P5.1-B ACEF balance seen to revert to National Treasury

The largely unutilized P5.1-billion Agricultural Competitiveness Enhancement Fund (ACEF) which expired last month will likely be reverted back to the Bureau of Treasury (BTr) after the Senate committee on agriculture failed to push for its extension.

"We were let down, we were so disappointed because we were hoping that the Senate committee on agriculture would work for the extension of the ACEF. This is a let down for the smaller farmers and fisherfolks because those funds meant for them will now go back to the National Treasury," said a DA source.

Sources said DA officials were shocked to learn that during the last Senate hearing on ACEF matters, Senate committee on agriculture chairman Ramon Magsaysay Jr. who also chairs the Congressional oversight committee on agricultural and fisheries modernization, agreed with other Senate members to shelve the bill calling for the extension of ACEF for another 10 years.

"Sen. Juan Ponce Enrile asked during the hearings if it’s possible to put at bay the ACEF bill since there were other bills that needed to be prioritized. At that point, Sen. Magsaysay agreed," said a DA official.

A staff from Magsaysay’s office, however, said the senator merely agreed to put off talks before the Senate went on a Holy Week break.

"He could never not push for the bill because he authored it," said Magsaysay’s staff who asked not to be named.

Magsaysay filed last year, Senate Bill 1165 calling for the ACEF extension and said in his explanatory note: "There is a need to extend the utilization period of the ACEF to enable government to provide the agriculture and fisheries sectors the opportunity to strengthen their development activities and enhance their competitiveness through the use of ACEF."

ACEF was created as an offshoot of Republic Act 8178 or the Agricultural Tarrification Act signed in 1996 to replace quantitative restrictions (QRs) on agricultural products. It was intended to cushion the effects of lifting of QRs on affected sub-sectors of agriculture by collecting tariffs from the 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.

ACEF however, is largely unused and the intended beneficiaries have complained about the slow disbursements by the Department of Budget and Management as well as the DA’s lopsided policy that favors bigger sectors such as the sugar sector in the granting of ACEF money.

"The ACEF coffers has P2.7 billion available funds to bankroll agricultural modernization projects and this is just part of the P5.11 billion collections accumulated under ACEF since 1999. The funding could have been much bigger had it not been for some technical problems in the management of the ACEF collections. Due to the lack of guidelines and procedures on handling and managing the fund deposited to the National Treasury, the collections from 1996 to 1998 were not used for intended purpose but were used instead for budgetary support," said Magsaysay in his bill.

Private sector groups and the National Agricultural and Fishery Council are urging the DA to push for the conversion of the ACEF into a mutual fund.

Earlier, NAFC, composed of representatives from the DA and agribusiness leaders of the private sector, asked DA to refile in the new Congress a bill that seeks to extend to 10 years or until 2015, the lifespan of ACEF.

Pete Borja, chairman of the ACEF ad hoc task force, said leaders of various agriculture subsectors have expressed willingness to lobby in Congress for the creation of an ACEF mutual fund which will be similar to the structure and function of the Home Development Mutual Fund.

Under the proposed ACEF mutual fund, all tariff collections of the Bureau of Customs (BOC) will go to the fund and no longer to the Bureau of Treasury. The fund will be governed by an autonomous corporate body.

"What will happen is that all tariff payments from the minimum access volume (MAV) will be remitted by the Customs to the fund, not to the Treasury. That way not only do we have a better picture of how much really goes into the fund, but we can program releases or disbursements for agriculture projects already approved," Borja said.

Under the current system, all collections from MAV imports by the BOC are remitted to the Treasury under Special Account 183. NAFC said however, that the DBM limits ACEF releases to only P632 million yearly and in reality, while the fund should be used only for ACEF projects, is usually diverted for other purposes.