coconut industryd7215b868a875f8

7/28/2019 Coconut Industryd7215b868a875f8

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COCONUT INDUSTRY PROFILE

I. INDUSTRY OVERVIEW

Coconut production constitutes one of the four

major sectors of Philippine agriculture, the othersbeing rice, corn and sugar. About 85% of coconutproduction is exported in the form of copra, coconut oil and dessicatedcoconut.

The coconut industry is a dominant sector of Philippine agriculture.The country has the world’s widest geographical area planted to coconut.Of the 12 million hectares of farmlands, 3.1M hectare is devoted tococonut and 68 out of 79 provinces are coconut areas. The AutonomousRegion in Muslim Mindanao(ARMM) has a land area of 284,223 hectaresplanted with coconuts with over 32M coconut bearing trees and 88,956

documented coco farmers.

Of the five (5) provinces of ARMM, the province of Basilan has thebiggest coconut areas with 67,763 hectares, followed by Sulu with 66,902hectares, then the province of Maguindanao with 63,122 hectares, Lanaodel Sur with 55,150 hectares and Tawi-Tawi with 40,056 hectares (PCA-BAS).

II. PRODUCT/ COMMODITY DESCRIPTION

Botanically speaking, a coconut (cocos nucifera) is a

fibrous one-seeded drupe, also known as a dry drupe.However, when using loose definitions, the coconut can

be all three: a fruit, a nut, and a seed.

The term coconut pertains to the fruit while the tree is called acoconut palm. It belongs to the Arecaceae palm family and can grow up to6 meters tall. Called the "tree of life" in the Philippines, all parts of the palmhas uses -nothing is wasted even at the end of its fruit bearing years.. As aresult, coconuts can produce drink, fiber, food, fuel, utensils, musicalinstruments, building material and many more.

The wonderful fruit of the coconut palm is rich in specific fats thathave incredible health benefits. It boosts immunity, kills bacteria andviruses, protects against cancer and other degenerative diseases,prevents osteoporosis by promoting calcium absorption, slows downageing and improves the complexion. It even helps weight loss!



In the advent of the entry of palm oil in the country, many thoughtthat coconut industry is now a “sundown industry” due to anti-coconut oilcampaign (health hazard) by soybean, corn and canola lobby groups inUSA and European Union. But, with the emergence of non-traditionalcoconut products like virgin coco oil, cochin oil, geotextile and flour, the

industry is now on the rise.

III. INDUSTRY COVERAGE/STRUCTURE

As mentioned, everything in a coconut palm tree is useful from leaves tobark. The whole of the coco fruit also has so many uses, to wit:

• Coconut Meat - Other than copra and dessicated coconut, the meatcan be turned into virgin coconut oil, skim milk, proteinisolate, coconut meal and flour, feeds or pulp, cochinoil and biodiesel. A by-product of biodiesel or coco-

methyl ester is glycerin which is used as intermediateproduct for many other uses.

• Coconut Husk - From the husk, coir fiber can be produced and further

turned into geotextile as well as peat, a major component for organic plant media fertilizer. Coir fibers are also inputs to a variety of other productssuch as brushes and brooms, ropes and yarns for nets

and bags and mats, padding for mattresses, rugs,carpets and needle felts. The peat can be turned intocharcoal, composite board (particle board and cement-

bonded panels), moulded rubberized coir, communitypots for ornamentals, etc.

• Coconut Shell - The shell can be produced into charcoal and further turned into activated carbon.

• Coconut Water - The water can be processed into beverage, vinegar,

distilled water, component for tissue culture work andenzyme production.

IV. INDUSTRY PERFORMANCE



The country is only second to Indonesia as the world's top producer of coconut products, but, the Philippines is the top exporter of coconut products,59% share of the world’s coconut exports.. About 64% of the world's copra &coconut oil comes from the Philippines. Our coconut product exports is one of the top 5 dollar earners for the country, average of U.S. $760 M per year. The

industry contributes about 1.14% of the Gross National Product (GNP) andannual average of 5.97% contribution to Gross Value Added (GVA).

However, official data from the Philippine Coconut Authority showed thatthe Philippines exported in January 2009 about 58,572 MT of copra. Thisrepresents a sharp drop of 72.4% from January 2008 at 212,378 MT. Grossexport receipts during the month likewise nosedived 72.6% to USD42.825 millionfrom USD156.385 million previously, caused mainly by reduced shipment of coconut oil and low coconut oil border price.

Export of coconut oil slumped at 79.8% year-on-year to 24,579 MT from

121,766 MT; average traded price tumbled 30.1% to USD745.76/MT fromUSD1,066.74/MT FOB. Shipment of oleochemicals plunged 66.0% to 2,198 MTas copra from 6,467 MT. Desiccated coconut was the only gainer among themajor exports with delivery at 11,228 MT vastly increased by 37.4% from 8,170MT. There was no copra meal export reported for the month as against shipmentof 36,031 MT last year.

Other products performed as follows, in MT: coco shell charcoal 1,325 (-5.8% from 1,407), activated carbon 2,145 (-19.0% from 2,648), glycerin 493 (-69.6% from 1,624). Aside from dessicated coconuts, fresh coconuts exports wason the rise with 162 (+96.2% from 83) and others with 2,891 (+35.6% from

2,133).

