Analysis of Philippine Coconut Industry

Problem, Strengths and Weaknesses, Objectives,

Area of Consideration, Recommendation and Conclusion
By: Jamielee B. Pacumio
Submitted to: Mr. Fracisco Y. Pacifico

I. Problem of Philippine Coconut Industry

a. Top Level Commitment
The top level commitment on this industry is not seen due to the absence of a
sustained roadmap which is manifested in continuous changes in Philippine Coconut
Authority (PCA) management, and negligible funds budgeted for development.
The constant change of leadership affects the continuity of the program of PCA,
in which a lack of political resolve by past administration has led to a lack of serious
development program.
b. Financing Development
Serious shortage of long term financing for permanent crops remains a significant
limitation on development, and on crop diversification.
c. Resource Allocation Criteria
Coconut plantations host the largest expanse of idle and underutilized lands today.
The potential for investment and job creation are high. But rice receives by far more
budget allocation than coconut on per ha or per farmer basis. There must be resolve in
letting market forces decide on what to plant and where to plant in the context of
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replanting, conversion or intercropping. Intercropping in which farmers plant different

variety of fruits and vegetables aside from coconut to have an extra income and to sustain
their daily needs.
d. Institutional
The Philippine Coconut Authority has been given permission to grant leadership
in the development of the industry. But , n the past year the growth of the industry is too
much delayed due to low level of investments, so the is under-funded in which it only
funded short duration of programs that has been unable to generate sustainable impact on
the development.
e. Implementation
Some sectors felt that program implementation in the industry could benefit by
engaging the stakeholders the local government unit (LGU) , the private sector, the civil
society, and the academe. With respect to LGU participation or cost sharing, there
appears to be limited involvement in replanting and rehabilitation. LGUs prefer
investments in infrastructure and buildings as well as short gestation projects. Moreover,
fourth to sixth class LGUs with low incomes have little resources for agriculture
development.
f. Engaging Civil Society
Majority of the civil society organizations (i.e., NGOs, POs, producer groups, etc)
appreciate the need to use the levy funds to address the declining farm productivity. They
suggested in a workshop in Mindanao not only to focus on replanting and production
issues, but, more importantly, examine the whole gamut of problems besetting the sector
such as the slow implementation of agrarian reform, the potential of downstream and
upstream activities, the need to dismantle the existing monopolies in the sector, and the
abject poverty that is prevalent among the coconut-dependent households
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g. Global Market Access

The campaign of overseas soybean interests has hurt the coconut oil (CNO) in the
US food usage. Labeling requirements of trans-fatty acids in consumer products and
wrong attribution of the negative impact on all saturated fats, including medium chain
triglycerides from coconut oil, have affected the industry. These non-tariff barriers will
not abate as lowering of tariff barriers makes many countries impose technical barriers to
trade.
h. Laws
The low intensity approach to solving the problems of the coconut industry
meant lost opportunities in the areas of poverty alleviation, global competitiveness and
sustainable development in the last two decades. It is a sad commentary of what
development management is not. Coconut provinces continue to be equated with high
poverty and, in many cases, insurgency. The coconut industry is not globally competitive
due to failure to put in place competitive strategies and actions. Agriculture is under
threat as many coconut regions are unable to provide good incomes. In the process, outmigration becomes the option for the rural poor.
i. Poverty Alleviation and Social Equity
Based on Human Development Report, regions with excessively coconut
areas tend to have a high poverty incidence. As there had been little changes in coconut
farm productivity through yield and/or intercrops, success in poverty reduction appears
limited, except in areas where there are alternative employment opportunities like Davao
City and Laguna.

The slow growth in production has affected raw material supply to agri-based
industries such as coconut oil milling and activated carbon. In turn, this affected
investments and job creation.

j. Global Competitiveness
Global competitiveness is defined as the ability of a product to sustainably
compete with exports in the global market or with imports in the local market. As most
coconut products, are exported, the premier measure is cost competitiveness. A sound
strategy for competitiveness is coconut-based farming system comprising two elements:
replanting with good clones; and market-based intercropping with other crops and/or
livestock. Marginal lands with senile trees, if not suitable for intercrops because of
distance from market and other constraints must be shifted to other use such as timber or
fruit trees.

II. Strengths and Weaknesses of the Industry

a. Strengths
-

The inputs of coconut industry are relatively strong due to availability of good clones.

The farms production is good because of favorable climate in most areas and the
availability of technology is at hand.

The logistic in marketing system and export facilities are established.

There are many mills and refineries present in the country.

There is a lot of other value adding to coconut industry because of its resourcefulness;
a lot of products can be created with the coconut.

