Banana chip makers seek cheaper source of coconut oil

MANILA, Philippines - Banana chip processors are seeking government help in the sourcing of lower-priced coconut oil.

According to local banana chip processors, the price of coconut oil has hit $2,000 per metric ton (MT), making Philippine banana chips less competitive in the world market.

At this rate, coconut oil, now accounts for 60 percent of the cost of producing banana chips for the eight major Philippine banana cheap processors-exporters, this means an annual budget of around $50 million for coconut oil.

Total usage by banana chip processors is around 20 million kilos of coconut oil a year.

Coconut oil cost in the banana chip-making process is expected to go up further with the Rotterdam-originating price rising to $2,260 per MT for the April-May 2011 position, according to the Asia and Pacific Coconut Community.

That price is double that of the year-ago level.

“We remain to be competitive (in banana chip price). But what happens in the international market is others will just find a cheaper substitute to banana chip for which there are,” See’s International Food Mfg (SIFM) president Ruben L. See said.

While the high price of coconut oil benefits local farmers, See said it is not good to other industries that depend on coconut oil as input.

Banana chip processors may also use palm oil as substitute to coconut oil.

Its price is cheaper than coconut oil. But its supply is mostly imported, thus benefitting other countries’ farmers.

See said the government should look more closely at raising coconut production.

Unfortunately, production has stayed at the two million MT level despite a plan by the Deparment of Agriculture-Philippine Coconut Authority (DA-PCA) in the early 2000’s to double this production before the year 2010.

“There’s so much lost opportunity. Even if we just produce coconut and banana all over the country, that will already be beneficial for us,” said See.

Despite this input constraint, the banana chip faces many expansion opportunities globally, See said.

One potentially big market is Iran. Other potential markets are in other Middle East or nearby Asian countries.

SIFM recently expanded in Saranggani where it put up a 15-metric ton per day banana chip processing plant.

The plant sources saba (cardaba) bananas from 300 hectares of banana plantation within the area.

The company is also planning to put up a banana chip manufacturing plant in Visayas, probably in Iloilo or wherever there is a rich source of saba bananas.

The company has two other manufacturing plants in Mindanao-one in Davao City, the other in Davao Oriental.