RP lags behind in vegetable oils trade

JAKARTA — The race for global supremacy in vegetable oils trade continues to intensify.

Over the past four decades, the production of the 13 prime vegetable oils grew, in the aggregate, by almost 3.5 times. From an annual average of 20.8 million tons in the 1960s, production soared to 72 million MT in the 1990s, or a jump of 247 percent.

The export of these oils considerably increased from 3.8 million MT in the 1960s to 24 million MT in the 1990s.

Frontliners in the race were soybean oil and palm oil.

Major soybean oil producers were the United States, Brazil, and Argentina, followed by China, the Netherlands, and India. A total of 72 million hectares were devoted to soybean production.

"With oil recovery per hectare of 0.39 MT, this translates into a global production of 27.94 million MT of soybean oil, given the favorable growing, harvesting, processing, and transporting conditions," stated Executive Director Norberto M. Boceta of the Jakarta, Indonesia-based Asian and Pacific Coconut Community (APCC).

Palm oil, whose phenomenal growth was unmatched in the past four decades, came in second in production, noted Boceta. Starting from No. 8 position in the 1960s, palm oil bolted to No. 2 position after a decade of hectarage expansion and tremendous advancement in research and development (R&D) in oil palm growing and processing.

The APCC official said soybean and palm made up close to 50 percent of the world’s production of vegetable oils.

In export, palm oil was the undisputed leader, cornering 43.40 percent of the market. Palm oil’s market share was double that of soybean oil.

Boceta, in a report, said that the two other oils whose share in production and export exceeded 10 percent were rapeseed and sunflower. The rest (groundnut, cotton, coconut, olive, palm kernel, corn, linseed, sesame, and castol oils) were minor players.

Coconut oil, considered by American and Filipino scientists and researchers as the centennial oil owing to its enormous health benefits, is right in the middle of the 13 vegetable oils.

Since the 1980s, coconut oil has been hanging on to its No. 7 position. That it slid down to No. 7 from No. 5 in the 1960s explains the structural changes occuring in the global oilsdeed market, Boceta said.

He noted that coconut oil’s share in the export market has been going down – from No. 3 exported oil in the 1970s to No. 4 in the 1980s, and finally to No. 5 in the 1990s.

This decline is explained by the stagnant coconut hectarage, senility of existing coconut stands, absence of an appreciable replanting program, on the one hand; and vigorously and consistently increasing production of major and other vegetable oils, on the other hand.

"There is no question about the leadership of coconut oil in the lauric oil sector," Boceta averred. "But palm kernel oil is slowly but surely catching up. Palm kernel oil’s rank in the export market improved from No. 12 in the 1960s to No. 6 in the 1990s, just a notch below coconut oil."

The APCC official further pointed out that with Malaysia’s aggressive and consistent development push for oil palm growing and processing, palm kernel oil is expected to improve its production in the years to come.

Looking ahead, Boceta projected that with the globalization trade, competition among vegetable oils is expected to intensify.

"Competition will heighten not just in the foreign markets where these oils are traded, shipped out, and consumed," he stressed. "Intense competition is bound to happen in the local market as producer-exporters of these oils compete with the inflow of competitively priced substitute oils and meals. In the crucible of modernizing competition, only the fittest (best quality and competitively priced) will remain in the market. Others will inevitably fall on the wayside."

Boceta also observed that with the thinning market for coconut oil in its traditional uses, the challenge is for R&D efforts to be concentrated in the production and utilization of olea-chemicals and nutricuetical products.

And the challenge for the Philippines?

The Philippines, he emphasized, still holds on to the sobriquet "World’s Coconut King." However, this "kingdom" is getting smaller.

Indonesia has dislodged the Philippines as the world’s No. 1 coconut producer. Indonesia has consistently increased her coconut hectarage (1.68 million hectares in the 1960s to 3.63 million hectares in the 1990s).

On the other hand, the Philippines’ hectarage has dwindled from a high of 3.3 million hectares in 1985 to the current 3.03 million hectares.

Apart from this decline in coconut area, a good 25-30 percent of coconut trees are senile and unproductive.

Production-wise, the Philippine share in the global production of coconut nosedived from 33.32 percent in 1960-69 to 30.83 percent in 1970-79, 27.94 percent in 1980-89, and 24.42 percent in 1990-99.

On the other hand, Indonesia’s share increased consistently from 15.33 percent in the 1970s to 27.12 percent in the 1990s.

"For coconut oil to slowly but surely regain foothold in the vegetable oil market, the Philippines should take the lead in a no-nonsense, long-term development of the coconut industry in the three functional areas of production, processing, and marketing.

Summing up, Boceta stressed: "The revitalization of the Philippine coconut industry deserves serious attention and action. The government should provide the policy environment for the private sector to undertake bold steps to produce and market high-value products which have niche markets locally and abroad."

The Philippine Coconut Authority (PCA), as the sole government agency mandated to oversee the rapid growth and development of the industry in all its aspects, should be at the forefront of all development efforts, Boceta concluded.