ACEF scam: Poor farmers fear trade liberalization

By Chi Almario-Gonzalez, ABS-CBN Investigative Team

Posted at Feb 11 2014 07:46 PM | Updated as of Oct 05 2016 04:31 PM

(Second of two parts)

Mang Tanyong has been a coffee farmer all his life. He earns P200 a day and he works six days a week. From a monthly income of P4,800, Mang Tanyong is proud to say he was able to send his three children to high school.

“Ok na yun (That’s enough for me),” 63-year-old Mang Tanyong said.

What Mang Tanyong doesn’t know is that by 2015, he, and tens of thousands of farmers and fishermen like him, will be facing a very big challenge.

By next year, members of the Association of Southeast Asian Nations (ASEAN) will already be engaging in free trade among member-countries in pursuit of the ASEAN Economic Community (AEC).

This means free flow of products, services, skilled labor, capital and investments.

For Mang Tanyong, this means that there will be more imported coffee beans available to the consuming public, which could be of better quality and may be cheaper, if not the same price, as Mang Tanyong's F1’s coffee beans.

“Paano mangyayari sa amin kung hindi mabibili 'yung sa amin? 'Yung sa kanila lang bibilhin? Syempre mangangamba rin kami,” he said.


But 20 years ago—when the government decided to join the World Trade Organization (WTO) and ratified the General Agreement on Tariffs and Trade (GATT)--the agriculture industry and its leaders knew this was going to happen.

And in 2003, when the government agreed to form the AEC with other ASEAN members, the government knew that import restrictions on foreign goods and products would be lifted in 2015.

And though some Philippine exports will be more competitive, the inflow of imported products could spell doom for unprepared sectors.

That’s why 20 years ago, the government decided to come up with various plans to help farmers and fishermen so they can compete with products of foreign countries.


The Agriculture Competitiveness Enhancement Fund (ACEF), a loan and grant program, was one of the measures identified as a safety net for the agri-agro industry.

Yet, like several government support programs for farmers, ACEF was mismanaged, misused and misallocated, leaving small farmers and fishermen in the same poor conditions they used to be in 20 years ago.

Former Sen. Francisco Pangilinan, who headed the Senate Committee on Agriculture from 2010 to 2013, was appalled at how farmers and fishermen have become victims of government fund scams and corruption.

“What is the average age of a farmer? 57,” Pangilinan asked. “What is the average school attainment? Grade 4. What is the average annual income? P23,000. Those figures alone show that our agriculture and fisheries industries have been neglected, abandoned and even used in scams.”

The most recent scams that victimized farmers and fishermen were the P10.6-billion Priority Development Assistance Fund (PDAF) scam where bogus NGOs funneled back the funds to politicians and government officials, and the P728-million Fertilizer Fund scam where agricultural funds were diverted to the campaign kitty of former President Gloria Macapagal-Arroyo.

The P10.59-billion ACEF misuse has not yet resulted in filing of charges but a closer look at its utilization shows the program reeks of corruption (read part 1 of the series ).

That’s why in 2010, the Aquino administration put a stop to the release of ACEF, pending recommendations from the DA and the Congressional Oversight Committee on Agricultural and Fisheries Modernization (COCAFM).

But it’s been three years since the fund has been frozen and meantime, the sectors that need the assistance are not getting any.

And with the ASEAN Economic Community starting next year, the use of ACEF is needed now more than ever.

Former Sen. Ramon Magsaysay Jr., who studied the ACEF during the 13th Congress, said more than the corruption, government leaders should worry about the readiness of the agricultural industry, which means using the fund to improve competitiveness.


According to the Department of Agriculture, the country is ready for influx of imported products and goods.

“In terms of the free trade I would say na we are really preparing and most of our industries are prepared on that because in terms of productivity, we’re not too far away. Siguro konti lang hahabulin natin,” said DA Undersecretary for Livestock Jose Reano.

“We have our continuous technical updating, training going on and research,” he added.

