When times were good, Efigenio Encinares and his wife used to earn about 1,000 pesos, or about $125, in an average harvest month from their small, five-acre plantation on the outskirts of this southern Philippines city. Today, they make only a third to half as much, can afford to send only one of their five children to school and say they are not eating as well.
"Now we are subsisting just enough," Encinares, 55, put it in his halting English. "We cannot even buy clothes."
Farther up the road toward the town of Tagum, the story is the same.
"We're sacrificing ourselves," said Carlito Casabuena, 29. He said his family's earnings had dropped by two-thirds and that his brother and sister had stopped going to school.
The troubles of the two families -- and literally millions of others throughout the Philippines -- stem from the price of coconuts.
The price has been declining for the past few years, and this year, when surplus stocks of coconut products reached record levels and the government-backed milling organization stopped buying, the price went through the floor.
The story behind the drop is partly a tale of a Third World country's struggle against declining terms of trade in a volatile international commodity market. But it gets more complicated than that.
It is also the story of how Filipino companies controlled by prominent and well-connected businessmen allegedly tried to create an OPEC-like coconut oil venture that some of the critics jokingly dubbed "Cocopec" -- only to see the scheme backfire, allegedly causing serious damage to the companies' overseas markets and leading to U.S. and private antitrust suits potentially worth more than $100 million.
Other elements of the story include what government critics call "cronyism," a reference to the activities of President Ferdinand Marcos' high-rolling friends, an unusual coconut tax levy, and a struggle between the government's new technocrats and old-guard politicians.
The price collapse also helps to explain why the communist New People's Army (NPA) is gaining strength, especially on this southern island of Mindanao.
In interviews in Manila and on Mindanao, a number of government officials, military officers, church leaders and opposition sources agreed that the economic problems here in general, and the coconut price plunge in particular, provide good propaganda for the NPA guerrillas, and are being exploited by them to build rural support.
"I'm sure they are taking advantage of it," said Maj. Gen. Delfin Castro, the Mindanao regional military commander in Zamboanga. "They are foolish if they don't."
Said an official in the mayor's office here, "certainly the NPA is riding on these economic problems. The NPA is building a base in the country because of neglect."
Another municipal official added, "It would be hypocritical to say there's no connection" between the growth of the New People's Army and the coconut downturn. "It just isn't worth it to work on a coconut farm anymore." The result is antigovernment sentiment.
Last week, a National Assembly member belonging to Marcos' ruling party publicly called for an investigation of the coconut business, condemning the "vise-like grip on all aspects of the industry by the 'coconut oligarchs.' "
Meanwhile, the mayor of Zamboanga City on the southwestern tip of Mindanao charged in a letter to the president that the decline of the coconut price was "developing into the biggest economic scandal in the country's history."
In an interview, however, President Marcos said he did not think the matter was "all that serious" and ruled out an investigation. He said his own representatives were looking into it and that he intended to call a meeting of coconut farmers to discuss the matter.
Regardless of the reasons for the price drop, it clearly has wide repercussions in this country of nearly 50 million people. It is estimated that about a third of the population depends on coconuts for at least part of their income. In some provinces, more than 90 percent of the people are employed in the coconut industry.
Coconut products are the Philippines' leading export, accounting for $781.5 million last year, or 13 percent of total export earnings. Of those products, coconut oil is the biggest seller, and the Philippines produces 80 to 85 percent of the coconut oil traded on world markets.
Thus when coconut oil prices abroad plunged by more than 50 percent between 1979 and 1981, many Filipinos were affected. Adding to their woes lately have been price drops for other leading commodities, including sugar, copper and timber. The problem is compounded by rising oil bills and interest payments, which took up 88 percent of the country's export earnings during the first nine months of the year.
While some of the blame for the coconut price drop can be laid to the vagaries of the international market, critics here charge that the United Coconut Oil Mills, the dominant Philippine coconut company known as Unicom, exacerbated the situation with a clumsy effort to corner the U.S. coconut oil market.
