Thursday, 29 September 2011 10:33
In 2004, I wrote an article titled, “Hey, do you want to buy buko juice?” (PerryScope, December 10, 2004). At that time, although buko juice – or Coco juice -- was then being sold in markets in the United States, it was mostly distributed in Asian markets. You couldn’t find them in mainstream markets then.
The following is an excerpt of what I wrote in 2004:
“Hey, do you want to buy buko juice?”
“When I was attending high school at the San Sebastian College on Azcarraga Blvd. in Manila, I always treated myself to a glass of ice-cold buko juice -- peddled by street vendors -- while waiting for my JD bus to Quezon City. It was a good refreshing drink especially during the hot and humid months. This was in the late 50’s.
“Today, buko juice is still being peddled in Manila in the same way they did 50 years ago. However, in the past five years, buko juice is now being peddled in Asian markets in the United States. Recently, I went to my favorite Filipino supermarket and looked for the canned buko juice. Eureka! I found it in several brand names. But none of which were processed in the Philippines. They were processed in Thailand or Vietnam.
“Buko or coconut is grown rampantly in the Philippines. As a matter of fact, the Philippines is the world’s number one grower of coconut. A hardy tree, coconut can withstand the worst typhoons unleashed by Mother Nature and it can grow on just about anything, including water.
“With the abundance of coconut, exporting processed coconut products -- from buko juice to ‘macapuno’ -- should not be a problem. However, the Philippines, due to lack of capital infusion, does not have the means to process its huge deposits of natural resources -- from seaweeds to oil.
“In a nutshell, the Philippines needs an infusion of capital to modernize its manufacturing industry. Local sources of capital are drying up fast. Foreign sources of capital is abundant; however, because of the 60/40 rule, foreign venture capitalists are not motivated to invest in the Philippines --- for a good reason.
“The 60/40 rule applies to the ownership ratio of businesses including corporations; that is, Filipinos must own 60% of capital stock. There is nothing wrong with this provision in the constitution. The major problem is that foreign investors are required to capitalize and pay up their stock subscription 100% while Filipino investors are required to only capitalize 25% and pay up 20% of their capitalized stocks, which means that a Filipino investor needs to pay up only 5% of the subscribed stocks while a foreign investor has to pay up 100% of the subscribed stocks. However, dividends are distributed according to the subscribed stocks. To begin with, the corporation’s operating capital would be less than the subscribed stocks. There is not much to expect when a corporation is operating at 45% of its capitalization.
“I brought this issue up with Speaker Joe De Venecia -- during the Ramos presidency -- when I arranged for him to speak to a joint session of the California Legislature, the first and only time that a Philippine congressional leader addressed the state legislature. He explained to me that it would take a constitutional change to do away, or modify, the 60/40 ratios. He further explained that a “charter change” convention -- known as Cha-Cha -- had to be convened to make a constitutional change.”
*Fast-forward to 2011
The Philippines has not changed much since 2004. It has yet to amend the constitution to make the country more attractive to foreign investors. The “60/40 rule” is still the “serial killer” that drives foreign investors away. And buko juice is still being sold on street corners. But today, canned buko juice – or “coco water” – is now being sold in some mainstream markets in the U.S.
Recently, at an airport press conference upon his return from the U.S., President Benigno “P-Noy” Aquino III said that he found out that Americans have discovered the joys of drinking buko juice. “Drinking what they call coco water and what we call buko juice is a growing trend in the US. Because of its nutrients, because it is natural and environment friendly, it is becoming the new natural sports drink in America and is now a hundred-million-dollar industry,” he said.
He then announced that Pepsi-Cola and Vita Coco are going to tap the Philippine coconut industry for the production of coco water. He said that New York-based Vita Coco, in a business venture with Philippine-based Fiesta Coco Equity, had committed $15 million in capital investment.
Vita Coco is being advertised in the U.S. as “the nation’s best-selling coconut water and one of the fastest-growing beverage brands in the U.S.” Vita Coco is currently sold at over 14,000 retailers in the U.S. Therefore, a Vita Coco-Fiesta Coco joint venture would insure the influx of Philippine-produced coconut water into the U.S. market, a boon to coconut farmers in the Philippines.
*Coco Levy Fund
But even with Vita Coco’s presence in the Philippines, the coconut farmers are suffering financially from lack of government support. The multi-billion Coco Levy Fund would have been a great source for financial aid that the coconut farmers need to sustain and maintain their farms. However, it is still sequestered by the government since 1987 when the late President Cory Aquino confiscated and sequestered all known assets of the late strongman Ferdinand E. Marcos and his cronies.
The Coco Levy Fund was created during the Marcos dictatorship purportedly to provide financial assistance to coconut farmers. The fund was raised from taxes forcibly collected from coconut farmers. However, to this day, only the former cronies of Marcos have benefitted from the Coco Levy Fund. One them who arguably benefitted the most was P-Noy’s uncle, Danding Cojuangco, whose 20-percent ownership of the shares of stock in San Miguel Corporation are being claimed by coconut farmers as rightfully theirs. Today, the Coco Levy Fund is reportedly estimated to have ballooned anywhere in the range of P100-150 billion in assets.
*Time to act
Recently, Senate President Juan Ponce Enrile said that the government should use the Coco Levy Fund and not wait for the Supreme Court’s decision on the case to help the local coconut industry. Yes, it’s time for the government to use the Coco Levy Fund for what it was originally intended for; that is, financial assistance to coconut farmers.
With coconut growing in 69 of the 79 provinces covering some 3.3 million hectares -- which is about 30% of all farmlands -- and comprising 1.4 million farms, expanding and marketing buko juice for worldwide distribution could become the country’s number one agricultural industry.
Has buko juice’s time come? Mr. President, we heard you talk. Now it’s time to walk the talk.
By Perry Diaz
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