But for Pangilinan, many agricultural and fisheries sectors are not competitive enough. He identified the critical products as rice, fish, coffee, corn, vegetables, fruits and poultry.

Teodoro de la Cruz, a coffee farm owner in Cavite and the employer of Mang Tanyong, said he is not ready.

“Sa palagay ko, sa kasalukuyan kasi nga wala naman tayong gasinong pag-aaral, walang kasiguruhan na itong ating produkto ay makakapag-kompetensiya sa produkto ng ibang bansa kasi nga pagdating sa magandang ani, hindi sapat yung naibibigay nating pakain sa ating mga halaman (At present, we don’t have an assessment on this but we don’t have any assurance that our product can compete with those of other countries because when it comes to good harvests we can’t be sure without good fertilizers for the plants) ,” he said.

De la Cruz believes since other countries provide better government support to their agricultural sector, their products will be of better quality and more affordable.

If the local markets are flooded with more imported coffee products, de la Cruz said his farm can't produce efficiently for the local market to go up against stiffer and cheaper competition.

“Pagdating dun sa mga bagay na pagtulong sa mga magsasaka ay nagkukulang talaga ang gobyerno at 'yun naman ay ramdam namin dito sa aming probinsya dito sa Cavite na hindi gasinong nasusuportahan lalo na sa aming magsasaka,” he said.

But a research division in the Cavite State University vows not to give up without a fight.

Dr. Alejandro Mojica, Cavite State University (CSU) vice-president for Research Extension Continuing Education and Training Services, has accepted the fact that trade will be almost fully liberalized by 2015.

“Wala na kaming magagawa," said Mojica, a coffee expert. “Nandyan na 'yan. Ang puede na lang magawa ay makahabol. Sa maliit na contribution ng University, gusto naming i-angat ang quality ng kape ng specialty coffee,”

Mojica said the CSU has a plan to help make the coffee industry competitive, if not by 2015, then at least in the next five years.

CSU, an ACEF loan beneficiary in 2010, applied for a P15-million loan but only P4 million was released.

The P4 million was used by CSU for improved technology for processed coffee. Mojica said this helped farmers look for another way to profit from the coffee beans.

“Maganda sya (ACEF),” Mojica said. “May loopholes lang. Malaking tulong para maging competitive, kasi out of ACEF puede kang bumili ng equipment, puede kang magnegosyo.”

But what bothers Mojica is that when the CSU gave notice to the Land Bank of the Philippines (LBP) that they were ready to pay back the loan, the LBP was asking them to pay more.

“Kumita na 'yun. Makakabayad naman kami. Kaya lang 'yung huling sulat sa amin ng Land Bank, ang babayaran namin ay 15 million (pesos). Pero and sabi ko, 'di naman kami magbabayad ng 15 million. Ang nakuha lang naman namin four million (pesos) out of that ACEF Fund,” he said.

Tracking and monitoring of released loans and collection of amortization were among the weaknesses of the ACEF program.

Dr. Daniel Israel, senior research fellow of the Philippine Institute for Development Studies (PIDS), said there was also no adequate checking of implementation of the projects.

Dr. Israel completed a study on the effectiveness and utilization of ACEF in 2011.

“Land Bank is just a collector,” he said. “It’s not their job to run after payers and force them to pay. 'Yun ang isa sa pinaka-importante kasi the money that has been given out is 8 billion (pesos) or so out of the 10 billion na napalabas, more or less, until 2009.”


In Batangas, Powerful Development Ventures Corporation (PDVC) told the ABS-CBN Investigative Team it applied for a loan from ACEF in 2008 but decided to back out when it was asked to give a “cut” from the loan.

Retired Navy Commander Angel Aliwalas Sr., PDVC co-owner, said the loan was supposed to fund the upgrading of technology and expansion of feed mill facilities.

“E napakaganda sana ng programang 'yan ng gobyerno kung itong mga nag-i-implement ay matuwid. Hindi yung katulad ng aming experiensya na sa halip na tax-free ay may cut. Kaya ito naging dahilan ng pag-back out sa project na 'yun na sana pinakinabangan namin,” he said.

