The Senate is set to approve a measure that would reform a multibillion-peso fund financed by tariffs collected from rice and sugar imports to ensure that funds would go to legitimate farmers and fishermen.
Sen. Ralph G. Recto said Senate Bill 2951, which is being debated on the Senate floor, “will not just extend the effectivity of the Agriculture Competitive Enhancement Fund [Acef], but make it effective.”
Conceived as a safety net when the country joined the World Trade Organization, the Acef was created by Republic Act (RA) 8178 in 1996 to assist farmers affected when protectionist walls came crashing down as a result of the Philippine ratification of the General Agreement on Tariffs and Trade.
It was to be funded by “in-quota tariffs” collected from imported commodities, such as rice, placed under the restricted Minimum Access Volumes (MAV) that the Philippines imposed.
In February 2008, RA 9496 extended the life of RA 8178 until December 31, 2015.
In his cosponsorship speech, Recto said that, by May 15, 2013, total actual collections of Acef has reached P11.8 billion, of which P10.3 billion was from MAV quotas and P1.2 billion was from the so-called sugar- conversion fees.
But, according to the Department of Agriculture and farmers’ groups, there were some P10 billion more in MAV in-quota tariffs, which were collected but was neither remitted to the Treasury, nor booked as Acef proceeds.
Of the P11.8 billion that was officially reckoned as Acef collections up to the summer of 2013, some P8.9 billion was disbursed by Acef Executive Committee. Included was P2.6 billion as grants to local governments, government corporations and state colleges.
Also approved was P5.9 billion worth of loans to 304 groups, which, except for 10, were private corporations.
Subsequent audit reports on the Acef, however, are littered with adverse findings like “dismally low repayment rate,” “double recording of loan releases” and “loans without collateral,” Recto said.
“Some grantees have pulled a Houdini and can no longer be found. There were P2.5 billion worth of loans covered by letters of confirmation, whose addressees could no longer be found,” he said.
In one case, proponents of a P63-million loan “have migrated to the Great Beyond,” leaving P58 million in payables, the senator said.
“Of the 294 private parties who were granted a total of P4.4 billion worth of loans, only 23 had fully paid as of December 2011. Of the remaining 271 private borrowers, only 15, or 5 percent of the total, had no arrears,” Recto said.
“As a result, P2.2 billion in loans was already due and demandable three years ago. In all, outstanding arrears already hit P5.1 billion three years ago,” he added.
Despite these irregularities, Recto said it is not yet time “to write the requiem for Acef.” What must be written is the law reforming it.”
The senator said Acef still has balance of P3.8 billion as of end-2014.
“Second, and more important, the concept of earmarking tariffs for local development remains valid,” he said.
Recto said all measures to reform and revamp Acef were incorporated in the bill principally crafted by Sen. Cynthia Villar, chairman of the Senate Committee on Agriculture and Food.
“With her experience in restructuring, no person is more qualified to write the prescriptions than her, as she has the head of a banker and the heart of a farmer,” Recto said.
“More stringent safeguards were put in place by Villar. For example, in the bill, there is a ceiling of P5 million per project. Gone is the era of megamillion-peso unsecured loans,” he added.
Another important provision in the bill, Recto said, is the revamp of the membership of the Acef Executive Committee.
“The chairman of the Senate and House Committee on Agriculture shall no longer joint-head the Acef Execom. In fact, they are yanked out of that body,” he said.
“There is moral hazard in leading the body which you ought to oversee. Members of Congress are not supposed to serve as loan-approval officers in a purely Executive body,” Recto added.
There is a provision in the bill designating the Land Bank of the Philippines as the one that shall manage the credit facility out of the funds, Recto said.
As to the Commission on Higher Education head, his or her involvement can be justified by the fact that Acef is also being tapped to finance the studies of students taking up agriculture courses, Recto said.
In hindsight, Recto said the scholarship component of Acef was one of its few bright spots. Loans for production capital may have been malversed but, by and large, tuition to train human capital was not.