PRESCRIBING MEASURES FOR THE STRUCTURAL ECONOMIC ADJUSTMENT PROGRAM FOR THE COCONUT INDUSTRY

• Number: Presidential Decree No. 1960
• Sections: 9

Preamble

WHEREAS, a rationalization program for the coconut industry

was mandated by LOI 926 in 1979 to save the coconut oil milling industry from

financial collapse whereby a cooperative endeavor was organized among coconut

farmers, oil millers and exporters of coconut products to pool and coordinate

their respective resources in the buying, milling and marketing of copra and its

by-products;

WHEREAS, a self-reliance energy program was instituted by

the Government whereby the energy requirements of the country would be serviced

from indigenous and renewable local sources and thereby diminish its dependence

on imported energy;

WHEREAS, the Coco-Diesel Program was conceived and

implemented as a substantial element in the country's self-reliance energy

program such that coconut oil, one of the country's indigenous and renewable

sources, would be utilized as a diesel fuel extender and fuel blending

stock;

WHEREAS, to ensure a continuous supply of coconut oil for

the Coco-Diesel Program and at the same time strengthen the rationalization

program for the coconut industry, Presidential Directive dated 1 September 1982

was issued mandating that the coconut oil production of intermittent exporters

of coconut products and the excess production of those primarily engaged in the

domestic market be instead channeled into the Coco-Diesel Program rather than

into the world market, and pursuant to which, the Philippine Coconut Authority

("PCA") issued Administrative Order No. 002, Series of 1982 establishing Rules

and Regulations to implement the said Presidential Directive;

WHEREAS, the severe drought in 1982-83 caused a substantial

reduction in the copra production of the country and compelled the Government

thru PCA to adopt measures to meet Philippine and world market requirements for

coconut oil; to prevent cutthroat competition for copra; and to forestall short

term cycles of artificially high prices of coconut products in the domestic and

world market including the issuance of PCA Administrative Order No. 002, Series

of 1983;

WHEREAS, since the promulgation of the Presidential

Directive and the PCA Administrative Orders, copra production of the country has

dropped even further as a result of numerous typoons in late 1983 and two (2)

super typhoons in 1984;

WHEREAS, in 1974, the Government launched a national hybrid

coconut replanting program with actual replanting commencing in 1979 as a viable

means of increasing copra production and thereby enhance the country's

competitiveness in the international market of fats and oils, which was however

suspended in 1982 in response to the public clamor against the coconut levy

which financed the replanting program;

WHEREAS, pending review of alternative schemes for financing

the replanting program, the Government ordered, as a result of the super

typhoons in 1984, the replanting of the devastated areas with high-yielding

hybrids with this limited replaing program not bearing fruit until the

1990's;

WHEREAS, external forces beyond the control of the

Government plunged the country into a severe economic and financial crisis

compelling the Government to seek a standstill and a restructuring of its

external debts;

WHEREAS, to enable the country to restructure its external

debts, the Government has implemented a series of substantial economic policy

measures which include reforms in the production, pricing, marketing, credit and

institutional arrangements of the coconut industry;

WHEREAS, after a thorough review, it is deemed to be in the

interest of all that there be less Government intervention in the marketing of

coconut products and allow the private sector greater access to the markets, and

at the same time encourage and require the private sector to establish and adopt

appropriate measures to enhance the competitiveness of coconut products in the

world market;

NOW, THEREFORE, by virtue of the powers vested in me by the

Constitution and the laws, I, FERDINAND E. MARCOS, President of the Philippines,

do hereby decree and order the following:

Section 1

SECTION 1. PCA Administrative Order No. 002, Series of 1982,

and PCA Administrative Order No. 002, Series of 1983, and all other rules and

regulations promulgated by various governmental agencies in consonance with the

aforesaid PCA Administrative Orders are hereby repealed and all oil millers are

hereafter permitted and authorized to export their coconut products to the world

market subject only to such rules and regulations that the Ministry of Trade and

Industry, the Central Bank and PCA may prescribe to ensure that coconut products

are sold at competitive prices in relation to other fats and oils and that the

proceeds of such sales, less actual expenses, are remitted to the country;

Provided, however, that no rule or regulation shall be promulgated

which may delay or restrict the expeditious exportation of coconut products to

the world market.

