Copra prices slump on supply glut

The domestic price for copra has fallen by 82 percent as of this week as the coconut industry continued to suffer from a supply glut in the world market.

Making it worse is the fact that the decline coincided with the peak of the crop’s harvest season, which happens between the months of June and October.

As of this week, the average farm-gate price for copra slumped to P20.89 a kilo from P38.18 in the same period last year. Consequently, average mill-gate price for copra has declined by 77 percent to P25.87 a kilo from P45.94 a year ago.

United Coconut Association of the Philippines (UCAP) president Dean Lao said in a phone interview that this downtrend would continue unless demand for the crop picked up.

Stakeholders of the industry have been calling on the government to raise the coco methyl ester (CME) content of biodiesel to address the issue.

“We need a solution of a huge scale and the biodiesel blend is the fastest and simplest way to do it,” Lao said. “So long as supply continues to grow and demand is not picking up, prices will continue to go down.”

With the current prices for copra, Philippine Coconut Authority (PCA) administrator Romulo dela Rosa said farmers have now reached a “breakeven point,” noting the importance of a government intervention at the soonest possible time.

PCA has been proposing to raise the CME content of biodiesel to 5 percent from the current 2 percent to boost domestic use of coconut oil.

Under the government’s Philippine Energy Plan 2012-2030, Philippine diesel should contain at least 5 percent CME by 2020 or before the end of President Duterte’s term.

According to Dela Rosa, the proposal has already earned the nod of both the agriculture and finance departments, but noted that resistance from independent oil companies has been delaying its approval.

With the proposal in limbo, coconut farmer groups all over the country have been conducting forums with the help of PCA to push for its implementation, while the administrator has been asking that the issue be taken up in the Cabinet.

“These oil companies want to suspend the implementation because they are worried about the additional cost of shifting to CME,” Dela Rosa said.

“However, we should also look at the contribution of our coconut farmers to the national economy if they would be given this opportunity. We all know coconut farmers are among the poorest Filipinos,” he added.

Dela Rosa also noted that increasing the local component of the country’s biodiesel “makes more economic sense” when world prices of petroleum go up.

Among Asean countries, the country’s biodiesel has the lowest percentage of vegetable oil blended to regular diesel. In Malaysia and Thailand, biodiesel should contain at least 7 percent palm oil while Indonesia’s biodiesel contains 20 percent.