The Philippine coconut industry

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) latest Industry Trends, a regular publication produced by IDEA, the coconut tree, long praised for the seemingly endless list of products derived from its various parts, the coconut tree has been dubbed as the “tree of life”. From its roots to its trunk to the leaf fronds and fruit, these have various uses in medicine, food, industry, etc. The Philippine coconut industry comprises activities that include cocon–growing, copra making (dried coconut meat), tuba–gathering (fermented coconut sap), and coco–shell charcoal making in the farm; production of refined and crude coconut oil, copra cake, meals and pellets; and wholesaling of coconuts and coconut by–products. These are classified under Codes 01300, 15152, 15800, and 51213 of the 1994 Philippine Standard Industry Classification (PSIC) Codebook.

Furthermore, according to IDEA, the main industrial use of coconuts is still copra production, and the coconut industry can be categorized into three main sectors that follow the entire supply chain—coconut farming, copra/coconut milling, and copra trading. Coconut farming includes of all activities by the farm owner, coconut farmers, and farm workers directly related to the production of the crop. This group has the highest level of employment among the three sectors. About 90% of the total number of workers in the industry is employed in the farming sector. Meanwhile, copra/coconut milling deals with the extraction of coconut oil from copra. In the Philippines, there are around 65 coconut oil mills each with a daily capacity of 2 to 1,000 MT of copra; making the country as the world’s biggest coconut oil supplier for the manufacture of food, personal care, detergent goods, and animal feed. Lastly, copra trading includes trading activities—may it be wholesaling or retailing—where domestic traders purchase copra from coconut farms, which they in turn sell to end–users; which includes coconut oil millers, coconut desiccators, and copra exporters.

Likewise, according to the same published report, by any measure, the coconut industry is a major sector of Philippine agriculture. Growth in the coconut industry has historically shown more variability compared to the growth rates of both the agriculture sector and GDP in general. Production tends to be sensitive to economic shocks due to the industry’s dependence on the global market. Moreover, the country’s exposure to erratic weather patterns and natural calamities also affect industry output.

Overall, the industry’s lackluster performance is perhaps best explained under the context of stagnant yields. Data from the Bureau of Agricultural Statistics (BAS) reveal that while coconut production has been inching up in the five–year period between 2005 and 2009, yield per hectare has barely changed from 4.57 MT in 2005 to 4.61 MT in 2009. The reasons behind this may include planting density which has also stagnated during the period, failure to use agricultural inputs such as high–quality planting materials and fertilizers, the use of marginal lands for coconut planting, and periodic pest outbreaks and weather disturbances, according to IDEA.

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