Theres a definite institutions on Philippine coconut industry which are multistakeholders.

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The Philippine coconut industry shows stable and growing export and domestic
market.

There are a lot of good prospects for value added products like Virgin Coconut Oil,
geotextiles, etc.

There is a demand for alternative fuel which is the coconut methyl ester-biodisel

The consumption of oil domestically is low

b. Weaknesses
-

Only 1% of the areas are planted with good clones.

There is no irrigation system in coconut plantation areas.

There are 30% of standings trees which are senile or over 60 years old.

Only 1% of the coconut farms apply fertilizers.

Farmers are farming in marginal lands.

Farmers are intercropping in only 30% of the land.

Logistics has a high assembly cost due to poor roads and fragmented, small holdings.

The export facilities are multi-layered marketing channels.

There are many underutilized mills and refineries in the country.

There is shortage of raw materials, high assembly cost, low quality of copra in
refineries.

The cost of raw materials in other value adding products that can be made from
coconut is high.

There is frequent change in leadership of the Philippine Coconut Authority.

The global image in supply reliability is poor.

There is a lot of competition from other tropical oils such as palm oil and palm kernel
oil.

There is unregulated cutting of trees.

III.Objectives
-

To unite all elements of the coconut industry and work for their common good.
Promote harmonious coordination among the various sectors of the industry for the
common benefit of the producing, trading, processing and consuming public.

To inculcate and preserve high standards of honor and integrity among its members
and to promote just and equitable principles and practices of trade.

To serve as a center of information about the coconut and related subjects.

To provide a forum for discussion of problems, issues affecting the coconut industry
and/or any of its sectors, inter alia.

IV. Analysis or Area of Consideration

-

Formulations of solutions or long term goals that will help the industry have a

sustainable development.
Formulation of regulation that farmers should do intercropping to maximize the land
area of coconut farm not just for the coconuts but for other fruits and vegetables that
can help the farmers alleviate their life and have an extra income besides from

coconut farming.
To present an opportunity the members of PCA and the farmers to discuss the
problems which affect the coconut industry and have a possible solution that would

hamper the problem.

Formulation of policy that in every farm, there should be value adding products using
the coconut shell, husk, copra meal, to maximize the use of the tree and not waste
anything of it because almost all of its parts is usable.

V. Recommendation and Alternative Action

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Formulation of industry roadmap consistent with the Agriculture and Fisheries

Modernization Act (AFMA) and Medium Term Development Plan (MTDP) goals
which will cover replanting, fertilization and intercropping targets subject to market
and economic returns.

Allocate Financial Management Association (FMA) budget for coconut roadmap

without waiting for the coconut levy resolution.

Install a continuous quality improvement program for copra, products and

byproducts.

Strengthen the Philippine Coconut Association as a major implementation agency.

Engage in Civil society organizations such as NGOs, Pos, producer group, etc. in
roadmap development implementation, and monitoring.

The coconut industry is a study in contrasts. The coconut farmers form among the
largest stakeholders in Philippine agriculture but are among the most impoverished.

Land diversification potential is among the highest but derives among the least
support from the government. If the Government desires high growth in agriculture
and job creation in the medium-term, it has to look at the coconut lands as a major
vehicle.

Planting and replanting program. The industry has to expand the planting and
replanting program to increase production to supply a stable and growing market.
This must be done in strategic areas identified as having the most potential for
growth.

Establish standards and enhance marketing given the prospects of value added
products, it is imperative that national standards be established which are acceptable
in the international markets. Corollary to attaining this is the creation of village level
processing plants as close to the market to arrest quality deterioration.

Expand production through the use of coconut oil for biodiesel will need a few
thousand hectares given a 1% blend of biodiesel and petroleum diesel. To avoid
compounding the already poor supply reliability in the export market, there must be
expansion of production.

VI. Conclusion
Philippine Coconut Industry is one of the major sources of foreign exchange and
the Philippines top export earners. It is among the top ten export produce of the country as
exhibited by the good export performance of both traditional and non-traditional coconut
products. In this case, many products can be made using coconut shell, husk and copra meal. It
can have a lot of value adding products like desiccated coconut milk & powder, buko juice,
virgin coconut oil, delicacies, biodiesel, etc. About one third of the countrys arable agricultural
land or 3.26 million hectares is planted to coconut representing sixty four out of total seventy
nine provinces, and 1,195 out of the 1,554 municipalities in the country. It provides a sustainable
income source for Filipinos by way of employment generation through its many programs. But
theres a lot of problem facing this coconut industry that the government or the private sectors
should change and have a sustainable development by implementing such policies that will
trigger the increasing of problems with this industry.