Desperate measures: ACEF’S last stand

For nearly two decades, the Agricultural Competitiveness Enhancement Fund has masqueraded as a rescue boat for Philippine agriculture in the face of the Asean economic integration move next year.

It was supposed to strengthen the capacity of the sector by improving farm or agricultural infrastructure and machinery, creating agricultural social infrastructure, implementing projects in support of global trade competitiveness, and improving the lives of small farmers and other stakeholders in the sector.

Yet, since its passage into law in 1996 and with over P12 billion of funds accumulated, the grim reality is that our agricultural sector is nowhere prepared to take on the challenge of an open Asean economy where there will are no tariff barriers imposed on those that dare to compete against our own home produce.

In short, our farmers, fishermen and small agricultural companies are due to be pummeled black and blue in the coming years as imported rice, pork, beef, chicken, vegetables, and other food items edge out their local counterparts because of lower prices.

You and I who do not belong to the agricultural sector may cry out a cheer of welcome at this seemingly beneficial turn of events where imported food is cheaper than those locally sourced, but not so to our fisher folks and farmers which comprise about half of the current working population.

Twisted reality

They will have nowhere to go, since many of them are not qualified for other jobs here or abroad. Their families, who have meekly subsisted on the meager income that farm work pays, will be plunged even further into poverty.

The other side of this picture, of course, is the country’s increasing dependence of imported food supply. There’s a sort of twisted reality in this: we have an economy whose main source of earnings comes from its overseas workers, and whose main source of food will be coming from other countries.

So, for how long this country can survive with this balancing act is for anyone to guess. So far, migrant earnings have continued to buoy the economy, and Philippine agriculture has continued to stay precariously afloat during the last three or four decades.

Changing landscape

But this is not expected to stay in this condition in the next few years, especially if Lady Luck starts to look the other way.

Already, remittances have manifested a slowing down, either a reflection of lesser income opportunities for our countrymen abroad, especially in oil-producing countries now that oil prices have been drastically slashed, or an indicator of the growing protectionism of governments favoring their own natives when it comes to employment.

While remittances are still significantly high, contributing $27 billion to the economy in 2014, new studies have surfaced that question the resiliency of OFWs given the continuing financial problems of many developed economies.

Coupled with this is the observed rise in BPOs. The Philippines, now regarded as the world’s center for business process outsourcing (BPO) resources, has supposedly become the favored choice of more Filipinos freshly out of college for jobs.

While the number of employed in local BPOs is only around a million (compared to 20 million OFWs), the earnings are already significant at $18 billion, and could jump to a staggering $25.5 billion next year with more multinational companies like expected to join.

This newfound position has been possible because of the relatively lower office rental rates in the country, plus the growing number of qualified Filipinos that can take on jobs in the industry.

However, BPOs are still an uneasy source of employment opportunities, much like jobs that are created in the electronics industry. Should there be sufficient reasons to erode investor confidence, BPOs can pack up quite as quickly as what the electronics exporters did a few decades ago.

ACEF extension

With the ACEF due to expire by the end of the year, and with just about P2 billion left in funds, our lawmakers have moved to extend the fund’s life by another six years.

They’re saying that this incremental P2 billion, if utilized and managed well, will still be able to muster enough fire power to spur agricultural competitiveness locally and globally. This seems like stretching things a bit too much.

In the first place, if the ACEF was not able to convert the first P10 billion collected during the 19 years of its life, how then can P2 billion make a difference in the next six years, especially when ASEAN trade barriers of food commodities will have significantly be broken down?

Without too much thinking, it is not difficult to see that a flawed law, which has been regarded as a near failure by reputable financial audits and scholarly dissertations, will not have much to go by even if its life is extended by a few more years.

A malicious mind will even think that the extension is merely a ploy to utilize the remaining funds for more of the same: bogus agriculture companies that have disappeared together with the loans they have secured, a record of double releases for the same loans, and dismayingly low loan repayment rates.

Change the law

If there will be no major changes in the ACEF that will safeguard its disbursement, then let it revert to the national treasury where its use may have a better chance of benefitting more Filipinos.

Otherwise, if there is still time, let there be a new law that will take on the remaining ACEF monies for a specified purpose and with less chances of misuse. For example, if it has been significantly contributed to the education of Filipinos in the field of agriculture and related disciplines, then so be it.

With Asean integration already knocking on our doors, it’s too late to shore up the country’s irrigation network, or subsidize tractors, threshers or fishing vessels to be sold to farmers and fishermen, or improve hog, chicken or beef raising capacities.

Perhaps the better road to the future will be raising a better breed of young farmers and fishermen who will have benefitted from the precious teachings of our internationally recognized agriculture schools and universities, and who will be enlightened enough to bring back hope to our agriculture sector.

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