New markets seen for value-added coconut products

As global vegetable oil prices rise

MANILA, Philippines — The rise in vegetable oil prices in the world market is opening new doors to one of the country’s prized agricultural products: coconut.

Global vegetable oil prices –from palm, sunflower to coconut – have been on a rally as world supplies tighten amid growing demand for both household and industrial uses.

The United Nations’ Food and Agriculture Organization (FAO) vegetable oil price index in March rose by nearly 24 percent year-on-year to 161.8 points from 130.6 points in the same month last year.

The FAO attributed the increase to the continued spike in the global prices of palm, soy, rapeseed and sunflower oils due to dwindling supplies coupled by rising demand by consumers.

The effects of the hike in world vegetable oil prices were immediately felt in the country through higher copra prices and more expensive cooking oil.

The uptick in copra prices is indeed a welcome news to over three million Filipino coconut farmers, who are considered among the poorest in the country.

But on the other hand, consumers are reeling from higher prices of cooking oil. Industries, such as food and fuel, are also impacted.

But between these two sectors, an opportunity arises for both the sector and the government: to further promote coconut value-adding to advance the development of the sector and improve the welfare of farmers.

It is high time for the coconut industry to accelerate its efforts of utilizing all parts of the mature nut amid the tightening of supplies.

This is one of the recommendations made to Philippine Coconut Authority (PCA) administrator and CEO Dexter Buted to address the current coconut supply situation by the agency’s Trade Information and Relations Division (TIRD).

The recommendation noted that coconut water from ordinary copra production must be collected and processed into nata de coco to serve as raw materials for the manufacturing of coco patch and other cellulosic materials.

Likewise, small and medium virgin coconut oil producers must be trained to use their coconut water into beverages and other users, according to the memorandum from the PCA’s TIRD.

Coconut water is one of the rising export products of the country with value of shipments estimated at $67.45 million in 2023, according to industry players.

There is also an opportunity to take advantage of the coconut husks, which often go into waste, to be sold to decorticating machines or coir processing plants to produce value-added products.

Meanwhile, the coconut shell can be turned into charcoal briquettes and even into handicrafts that should be promoted under the government’s Coconut Farmers Industry Development Plant, which is bankrolled by the coconut levy trust fund.

“The increasing global demand trend for vegetable oils is inevitable. This is a big opportunity for the Philippines to further strengthen its flagship industry,” the memorandum read.

The rise in global vegetable oil prices continues to be evident in the country’s export earnings as coconut oil shipments in the first two months continue to outpace last year’s figures at even faster rates.

Coconut oil exports rose by almost seven percent year-on-year to 139,413 metric tons (MT) but its value surged by 80 percent on an annual basis to nearly $250 million, based on Philippine Statistics Authority (PSA) data.

In February, the value of coconut oil exports more than doubled to $251.12 million from $118.59 million in the same month last year, PSA data also showed.

The country’s total earnings from coconut oil exports last year reached a record-high of almost $2.2 billion, about 85 percent higher than the $1.18 billion recorded in 2023.

The country’s exports of other coconut products like shell charcoal rose by nearly 60 percent year-on-year to $76.3 million from $47.8 million. Likewise, export volume of the coconut product expanded by nearly 65 percent to 140,280 MT from 85,103 MT.

The country can also take advantage of growing demand from transport and aviation industries by boosting production of vegetable oil-based products such as coconut methyl ester (for biodiesel) and sustainable aviation fuel.

This measure complements the policy that is being mulled over by the government wherein a portion of the country’s coconut oil will be retained for domestic use to ensure supply and prevent further price spikes while shipping out excess stocks to sustain the prized export market.

Penetrating the higher value markets such as biofuels and sustainable aviation fuels would be able to replace the lost export revenues caused by the retention policy.

The PCA is in talks with industry stakeholders and relevant government agencies regarding the proposal.

The PCA has the legal mandate and basis to regulate the export of coconut oil, as provided under multiple presidential decrees including PD 1468 that created the agency’s charter and mandate.

The power was further strengthened under PD 1644 as it granted the PCA the “full power and authority” to regulate the marketing and export of copra, coconut oil and their by-products.

Neighboring countries such as Thailand, Vietnam and Indonesia have already implemented various export restriction policies to address supply shortages and rising cooking oil prices in their respective markets.

Despite an increase in production, the country’s coconut oil exports are projected to remain flat in market year 2025-2026 (October-September) at 1.13 million MT due to higher demand for biodiesel blending, according to a US report.