Section 2

SECTION 2. To help planters and processors organize

themselves into associations and/or cooperatives to give them greater control in

the marketing of their products, the coconut farmers, and/or the copra buyers

and/or millers/refiners and/or exporters of coconut products are encouraged and

authorized to form such cooperatives or associations as may be appropriate to

achieve economies of scale; avoid the ruinous competition for copra which pushed

the coconut oil milling industries to the brink of financial collapse in late

1979; maximize foreign exchange earnings; ensure that the coconut farmers

receive a fair share of the proceeds from exports and/or domestic sales, and at

the same time continue to assure consuming countries an adequate and continuous

supply of coconut products at fair and reasonable prices; Provided

however, that the Government or any of its agencies or instrumentalities,

including government owned or controller corporations, shall not, unless

expressly permitted by law, or by the President of the Philippines, directly or

indirectly engage in the marketing of coconut products in the world market.

Section 3

SEC. 3. To ensure the survival of the coconut oil

milling/refining industry while there is an excess of copra crushing/refining

capacity and to encourage fresh equity to be invested in existing coconut oil

milling/refining capacities, no new copra crushing/refining capacity shall be

allowed without respective approvals of the Ministry of trade and Industry, the

Ministry of Agriculture and Food and the PCA, all of which agencies are hereby

required to respective promulgate the necessary rules and regulation to enforce

the foregoing. The Central Bank shall not authorize the opening of letters of

credit for the importation of capital equipment with out the respective prior

approval by the agencies. For this purpose, the crushing/refining capacities

fixed opposite each coconut oil miller/refiner listed in Annex “A” hereof, shall

be utilized in determining whether there is basis for expanding existing

crushing/refining capacities and/or allowing new crushing/refining capacities to

be established. The governmental agencies concerned shall accord priority to

coconut oil millers/refiners listed in Annex “A” for the establishment of new

facilities, or, within their respective areas, the expansion of their existing

facilities, or the restart of mills that have been mothballed by the cooperative

endeavor.

Any person or entity who may be aggrieved by the accuracy of Annex “A”

hereof, may within thirty (30) days from the date of promulgation of this

Presidential Decree, submit its perceived grievances to the Ministry of Trade

and Industry, the Ministry of Agriculture and Food and the PCA which shall

respectively submit their recommendations for the maintenance or modification of

Annex “A”, as the case may be, to the President of the Philippines for final

decision.

Section 4

SECTION 4. To assure the coconut farmers a return on their

investment and to honor the commitments of the cooperative endeavor and the

country as well, in the domestic and international markets, including the

financial markets, all rights and obligations acquired or incurred by the

cooperative endeavor in implementation of the rationalization program for the

coconut industry mandated by LOI 926 and duly approved by appropriate

governmental agencies such as the Ministry of Trade and Industry, and/or the

PCA, and/or the Central Bank, must necessarily be assigned, transferred or sold,

pro rata and under reasonable terms and conditions to preserve the interests of

the creditors and the contractual commitments of the cooperative endeavor, to

the coconut oil millers/refiners who desire to service the world market,

including oil mills/refineries owned or controlled by the coconut farmers of the

Philippines as provided in Presidential Decrees No. 961 and 1468, as

amended.

Section 5

SECTION 5. To encourage full and faithful compliance with

the structural economic adjustment program for the coconut industry herein

prescribed and the acquisition and the assumption of the rights and the

obligations of the cooperative endeavor as prescribed in Section 4 hereof, all

persons or entities, including the cooperative endeavor and their respective

stockholders who have participated in the pooling and coordination of their

respective resources as required by LOI 926, as so certified by the cooperative

endeavor, are hereby exempt from any and all taxes, fees, imposts, charges of

whatever kind and nature, which any, some or all of them may, or might have

incurred as a consequence of, or arising out of, or by reason of, or in

connection with, such steps, measures and/or procedures which they may adopt in

compliance with or in obedience to the structural economic adjustment program

for the coconut industry which they may deem necessary or useful or beneficial

to them, and their respective stockholders.

Section 6

SECTION 6. Any violation of the provisions of this

Presidential Decree, and/or the rules and regulations herein authorized to be

issued by the governmental agencies concerned, shall be punished and penalized

in accordance with the respective enabling act or charter of the governmental

agency or instrumentality concerned.

Section 7

SECTION 7. All laws, executive and administrative orders,

and/or rules and regulations respectively issued by the governmental agencies

concerned inconsistent herewith, are hereby repealed, amended or modified

accordingly.

Section 8

SECTION 8. This Decree shall be effective immediately.

DONE in the City of Manila, this 11th day of January in the year of our Lord

nineteen hundred and eighty five.