In a resolution filed in the National Assembly demanding an investigation of Unicom, Assemblyman Emmanuel Pelaez charged that shortly after forming in 1979, Unicom ordered American subsidiaries to hoard more than 43,000 tons of Philippine coconut oil in an attempt to drive up the price.
The plan was a failure, Pelaez charged. Moreover, his resolution noted, the U.S. Justice Department filed a complaint in a Los Angeles federal court against the U.S. companies for conspiracy to create an artificial shortage of coconut oil in violation of the U.S. antitrust laws. Unicom, the alleged parent company, is not mentioned in the U.S. charges, which the companies have denied.
On top of that, several U.S. firms filed a $100 million civil antitrust suit against the U.S. companies and their Philippine principals, including Unicom, the resolution said. The companies involved are also contesting this action, and both court cases are still pending.
The charges are all the more intriguing because the chairman of Unicom is Defense Minister Juan Ponce Enrile, and its president is Eduardo M. Cojuangco Jr. Each is a close friend of Marcos.
As a result of the alleged price-hiking plan, Peleaz's resolution said, the Philippines "damaged its most important export industry" and lost a big share of the U.S. coconut oil market. The resolution charged that the price paid to Philippine coconut farmers or middlemen has fallen to less than half the 4 pesos (50 cents) a kilo (2.2 pounds) that they obtained in 1979.
In Manila, Maria Clara Lobregat, a Unicom board member and president of the Philippine Coconut Producers Federation known as Cocofed, declined to discuss particulars of the case but reacted sharply to Pelaez's call for an investigation.
"What do they want to investigate?" she asked. "This is a private corporation. Why should we allow them to do that? We have our own auditors." She added, "If there are irregularities in the United States, the U.S. government should investigate. Why investigate it here?"
Of far greater concern here than the U.S. cases, however, is a debate about a controversial levy that is essentially a tax on farmers' sales of their coconut products.
Although originally designed to promote the coconut industry, the levy in the last couple of years has strengthened Unicom's virtual monopoly by, among other things, funding its purchases of financially troubled coconut oil mills, according to Western economists. Today, Unicom controls about 85 percent of the country's milling capacity.
The levy also funds a replanting program, and a company owned by Cojuangco has an exclusive government contract to supply hybrid coconut seedlings.
The controversy over the levy escalated in early September when new Prime Minister Cesar Virata and assemblymen from coconut-producing areas persuaded Marcos to lift the levy for six months. Unicom then stopped buying completely from coconut farmers, and the bottom fell out of the market.
In early October, while Virata was out of the country, Unicom organized a demonstration of people it said were coconut farmers in front of the presidential palace to demand reinstatement of the levy. Marcos then ordered it restored at a reduced rate.
The turn of events has left many coconut planters in this area dismayed.
"The coconut industry is in the hands of people who don't have any conscience," said Pedro Durano, a coconut planter and president of the Davao chamber of commerce. "The poor farmers will not survive."
He added that in this region "everything is affected by coconuts, even the massage parlors."
In his Oct. 30 letter to Marcos, Cesar Climaco, the opposition mayor of Zamboanga, said many people believed that the coconut levy "was primarily designed to protect and promote the selfish interests of a few who are obviously enriching themselves by exploiting their closeness to your administration."
Certainly, the complexities of Unicom and the levy seem largely lost on small-time planters like Efigenio Encinares. "We cannot blame anyone except the government," he said. "They're the ones controlling the price."
The Cocofed's Lobregat takes a different view. She said farmers who oppose the levy "are being influenced by a disgruntled minority who used to control the industry."
Lobregat said her organization was looking into ways to use more coconut products at home now that foreign sales have slipped. One project is to mix coconut oil with diesel fuel and turn out something called "coco-diesel."
Lobregat also has a simpler plan.
"We are teaching our people to eat more coconuts," she said.