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Will the CFITF bring relief to farmers?

Among the agricultural products being exported by the Philippines, coconut oil and other products derived from coconut contribute more than $1 billion in the country’s annual export receipts. Coconut oil is the largest contributor in terms of value, given its industrial uses. The country also ships desiccated coconut, copra meal, oleochemicals, activated carbon, virgin coconut oil, coco water and even fresh coconuts.

The Philippines currently earns millions of dollars from coconut products despite the numerous challenges facing the industry. These include the aging of coconut trees, low farm productivity, inadequate infrastructure support, low allocation on research and development, and the disorganized supply chain. Philippine coconut is also vulnerable to world price fluctuations and tariff and non-tariff barriers.

Experts who have written countless articles and columns in the past about the sector all agree that the sector could expand its contribution to the country’s exports and gross domestic product if only it could tap its vast potential. For one, there are many other products that can be derived from coconut, such as geotextiles or “cocomats” that serve as erosion control material. The Covid-19 pandemic, while unfortunate, has trained the spotlight on coconut, particularly virgin coconut oil and its strong potential to fight Covid-19 (See, “Coco sector upbeat on VCO potential to fight Covid-19,” in the BusinessMirror, October 26, 2020).

The passage of the Coconut Farmers and Industry Trust Fund Act, which will allow farmers and other stakeholders to use the P100-billion coconut levy fund, is expected to fast-track the industrialization of the sector (See, “CFITF to modernize coconut sector, bring relief to farmers,” in the BusinessMirror, March 1, 2021). Money that has been parked in the national treasury for many years can now be used for a number of initiatives aimed at removing the obstacles to the full development of the sector. These include the development of hybrid coconut seed farms, provision of crop insurance, credit programs and establishment of shared facilities for processing coconut.

Under the law, the Philippine Coconut Authority will lead the crafting and implementation of the Coconut Farmers and Industry Development Plan. We urge the PCA to also put a strong emphasis on research and development, which will allow the sector to diversify and come up with other products that can be sold both here and abroad. It cannot be business as usual for the government if it is really serious about developing the sector, as R&D is an integral part of hastening its industrialization.

Proponents of the CFITF have lauded its signing into law and even called it a “game changer.” Indeed, the law that will finally allow the sector to use the funds that have been collected from coconut farmers decades ago will definitely increase its contribution to GDP. However, this is only possible if the funds earmarked for the sector are used judiciously and are channeled to the right programs. We call on the government to put in place effective mechanisms that will ensure that millions of impoverished coconut farmers will truly benefit from the CFITF.

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