Coco, palm oil producers seek gov't protection

Coconut and palm oil producers are asking the government for higher tariff protection and the withdrawal of concessions under the Common Effective Preferential Tariff of the Asean Free Trade Association (CEPT-AFTA).

Strugging against competition and low productivity, local vegetable oil producers want the government to defer the liberalization of imports until the production of coconut and palm kernel oil has improved.

In a letter to the Cabinet committee of Tariffs and Related Matters (TRM), the Philippine Coconut Producers Federation and Palm Oil Growers Association asked for the increase in the rate of duty from 15 to 20 percent on palm kernel oil (PKO) and its derivatives in 2000.

The duly on coconut oil (CNO), PKO and its fractions and margarine had only been recently reduced last year from 20 percent to 15 percent, but local vegetable oil producers want the duty rolled back to 20 percent.

According to a source from the Department of Trade and Industry (DTI), PKO and CNO were both suffering from heavy competition from imported PKO, mostly coming from Indonesia, the world's biggest exporter of PKO.

The source said that most cooking oil sold in the local market now come from imported PKO, easing out CNO from the local vegetable oil milling market.

"Naturally, both local PKO and CNO producers are complaining because they are equally vulnerable to cheap imports," the source said.

PKO is now being produced locally but not in quantities sufficient to meet domestic requirement. Since vegetable oils are price elastic commodities that are traded at the world market, oil users prefer to import PKO which is cheaper than local CNO and PKO.

Coconut and palm oil producers are lobbying for protection, saying that government should help develop both industries, especially palm oil which has a higher yield than coconut.

United Coconut Association of the Philippines chairman Jesus Aranza said one hectare of land planted to coconut producers 850 kilograms of copra compared to five tons of oil that a hectare of palm oil could produce.

"Coconut and palm oil have to develop side by side," Aranza, said. He said the country would not stand a chance against imports, especially since Thailand was continuously improving its production.

Malaysia is actually a bigger producer but Aranza said the country also has a well-developed downstream industry that uses PKO to produce oleochemicals that are in turn used in various industries.

"Malaysia uses the bulk of what it produces," said Aranza. "We should have the same perspective for our coconut and palm oil industries."