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Tuesday, January 28, 2020
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PH coconut industry a ‘sleeping giant’



Second of two parts
Before I proceed, I would like to thank in the biggest way possible all the participants, both from private and government institutions, local government units as well as foreign governments, for their participation in the collective action to address the numerous issues that have cropped up recently in the agriculture sector.

Among these are containing the African swine fever and assuring better prices for palay (unmilled rice) to benefit smallholder farmers.

The institutions as well as personalities who are currently taking part in this collective action have chosen the path of cooperating with the Department of Agriculture (DA) in realizing the objective of masaganang ani at mataas na kita (high productivity/bountiful harvest and better income) for smallholder farmers and fishers, and other players in the country’s agriculture sector.

May God continue to give us strength!

Now, to the continuation of my topic from last week.

Could we call the coconut industry a “sleeping giant,” as its potential to help fight poverty in the country cannot be discounted, as coconut is third most dominant crop behind rice and corn? But while the productivity of rice and corn farms has been gradually increasing, the country’s coconut farms need a shot in the arm.

The average yield of rice farms today is about 4 metric tons per hectare (MT/ha) from approximately 3.9 MT/ha in 2015. Meanwhile, corn yields increased from 2.91 MT/ha in 2016 to 3.1 MT/ha currently.

As for coconut, yields have remained at 40 to 45 nuts per tree annually, which is below the 200 to 300 nuts recorded in countries like India and Brazil.

So, I see hope in the drive of the Philippine Coconut Authority’s PCA), an agency under the DA, to plant hybrids that have the potential of yielding 150 nuts per year. The hybrids could also yield 300 nuts per year by augmenting hybrid technology with good agricultural practices (GAP).

But the coconut industry needs another market in the Philippines, which Republic Act (RA) 9367 or the “Biofuels Act of 2006” could provide. RA 9367 provides for the increase in the coco methyl esther blend (CME) in diesel sold locally, which could result in billions of pesos in economic benefits for the industry.

A study conducted by the Asian Institute of Petroleum Studies Inc. (AIPSI) showed a 5-percent biodiesel requirement in the Philippines would need at least 360 million liters of CME per year. And to meet that requirement, about 489.8 million kilos of copra is needed.

If all diesel sold in the Philippines gets a 5-percent CME blend, that would result, based on the AIPSI study, to an import reduction in diesel imports by about 430 million liters a year. And with diesel-fed SUVs now the popular choice of affluent motorists, that figure could even be higher now, as the AIPSI study was made public by the PCA in May last year.

At present, the CME blend in locally-sold diesel is only 2 percent.

Environmental, social benefits
The AIPSI study also showed that biodiesel with 5-percent CME blend could reduce by as much as 83 percent the particulate emissions from diesel use, contributing to air pollution reduction. Furthermore, the study said the country spends as much as P16.4 billion a year to treat lung diseases and ailments, including cancer, which could be possibly reduced with the use of biodiesel with 5-percent CME blend.

The PCA estimated the total economic benefits in shifting to 5-percent biodiesel blend at about P110 billion per year, and I believe much of that could redound to the coconut farmer.

But the opposite view to increasing the CME blend in diesel is it would increase the cost of the fuel at the pump stations.

Nonetheless, the potential of increasing the biodiesel blend to 5-percent as stipulated by RA 9367 should never be overlooked, as its socio-economic and environmental impacts could also never be ignored. We also should consider that increasing the earnings of coconut household families would reduce migration towards the urban areas, which is a factor causing congestion and other social problems in cities.

Uncontrolled migration to urban areas could worsen traffic congestion, which in turn increases fuel consumption and worsens air pollution.

So, we should also take into account the social impact of increasing the biofuel blend for diesel over the long term.

Currently, copra prices are hovering from P20 to P25 per kilo nationwide, with the breakeven cost pegged at P15 per kilo. By opening up a new market for coconut farmers by increasing the biodiesel blend to 5 percent, copra prices should definitely improve.

And since the market for CME are petroleum firms, the potential for the big brother-small brother arrangement could be put in place, or organizing fragmented coconut farmers and assisting them to enter into mutually-beneficial arrangements with big millers or directly with petroleum firms. Such an arrangement should result in coconut farmers getting a fairer share in the economic benefits of increasing the biodiesel blend to 5 percent.

Industry’s position
In July this year, the Philippine Biodiesel Association (TPBA) proposed to increase the biodiesel blend to 5 percent by 2021, which I believe is doable and should be the way forward.

The United Coconut Association of the Philippines also said it was pushing for a 3-percent blend this year, 4-percent by 2020 and eventually, 5-percent by 2021.

Ironically, Malaysia and Indonesia have increased their biodiesel blend to 5 percent but using palm oil. Indonesia is even considering a 30-percent biodiesel blend, which is not surprising since it is currently expanding its lands planted to palm.

The move to a 10-percent palm oil blend for diesel sold in Thailand is also getting off the ground, a move that was made to absorb excess palm oil production.

As mentioned in the first part of this column-series, there is a European ban on palm oil stemming from environmental issues, with Indonesia’s burning of its forests to expand palm oil plantations under scrutiny. Perhaps this partly explains why there are moves to increase the palm oil blend for diesel among some Southeast Asian countries.

As for the Philippines, increasing the CME blend in diesel to 5 percent should also be viewed in the context of improving the lives of coconut farmers, of which a big percentage still belong to the “poorest of the poor.”

A ‘sleeping giant’
Along with the measures I mentioned in the first part of this column series like tapping the growing export market for coconut water and milk, intercropping in coconut farms, and planting hybrids in existing farms, I could even say the Philippine coconut industry is a “sleeping giant.”

Besides, coconut, mostly in oil form, is already one of the Philippines’ top 2 farm exports generating over $1 billion each year. Furthermore, coconut planting has not yet suffered the stigma of having a negative impact on the environment, and there are already numerous studies showing coconut water and oil are beneficial for human health.

And perhaps, CME-blended diesel will soon emerge as one of the best fuel for the vehicles, because of its potential impact on the environment through reduced particulate emissions.

So now is the time to awake the “sleeping giant” that is the coconut industry.

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Today’s Front Page January 27, 2020

Today’s Front Page January 27, 2020