Agricultural Foreign Trade Statistics.

BRIEFER ON THE COCONUT TRADE PERFORMANCE IN Q1 OF 2023

The coconut industry has been the home of the country’s agricultural export champions. In the past decades, coconut exports contributed an annual average of 35% to the country’s total agricultural exports. In 2022, coconut exports amounted to USD 3.2 B accounting 43% of the country’s total agricultural exports.

In 2023 however, the country’s coconut exports experienced a sharp decline in volume and value from January to February as compared to the same period in 2022. The commodities include traditional coconut exports such as copra meal which shrunk the most at 87.8%, followed by oleochemicals at 54.7%, and coconut oil (CNO) at 47%. Other coconut exports including VCO, activated carbon, and fresh coconuts, also experienced a downward trend.

The overall decline in coconut exports was influenced particularly by the CNO which is our largest coconut export in terms of volume. Comparing this trend in 2022 performance, the abnormal increases in vegetable oil prices during the first semester of 2022 were generally driven by the Russia-Ukraine conflict and Indonesia’s temporary ban on palm oil exportation. In the second semester, the prices of vegetable oils went down as Indonesia’s ban was lifted and supply of palm oil increased and stabilized starting May 2022. Consequently, domestic copra prices followed a downward trend as a domino effect of the global price trend.

The volume of purchases of coconut oil increased during the last quarter of CY 2022. However, the supply of palm kernel oil (PKO) likewise increased in May 2022 until November 2022. The high inventories coupled with the consumer’s reduction in spending, resulted to the reduction in exports in the first quarter of 2023 which cuts across all products.

ANALYSIS AND RECOMMENDATIONS:

The decline in the global prices of coconut oil has a domino effect to the domestic prices of copra. Consequently, the sustained decline of copra prices will have a significant impact to the livelihood and income of the coconut farmers, traders, oil mills, and downstream industries in the coconut oil value chain. Oil millers may reduce purchases so copra will be stored for long in traders’ warehouses and would entail dry matter losses. Thus, the government and the private industry players should work together to implement the necessary safety nets to minimize the impact to the industry. Following are the recommended strategies:

Expand Domestic Trade while Maintaining International Presence. It is recommended to expand domestic utilization of downstream products which have both domestic and export potentials such as oleochemicals and coconut methyl ester (CME). Advocate the increase from 2 to 5% of biodiesel blend. Extensive information campaign on the health benefits of coconut should be done and the issuance of an Executive Order for the use of coconut foods in government functions should be facilitated. A unified effort among government agencies such as DEPED, DOT, DSWD to prioritize coconuts in their programs and projects and for DOST to prioritize coconut in the researches to establish and provide scientific basis for health benefit claims.

Regulate Palm Oil Importation. Unregulated importation of palm oil for animal feed ingredient but used for other applications has deprived the country of revenues from value added tax (VAT) and to the disadvantage of the coconut oil whose market share was eroded. Imposition of appropriate value-added tax (VAT) shall enhance fair competition and strike a balance between coconut and palm oil in terms of pricing.

Intensify Value-addition with Optimized Raw Material Recovery and Improve Resource Utilization. Optimizing recovery of materials from farm-based processing and converting them into value-added products such as coconut water processing into vinegar, aminos, nata de coco, beverage, or liquid fertilizers, and husk into boards, organic fertilizers and erosion control materials should be promoted and supported. Consolidation and clustering approaches coupled with good practices and standards conformance from farm to markets should be used to address issues on farm labor shortage, material losses, costly operations among others. This will increase operation efficiencies and optimize farmers’ benefits from their coconuts.

COCONUT TRADE PERFORMANCE AND MARKET TRENDS

AGRIBUSINESS OPPORTUNITIES IN THE COCONUT INDUSTRY