Reg’l agri councils buck transfer of P1B from ACEF to Quedancor

Leaders of private sector-led Regional Agricultural and Fishery Councils (RAFC) are opposing the Department of Agriculture’s (DA) decision to endorse the transfer of P1 billion from the Agricultural Competitiveness Enhancement Fund (ACEF) to the Quedan and Rural Credit Guarantee Corp. (Quedancor).

At the recent RAFC summit meet, leaders raised questions on the appropriateness of the DA’s move to channel a huge chunk of the highly unutilized P5.1 billion ACEF to Quedancor this year.

Agriculture Secretary Luis Lorenzo Jr. earlier this year recommended to the Department of Budget and Management (DBM) the release of P1 billion to Quedancor, the credit arm of the DA, which extends loans, mostly to farmer organizations and other agri-based enterprises.

"We have to point out the disparity in lending ACEF-zero interest rates on loans worth millions versus a 9.5 percent charged to a few thousand pesos loaned to small farmers and fisherfolk organizations by Quedancor in relending the ACEF and the fact that it is also being allegedly used to extend salary loans," said Pete Borja, spokesperson of the National Agricultural and Fishery Council (NAFC).

Borja had said that because Quedancor was favored over other groups that have been waiting for funding for their approved projects for three years now, it is unlikely that the original intended beneficiaries of ACEF will get funding next year, and even in 2005 when the program expires.

"Aside from not getting funding, giving the money to Quedancor will limit the number of beneficiaries while also making them pay the minimum interest rate because unlike ACEF which is interest-free," Borja added.

The DA has been criticized for the slow disbursement of the ACEF which since its creation in 1996, amassed P5.1 billion as of July this year.

Lorenzo has asked President Arroyo to certify as urgent the DA’s proposed draft bill that seeks to amend and extend the lifespan of ACEF until 2015.

The ad hoc task force on ACEF which monitors the fund initiated the move to prolong its effectivity. The bill was submitted to the committees on agriculture of both the House and the Senate, and to the Congressional Oversight Committee on Agriculture Fisheries Modernization (COCAFM).

ACEF was created in 1996 to cushion the effects of lifting of quantitative restrictions on affected sub-sectors of agriculture by collecting tariffs from the minimum access volume (MAV) importations. It is part of the safety nets pledged by government to make local agricultural producers globally-competitive once further trade liberalization takes place by improving their infrastructure systems.

MAV is the minimum volume of specific agricultural products committed by members of the World Trade Organization that are allowed entry in their respective countries.

Ad hoc task force chairman Pete Borja said it is critical for the bill to be approved before Congress adjourns its session in 2004. ACEF expires in March 2005.

"If the fund remains undisbursed by 2005, it will be a waste because the money will go back to the general fund," said Borja, adding that ACEF collections from 1996 to 1998 were used to shore up government’s budget deficit instead of being channeled to intended beneficiaries.

Moreover, the Department of Budget and Management (DBM) has been slow in disbursing the fund and most of the beneficiaries are sectors that are not the most "needy," such as the sugar industry which can very well fend for itself.

The most crucial amendment to the ACEF structure being sought by the DA is for the fund to be converted into a revolving fund which will be named "DA-ACEF Revolving Fund."

Under this scheme, the DA and the ACEF secretariat will directly handle the revolving fund.

This is a departure from the current system wherein tariff collections from the MAV mechanism are remitted by the Bureau of Customs (BOC) to the Bureau of Treasury (BTr) and deposited under Special Account 183. Projects approved by the Department of Agriculture’s (DA) National Agricultural and Fishery Council (NAFC) are endorsed to the ACEF executive committee and the (COCAFM).

These are then submitted for funding to the DBM. The fund, once paid up by sectors that availed of it, is reverted back to the general fund.

Under the proposed revolving fund, loans paid by beneficiaries are kept intact since the funds will no longer be passing through the DBM.