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Economy

Steps to cushion farmers vs drop in copra prices readied

November 11, 2008 2:14am
DAVAO CITY, Philippines — The Davao regional office of the Philippine Coconut Authority (PCA) is introducing projects to help farmers reeling from a recent drop in copra prices as world market demand shifted away from coconut oil, which is extracted from the dried coconut meat.

Copra prices dropped to as low as P15 per kilogram last week from as much as P45/kg three months ago.

The situation is paralleled by developments in Eastern Visayas — which joins Davao and Zamboanga Peninsula as the top three copra-producing regions of the country — where prices registered an even bigger drop to a range of P14/kg (in rural areas) to P17/kg (in key cities) from P45/kg in the same period.

In 2001, copra farmgate prices in Mindanao dipped to as low as P5/kg, spurring the government to offer subsidized programs on food and education as well as free insurance in affected areas.

This time, the Davao regional government is preparing livelihood projects to augment farmers’ income. The latest of these projects, said PCA regional chief Lornito U. Orillaneda, is raising Sasso chicken. "What the farmers will just do is visit our office to register and then we will give them the chicks," Mr. Orillaneda said in an interview, adding that the agency will train these farmers on the basics of raising chicken.

Mr. Orillaneda said other mitigation projects to help farmers cope with volatile copra prices include giving incentives to farmers who plant new coconut trees, distributing organic fertilizers in order to raise yield, intercropping coconut farms with high-value crops like cassava and banana, and growing catfish.

"We need to help the farmers increase their income by not depending on their copra. They must realize that the copra is also competing with other [plant-based] oil products and is dependent on the global market," Mr. Orillaneda explained.

He said the region still hopes that copra prices will rise to at least P25/kg before Christmas.

Coconut is Mindanao’s largest export commodity, cornering roughly 40% of the island’s total receipts. About half of the country’s coconut lands, or up to 1.2 million hectares, is in Mindanao.

Meanwhile, a report from Palo, Leyte quoted from an e-mail Emmanuel Licup, chief operating officer of SC Global Coco Products, Inc., sent to the PCA regional office there to report the huge drop in copra prices.

Joel Pilapil, PCA assistant regional manager for Eastern Visayas, said his office is verifying the situation of the estimated 1.7 million coconut farmers and their dependents in the region. But he said SC Global’s observation is credible because the company has been trading copra for a long time. SC Global’s plant in Baybay City in Leyte, which started operating last year, can produce up to 39,600 metric tons of coconut oil a year for export.

Mr. Licup explained in his e-mail that the unusually high copra price earlier this year — "at a staggering P43 per kilo" — made coconut oil, which is extracted from copra, less competitive than alternatives like palm, soya and rapeseed oil. The huge price difference, in turn, spurred a swing in international market demand away from coconut oil.

"The price swing from June to October was mostly correctional. While the world market was already going down, our domestic market tried to keep it high to minimize losses from purchases of high-priced copra," Mr. Licup explained, adding that prices should have come down sooner since "the world market was already showing signs of a bearish scenario as early as September."

He noted that the coconut oil industry is now "seemingly panic as to how to unload a very huge inventory."

"We are trying to gather facts from oil millers so that we can tell farmers what’s really happening in the global market," he said. "Thissituation pushed millers and traders to sell [at a loss] at very low prices." — Sarwell Q. Meniano and Carmelito Q. Francisco, BsuinessWorld
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