Renewing support vows to agri

Thanks to the upcoming national elections, the government is renewing its promises of support to farmers and fishermen. It looks like the Agricultural and Fisheries Modernization Act (AFMA) or Republic Act 8435 will likely get a new lease on life after Congress recently approved amendments to correct crucial program flows. Now, let’s hope that the President finds time in her busy election schedule to affix her signature to the proposed changes.

Since its implementation in 1997, the modernization program has failed miserably to live up to its promise to make our farmers and fishermen globally competitive. AFMA was supposed to get P17 billion yearly after the initial P20-billion budget in the first year of implementation in 1997. Budgetary constraints, however, hounded the program.

At the same time, the Department of Finance could not generate revenues that would have supported the program. So eight years into the program, the local agriculture sector is still in dire straits while our regional counterparts are making great strides.

More Time, More Promises

The amended legislation will include features extending up to 2015 the effectivity of tax incentives to agribusiness enterprises and the mandated funding support for AFMA’s implementation. This effectively adds 10 more years to the AFMA life.

The extension should provide breathing room for our grossly-neglected local agriculture sector as it prepares for the full implementation of the Common Effective Preferential Tariff (CEPT) scheme of the Association of South East Asian Nation (ASEAN).

Under this trading arrangement of which the Philippines is a signatory, all tariffs of major and sensitive agricultural imports shall be phased out in keeping with the goal of making the ASEAN market a tariff-free trading area for its members.

Hopefully More Funds To Back Promises

Congress amended Section 109 of AFMA so that agribusiness companies duly certified by the Department of Finance (DOF) and the Board of Investments (BOI) will continue to be exempted from tariff payments on the importation of all types of agriculture and fishery inputs, equipment and machinery.

Section 12 was also amended to ensure that the Department of Agriculture (DA) gets a guaranteed allocation of P17 billion yearly for the duration of the law. This should be on top of the regular DA budget and should not be subjected to any mandatory reserves usually imposed by the Cabinet.

Likewise, Congress mandated several government agencies to provide funding for AFMA. For instance, AFMA could expect to get 20 percent of the proceeds of the securitization of government assets, including the Subic and Clark special economic zones.

Another agency to be tapped for funding is the Public Estates Authority or its successor agency, which will contribute 50 percent of its net earnings to the AFMA fund.

The Technical Education and Skills Development Authority Fund will also be asked to remit 40 percent of its revenues to the program, plus net proceeds from the privatization of the Food Terminal Inc. (FTI).

At the same time, fees and other revenues collected by the Bureau of Animal Industry, the Bureau of Plant Industry, including assets recommended by the DA for privatization will be channeled to the program.

Funds should also be coming from proceeds of the minimum access volume in accordance with the provisions of Republic Act 8178, proceeds from the countervailing, anti-dumping and special safeguards duties collected from agricultural imports, and 50 percent of the support facilities and services fund under RA 6657.

Ironing Out Kinks

All the new sources of funds should be quite adequate to finance the modernization of our agriculture and fisheries sectors. Critics however warn of possible hitches if government for instance is unable to securitize and sell assets.

For one, government has not up to now been able to tickle the interest of investors to consider its securitization proposal for the assets of Clark and Subic. The bidding for the FTI has also failed at least twice already.

Then again, the governments of Thailand, Indonesia and Malaysia have the advantage of time since they have already been for some time now investing heavily on the agriculture sector to make their farmers competitive. These countries have even been giving their farmers and fishermen debt-relief packages.

In contrast, our own government has been lacksadaisal, content with providing token support to agricultural enterprises. In fact, this year, the DA’s budget is the lowest in years.

The AFMA extension, which seeks to provide funds for agricultural support services including irrigation, post-harvest facilities, infrastructure, credit, research marketing and information and training to prepare Filipino farmers for globalization, is a long overdue sound move.

Now that it’s election time, the move earns points for the administration and will also give government the chance to redeem itself with its many constituents.

This time, government should prove that is still possible to go beyond rhetoric, and puts its money where its mouth is. This administration cannot afford to fail our poor farmers again.

On TV: Ticking Bomb Of Population Explosion

"Isyung Kalakalan at Iba Pa" on IBC News (4:30 p.m. and 10:30 p.m., Monday to Friday) ends today a discussion of population management in the country, and the urgency by which government needs to respond. The Philippines is two countries shy of being in the top 10 most populated nations of the world. The population issue is likened by many to a ticking bomb that threatens our socio-economic structure. Government seems to be reacting now, but it may be too late. Watch it.

‘Breaking Barriers’ With BIR Commissioner Parayno

"Breaking Barriers" on IBC (11 p.m. every Wednesday) will feature Commissioner Guillermo L. Parayno Jr. of the Bureau of Internal Revenue on Wednesday, 18th February 2004.

Is the BIR hopelessly corrupt? Is the lifestyle check an effective tool to combat corruption in the agency? Why are the initiatives to drastically reform and re-structure the bureau not progressing and are always set aside by the legislative bodies? Why is it that small taxpayers get it in the neck whenever BIR conducts tax collection drive but large tax cheaters remain unscathed?

Join us break barriers and gain insights into the views of Commissioner Guillermo L. Parayno Jr. on various issues affecting the Bureau of Internal Revenue and Philippine business in general.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.