Five years after, Aliwalas said the feed mill industry remains weak and will face serious problems when import bans are lifted in 2015.

“The farmers are not even subsidized by the government,” he said. “No assistance. No incentive. And when we open up ourselves to foreign (goods) in a free market, the more we will die a natural death and lose in the competition.”

But Aliwalas said it is not too late to use ACEF to help the farmers.

“Malaki ang pag-asa. Lalo na kung mahahawakan ito nang matuwid. Everybody cooperates. And walang corrupt,” he said.


Agriculture Undersecretary Emerson Palad said had the ACEF been used properly, it could have produced bigger farms, more slaughterhouses, dressing plants, cold storage and processing and packaging plants.

“Mas maganda po kasi kung magagamit na ang pondo (ACEF),” Palad said. “Kasi po itong post-harvest facilities na itinatayo natin could really bring down the cost. Ang labanan sa AEC [ASEAN Economic Community] 2015 is going to be the cost. 'Pag napababa ang presyo, dyan tayo magiging competitive.”

The COCAFM, the farmers, the agriculture industry leaders and even the Department of Agriculture are seeking the lifting of the moratorium on the use of ACEF.

But the DBM has not relented, fearing it could again fall to victim to corruption.

“Na-overhaul na namin 'yung criteria ng pautang at paggamit ng ACEF,” Pangilinan said. “In principle, dapat na release na 'yan. Sa batas, it’s the ACEF Execom that approves it and then it should be released by DBM.”

And while government leaders debate on how to make the agriculture industry competitive when import restrictions are lifted next year, small farmers have no choice but to plod on and brace for the storm of trade liberalization.

Mang Tanyong said, with or without government help, the WTO-GATT and AEC will find him harvesting coffee until there is work left for him to do.

“Hangang sa tumanda, dito pa rin kami sa kapehan. Mahirap naman na hindi ako magtrabaho sa lupa,” he said.

Feed mill owner Aliwalas said he believes there is hope for the industry to be competitive as long as the government will implement programs for the agriculture and fisheries sector without graft and corruption.

House probe sought on alleged misuse of ACEF

by RG Cruz, ABS-CBN News

MANILA (UPDATED) - Anakpawis Rep. Fernando Hicap has filed a resolution seeking an investigation into the alleged misuse of the Agricultural Competitiveness Enhancement Fund (ACEF).

The resolution reads: "The grants and loans availed of under the fund including the loan balances, interests gained from individual/ corporation/organization/cooperative which availed of the fund, and projects wherein the fund was utilized need to be scrutinized to determine whether the same has been used for the intended beneficiaries of the law."

Citing a document from the Department of Agriculture (DA) as of June 2013, he said ACEF assistance in the form of grants amounted to P2,576,020,918 while ACEF assistance in the form of loans amounted to P5,887,554,884.

The same document also revealed that under the category of loans for restructuring, there are 216 projects with ACEF-assistance amounting to P4,515,776.312.

Out of the 216 projects, 99 projects with assistance of P2,583,684,612 are without payment, 103 projects with assistance amounting to PI,769,242,552 are with payment of less than 50% of the total due and 14 projects with assistance amounting to 162,809,148 are with payment of more than 50% of the total due.

Hicap's resolution came after ABS-CBN's Investigative team recently exposed irregularities in the ACEF.

Last week, Senate President Pro Tempore Ralph Recto also pushed for a probe on the anomalies surrounding the P12-billion Agricultural Competitive Enhancement Fund or ACEF.

Senate Resolution 495, which Recto authored, states the need to review the program and make sure that country’s farmers benefit from it.

Recto expressed dismay over reports of the Commission on Audit and the investigative team of ABS-CBN which show that there are anomalies in the distribution of the ACEF.

The ACEF, Recto said, is supposed to be used to help small-scale farmers and fishermen raise the volume of their products through loans and trainings, in a bid to make the country competitive by 2015.