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The Philippine coconut industry in the long term

(Part II and conclusion)

Published

Dr. Emil Q. Javier

Dr. Emil Q. Javier

Our coconut industry is woefully distressed. Not only is its productivity low and stagnant, it is losing ground in the highly competitive global vegetable oils market.

The coconut levy funds (CLFs) which are now worth about P100 billion upon which coconut farmers had been pinning their hopes for salvation still remain frozen in the national treasury. The bill pending in Congress that will finally provide for the utilization of the CLF entrusts the management of the funds with the Philippine Coconut Authority (PCA). However, PCA’s charter will have to be amended and that could very well take a year, or forever, if the 45- year saga of the CLF is any indication.

In order to bring down cost of diesel to help temper inflation, there is a threat to repeal the Biofuel’s Act which mandates the use of coconut oil-derived biodiesel. This will impact negatively on our fledging oleochemical downstream industry.

And just yesterday, the coconut industry suffered yet another social media blast in the continuing polemic of the US soybean lobby against coconut oil. A supposed quote from a Harvard researcher that “Coconut Oil is Pure Poison” has gone viral. This contention ignores the counter factual that the fatty acids in coconut, unique among vegetables oils, are medium-chain fatty acids which are readily digested and metabolized as energy, and NOT DEPOSITED AS FAT in the liver.

All the above conspire to make our coconut industry a pariah of sorts.

This two-part column elaborates on why the pariah appellation is undeserved and more importantly how we can turn things around moving forward. What the coconut industry needs is a coherent, integrated and sustainable long term plan which takes into account the challenges and opportunities, present and future. This column offers eight considerations around which we can build such long-term plan.

The first four considerations were dealt with in the first part, namely: 1) strong rationale for continuing support to coconut for reasons of ecology, food security, livelihoods, culture and tradition; 2) deteriorating position of CNO in the global vegetable oils market, and hence the need to lessen dependence on CNO as commodity export; 3) consequently, the challenge to aggressively diversify into other products such as virgin coconut oil, coconut water, and direct exports of young coconuts (buko) which are higher valued, and for which there is an expanding export market, and; 4) relatedly, the opportunity to increasingly switch into wet processing (instead of copra processing) to exploit the full value of all parts of the coconut, namely coconut water, coconut sugar, coconut fibers and geotextiles, activated carbon, virgin coconut oil, desiccated coconut, and coconut flour; which in turn will require village-level, moderately-sized processing hubs (small- to medium-scale countryside enterprises) which will generate more rural employment and broaden ownership of the coconut value chain (inclusive growth).

Intercropping for greater
productivity and farmers’
incomes and higher employment

The fifth consideration is the opportunity to generate more farm productivity and incomes and higher employment by intercropping. Coconut lends itself well to a multi-canopy type of agriculture. There is much sunlight filtering through the coconut canopy all year round to raise decent crops of annual crops (corn, vegetables, legumes, ornamentals and herbal crops) as well as perennials (bananas, pineapple, papaya, coffee, cacao, black pepper). Provided markets could be arranged for these intercrops very often they will be more profitable than coconut itself.
Only one-third of the three million hectares devoted to coconuts are intercropped. The entire bureaucracy of the Department of Agriculture (DA), not just PCA, needs to be mobilized to realize the additional productivity from the two million hectares of underutilized coconut farm lands.

Raising primary productivity
with hybrids and
adequate fertilization

All along, the basic challenge is the low primary productivity of the coconut palm itself. Our national average yield is only 43 nuts per tree year equivalent to 0.75 ton copra per hectare per year. Current selected tall varieties like the Laguna Tall, San Ramon and Baybay with proper fertilization and weeding are good for 2-3 tons copra per hectare per year. The 12 hybrids developed by PCA researchers can produce as much as 4-5 tons copra per hectare per year.

We should therefore persevere in the replanting program with mass-selected selected tall varieties and dwarf x tall hybrids (6th consideration). Priority are the 68 million unproductive senile palms among the total coconut population of 324 million trees.

Producing dwarf x tall coconut hybrids is relatively simple. The PCA experiment stations, if properly staffed and funded, can produce one million hybrid seedlings a year. However our goal should at least be 10 million hybrid seedlings a year. For this we need about 1000 hectares of hydrization gardens. We will need 250 farmer cooperators each with four hectares, strategically dispersed in the major coconut growing provinces. At P60 per hybrid seedling, the annual cost is P600 million. The P600 million per year can be sourced from the proceeds of the P100 billion Coconut Levy Fund.

Downstream integration
with oleochemicals production

Vegetables oils are valuable raw materials in the production of specialty chemicals. There is a whole family of specialty chemicals that can be derived from CNO which have valuable applications for various industries such as personal and health care, plastics, fuels and lubricants, food ingredients and other industrial uses. Since they come from renewable sources they are increasingly preferred over those derived from oil and gas fossil sources.

However, our domestic oleochemicals industry is up against stiff competition from behemoth conglomerates in Indonesia and Malaysia whose raw material is palm oil (which is cheaper than CNO) and whose operations are seamlessly integrated with huge oil palm estates. Since we cannot compete head-on with the oil palm conglomerates we should focus our limited resources to specific products/applications.

The industry deserves the full support of government by way of fiscal/tax incentives, public research and product development support, and export promotion. The least we can do is patronize the coconut methylester (CME) additive to diesel not only as support to our domestic oleochemical industry but also as a way of reducing air pollution, further minimize our contribution to global warming and improve the fuel efficiency of transport.

PCA is the key

The eight and last consideration is the imperative to strengthen the institutional capacity of the PCA. Turning around the coconut industry is next to impossible without a strong national agency providing central direction and proper coordination of government, farmers and private sector initiatives.

In does not make sense to have two national agencies responsible for the coconut sector. Unless otherwise changed by Congress, that agency is The Philippine Coconut Authority (PCA).

However, PCA needs to undergo reforms in four aspects: First, revolving door political appointments of the PCA administrator must cease. The appointment of a career administrator with a fixed term of, say, three years but renewable upon meritorious performance will provide stability to the agency. Second, need to strengthen business management and scientific expertise in the PCA Board by the appointment of a proven industry executive nominated by the Management Association of the Philippines (MAP) and of an eminent scientist/technologist endorsed by the National Academy of Science and Technology (NAST) as additional independent directors.

The third reform has to do with PCA’s research and development function which has deteriorated over the years after the old stand-alone scientific organization – the Philippine Coconut Research Institute – was absorbed into PCA. The coconut industry must continuously innovate to stay competitive and survive. PCA needs to undertake a massive recruitment and training program of researchers at the graduate level. The PCA experiment stations and research laboratories should be modernized and appropriately funded.

In fact the better option is to resurrect the old Philcorin and administer it as a separate research entity like PhilRice and the Philippine Carabao Center which R:D units under the Department of Agriculture had been doing well.

And the fourth, is to resolve the impasse and finally return PCA under the supervision and control of the DA. PCA cannot do it alone. The coconut industry will benefit greatly from the complementary technical support of the Bureau of Plant Industry, Bureau of Soils and Water Management, the National Irrigation Administration and the Agricultural Training Institute (for extension) all of which are in the DA.

*****
Dr. Emil Q. Javier is a Member of the National Academy of Science and Technology (NAST) and also Chair of the Coalition for Agriculture Modernization in the Philippines (CAMP). For any feedback, email eqjavier@yahoo.com

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