V. PROJECTED DEMAND AND SUPPLY

Supply:

Of the 324 million coconut trees in the country, ARMM’s participation is32,860,912 million in which 85% are considered productive ( please see tablebelow). Average production of trees is 43 nuts/year. Farmers usually sell this tobig coconut buyers in the area in fresh form or in copra, where they can easilyget cash advances.

Table I. Coconut Profile of ARMM, by Province

ProvinceCoconut Area

(in Has.)CoconutFarmers(Nos.)

CoconutTrees(Nos.)

Basilan 67,763 18,872 5,919,589



Lanao del Sur 46,380 16,342 7,188,855Maguindanao 63,122 18,473 9,473,185Sulu 66,902 22,502 6,647,820Tawi-Tawi 40,056 12,767 3,631,463

T O T A L 284,223 88,956 32,860,912

Source: Philippine Coconut Authority, XIV-ARMM (2007)

Table II. Volume of Coconut Production, ARMM, 2005-Sept. 2007 (MT)

Province 2005 2006 2007 TOTAL

Basilan 160,515.36 206,159.46 50,625.87 417,300.69Lanao del Sur 108,222.05 170,338.44 44,591.00 323,151.49

Maguindanao 335,689.34 374,287.74 117,348.00 827,325.08Sulu 150,008.88 374,287.74 49,950.95 574,247.57Tawi-Tawi 155,926.00 203,538.07 33,252.24 392,716.31

T O T A L 910,361.63 1,328,611.45 295,768.06 2,534,741.14

Source: Bureau of Agricultural Statistics/PCA

Demand:

The country is top exporter of coconut products accounting about 59%share of the world’s coconut exports and second top producer of coconuts.

Our biggest market for crude coconut oil are Netherlands, Spain andUnited States. For cochin oil, Europe, USA and Japan are our biggest importers.It is also Japan and Europe as our main importer of RBD coco oil.

Apart from Europe and the US, other importers of crude coconut oil wereTaiwan , Singapore, Hongkong, and Russia. In the case of RBD oil, apart fromJapan which was the top destination, other buyers included United ArabEmirates, Bulgaria, Singapore, Iran, China), Russia, Azerbaijan, Israel,Bangladesh Pakistan, Australia and New Zealand .

Export of desiccated coconut went to 38 countries with US as marketleader, trailed by United Kingdom , and the Netherlands. Substantial volumelikewise went to France , Russia, and Belgium. Other significant importers are :

Australia, Ireland, Korea, Singapore, Germany, Sweden, Taiwan, Hongkong,Brazil, China.

Japan was the leading destination for coconut shell products exportsfrom the Philippines. An almost exclusive market for coco shell charcoal, is



Japan which gets the bulk of the total exports. Other markets are Korea andTaiwan.

Top market for activated carbon is also Japan, strong second isSingapore, followed by Korea, US and Russia. Eleven other countries are also

our activated carbon exporters.

IV. INDUSTRY STRENGTHS/WEAKNESSES

Strength:

• Second top producer of coconuts in the world

• Top world exporter of coconut products

• Emergence of non-traditional coconut products

• High cost of labor due to mandated minimum wage

Weaknesses:

• High transport cost

• Poor copra quality due to lack of drying facilities

• Limited market development and promotion

• Anti-coconut oil campaign by soybean, corn andcanola oil lobby groups in USA and EU

• Rampant cutting of coconut trees

V. GOVERNMENT POLICIES AND PLANS

A number of laws have been enacted since 1971 to institute variouslevies on the coconut industry. Notable among the various funds that have beenimposed on the industry are the coconut investment fund, the coconut consumer stabilization fund, the coconut industry development fund, the coconut industrystabilization fund and the coconut reserve fund.

The proceeds of these funds are now the subject of a controversy on theunconstitutionality on the private nature of the funds. Our courts have not

resolved the issue and the funds are still sequestered and frozen.

Moreover, it is observed that policies enforced by the government are pro-big coco producers only to the detriment of small farm landholdings. With thisdevelopment, BOI, NEDA and other business development team recommend an

Action Plan to:



1, Formulate a roadmap to guide the industry in tandem with the conductof regional and national stakeholders summits to improve the investment climatein emerging coconut products.

2. Conduct investment forums to introduce available technologies, secure

investments for SMEs and provide assistance to farmer groups in setting-upSMEs.

3. Enforce through the LGUs, PNP and PCA the law that prohibits thecutting of the coconut trees.

4. Formulate and enforce, through PCA, BFAD and FDC the productstandard for all emerging coconut products.

V. PROSPECT FOR THE INDUSTRY

The world demand for Virgin Coco Oil (VCO) is increasing due toits high lauric acid content and newfound applications in the cosmeticsand nutracurtical industries.

Also gaining popularity in the world market is coir with itsnontraditional applications. Its demand is pushed by the eco-friendlycharacteristics of the product.

Coir dust is also finding sizeable market in Europe and Canada.The bulk of coco peat exports is taken by Sri Lanka, Korea and Japan.

The international concern for the environment increases the use of activated carbon.

coconut industryd7215b868a875f8

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