Sponsorship speech On the extension of ACEF

Senator Edgardo J. Angara

The Agricultural Competitiveness Enhancement Fund (ACEF), enacted in 1996, is a funding facility aimed at supporting those whose livelihood depends on our primary sector, agriculture. It enables farmers and fisherfolk, cooperatives and agribusiness entrepreneurs to compete in an extremely competitive and increasingly globalized agriculture market.

The fund was created by replacing quantitative import restrictions on agricultural products, except rice, with tariffs. Collections then became the ACEF. The program was given nine years to exist, beginning in April 1996 when a special account for the purpose was set up in the Treasury.

The ACEF is particularly special to me, because it was during my time as Secretary of Agriculture that ACEF was first created and operated, alongside the Agriculture and Fisheries Modernization Act (AFMA).

What makes ACEF special is that it makes credit available to small farmers and fisherfolk and agriculture entrepreneurs - which the regular credit market does not provide. It is intended to augment the support for selected agricultural products in terms of farm-to-market roads, post-harvest equipment and facilities, research and development, marketing infrastructure, training and other extension services.

In short, it is intended to support projects to make selected agricultural products and services competitive and sustainable.

However, despite efforts to complete the program on time, the fund was not made fully available until 1999. First, the ACEF special account was set up only on that year, and the funds were not for its original purpose but used for national budgetary support. Collections from 1996-1998 went to the general fund because there was no special account that the collections could be credited to.

It was only in 1999, through my initiative as Agriculture Secretary, that the Department of Budget and Management (DBM) was able to assign a special account number, Fund 183.

Second, the DBM imposed a maximum expenditure cap for ACEF, rendering it unable to release the entirety of its accrued funds.

Notwithstanding the four lost years from 1996-1999, the P5.81 billion-worth ACEF was able to fund 93 sugar projects and 136 regular projects on livestock, poultry, and fruits and vegetable subsectors worth P3.94 billion.1

As of this month, the ACEF coffer has a balance of P1.90 billion2, an amount still pending at the Bureau of Treasury.

Of this, DA has requested the release of P185 million from DBM to fund 14 new projects,3 but has yet to receive it.

But, as RA 8178 mandates that the Fund will have a life of nine years, the ACEF will expire at the end of this year.

As a consequence, ACEF's P1.9 billion will be reverted back to the general fund, and can no longer be used to support agricultural modernization and competitiveness projects for which it was created.

The Philippines is still a primarily agricultural country. Agriculture contributes a fifth of our total GDP, providing jobs and support to tens of thousands of families, and almost one half of our labor force.

We live today in an open trade regime where quality products at competitive prices are required to sell in the market. The farming sector needs safety nets to cushion it from the impact of liberalized trade in the agriculture sector. The ACEF is one of them.

Throughout the years, we have seen how our economy has been rescued from collapse, time and again, by our farmers. Raising their living standards is decided largely by the priority and investment we make in this crucial sector.

For these reasons, I therefore seek this chamber's support for the extension of the ACEF's utilization period for another nine years, or until 2015. We cannot afford to slow down further development of agriculture by cutting this vital lifeline.

Thank you.

Notes

Total number of funded projects as of Sept 2007
(Total ACEF Fund of P5.81 billion) - (Projects funded worth P3.94B) + (Deferred request of P27.3 M) + (Fund request with no DBM action of P457,000) = Remaining ACEF Fund of P1.90 B as of Sept '07 Source: ACEF Secretariat
Data from the ACEF Secretariat