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Extending the Agricultural Competitiveness Enhancement Fund (ACEF)

SPONSORSHIP SPEECH Extending the Agricultural Competitiveness Enhancement Fund (ACEF) Senate President Pro-Tempore Ralph G. Recto 23 September 2015

Mr. President:

The Agricultural Competitiveness Enhancement Fund or ACEF traces its genesis to our ascension to the World Trade Organization.

When the gospel of globalization made the world flat, and the world started chanting," I believe in GATT, the treaty almighty, creator of wealth on earth," we also demonstrated our faith to the new world order by changing our laws to make our country GATT-compliant.

One of the laws we passed was Republic Act 8178, which replaced quantitative import restrictions on agricultural products, except rice, with tariffs, and putting all collections in the ACEF.

In short, protectionist walls would come tumbling down and what would come up are tariffs.

The general rule was that agricultural goods, for as long as they can hurdle health, sanitary and other rules, can come in for as long as they pay the tariffs we have set.

To use a simple analogy, we replaced the "Do not enter" sign on our borders with a "You may enter, provided you pay" notice.

The problem, however, with rolling out the red carpet for imported agriculture products is that they will pull the rug from under our farmers, who historically have been having a hard time standing on their own feet.

There are reasons why most of them are down on all fours most of the time: knocked down by typhoons, floored by costly inputs and indebtedness, which have kept them on the ropes for as long as they can remember.

RA 8178 mandated that all tariff collections on agriculture products covered by minimum access volume, principally rice and sugar, be plowed back to them.

No, Mr. President, tariffs were never envisioned to be distributed as dividends, CCT-style. Rather, they will be used to build, and let me quote from the law, "irrigation, farm-to-market roads, post-harvest equipment and facilities, credit, research and development."

Also covered are "marketing infrastructure, provision of market information, retraining, extension services, and other forms of assistance and support to the agricultural sector."

The idea was to use the very same taxes levied on imports to finance projects that would boost local agriculture and allow it to compete with imports.

Some labeled these as safety nets that would cushion the fall of farmers sideswiped by imports.

Others preferred to call them "ladders" that would allow farmers to climb out of the rut they are in.

And who shall earmark the funds?

Under RA 8178, it will neither be the Department of Agriculture nor the Palace, but Congress. We should remember that this law was enacted in 1996, when congressional power of the purse, was real and not illusory.

So when imported rice started to fill bodegas, as well as the pockets of importers, whose unli greed was matched only by our love for unli rice, the coffers of ACEF was getting filled too.

By May 2013, some P10.3 billion in MAV in-quota tariffs had been collected.

In addition, there was P1.2 billion raised from sugar conversion fees, plus P300 million in loan repayments and other collections, bringing the total to P11.8 billion.

This was the figure which stood two years ago.

But according to DA and farmers' groups there was some P10 billion more in MAV in-quota tariffs which was collected but was neither remitted to the Treasury nor booked as ACEF proceeds.

This shouldn't surprise us at all. If shiploads of smuggled rice can disappear without trace, collected tariffs on rice can easily evaporate too.

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.

The fund flow goes like this: Tariff collected is remitted to the Treasury, and it is the DBM which releases the money to the ACEF Execom upon its request.

ACEF Execom in turn released P2.6 billion as grants to local governments, government corporations and state colleges.

It also approved 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."

Some grantees have pulled a Houdini and can no longer be found.

Some P2.5 billion worth of loans are covered by letters of confirmation, whose addressees could no longer be found.

They have flown the coop like migratory birds.

In one case, proponents of a P63 million loan have migrated to the Great Beyond, leaving P58 million in payables.

Of the 294 the 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.

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.

Actually, the figures given by Senator Villar painted a bleaker picture of a 7 percent repayment rate.