Hot new coconut products to compete for dwindling raw material supply

Mike Banos

March 22, 2007

The American Chronicle

Already reeling from increasing demand and decreasing production, authorities fear the full implementation of the bio-fuels law and new sunrise products could exert tremendous pressure on the country’s coconut production and raise prices of raw materials, eroding the country’s competitiveness in the global market.

“The mandated infusion of bio-diesel will increase pressure on copra production,” noted Luis G. Cruz, regional manager of the Philippine Coconut Authority during the Quarterly Regional Economic Situationer for Region 10 recently hosted by the National Economic Development Authority in this city. “Our present production is insufficient to meet the expected demand.”

The Philippines remains to be the only country in South East Asia to mandate the use of bio-diesel and would like to cut down on the US$4 billion it spent importing 77 million barrels of crude and refined petroleum products in 2005.

In a recent presentation at a biofuels forum hosted by this city, Mr. Andy Ulgado, DOE senior science research specialist, said the mandated shift to coco bio-diesel (coco-methyl-ester or CME) would result to savings of US$420,000 for government vehicles using one percent blend at a volume of 882,000 liters and US$41 million nationwide at a volume of 86 million liters. When the law requires the CME blend to rise to five percent, the country stands to save US$205-million at a volume of 429,400,000 liters.

However, while only five percent of the country’s coconut oil production or 70 million liters of coconut oil per year are needed to supply the required one percent blend for bio-diesel, increasing demand expected from other “sunrise” products such as virgin coconut oil and coconut sugar which have tremendous export potential could also exert even more pressure on the existing coconut production in the country.

Mr. Cruz said recent tests have shown that coconut sugar has a Glycemic Index (GI) of 35 which make it ideal for diabetics and a sure winner in the booming global health and wellness industry.

Joy Aster Gamolo, project consultant (not owner and manager as earlier reported) of Sphyte Global Enterprises, which is pioneering the production process and technology of coconut sugar as the One-Town, One-Product (OTOP) for Balingasag, Misamis Oriental, says the firm is now producing 3.5 metric tons a month from its two hectare pilot area but could easily transfer the technology to more areas in the province and region.

However, the increased production of virgin coconut oil and coconut sugar could adversely affect the present production of copra and coconut oil which supplies the raw materials for a major portion of the country’s exports since trees dedicated for the production of these products would no longer be available for the production of copra.

Consolidated figures released earlier this month by the Department of Trade and Industry in Region 10 show coconut-based products as the region’s top export item with 47% of the region’s export pie. The Mindanao Economic Development Council said crude and refined coconut oil also remained Mindanao's top export items in 2006 with coconut oil accounting for 85-95 percent of total coconut exports by volume and 80 percent by value. The Department of Agriculture estimates some 80 percent of local coconut production goes to the export market .

PCA figures for 2005 show Mindanao has 49.3 percent of the country’s coconut bearing trees, yielding 58 percent (8.6 million tons) of the country’s production.

Already, PCA figures show copra production in 2006 dropping 17 percent to 2.14 million metric tons (MT) from 2.6 million MT a year earlier. PCA Administrator Oscar Guarin attributed the decrease to aging coconut trees and damage from typhoons estimated to have reduced production by at least 300,000MT.

Although the PCA petitioned the Coconut Industry Investment Fund to release P300-million for the rehabilitation of typhoon-damaged coconut farms in Bicol and Eastern Samar, only P100 million was approved, which led to a further reduction in output by 100,000MT, Mr. Guarin said.

Mindanao will play a key role in the country's bid to increase the use of biofuels although an energy department official says the Philippines has a long way to go to match other countries performance in the field.

“Although the Bio-fuels law mandates the use of bio-ethanol and coco-diesel, we are still in our infancy compared to other countries like Brazil,” said Energy Undersecretary Mariano Salazar said in a recent forum. “We have a lot of hard work ahead of us and there remains a strong opposition to the use of biofuels in the country.”