Cargill Philippines gets into post-Yolanda rehab to keep copra prices, supply stable
The two-year rehabilitation covers an initial 150 hectares in the first semester of 2014 until the target hectarage is covered in 2016. The company is banking on its initiative to ensure sufficient supply of coconut and its industrial by-products.
The Philippine unit of US-based farm products manufacturer Cargill Inc. is trying to cope with a post-Yolanda decline in copra supply across the country, particularly in key copra areas in the Visayas.
"So we would be helping farmers produce better quality copra and we can buy them at fair prices," Deepak Gupta, Cargill Business Unit Leader for Grains and Oilseeds Supply Chain in Asia, told reporters in a briefing Wednesday.
"The challenge for us now is how to maintain business profitability. And I'm pretty confident that it will continue," he said.
Yolanda destroyed 10 percent of Philippine coconut trees when it rampaged through the Visayas in November 2013. As a results, coconut industry suffered a 13.5 percent drop in copra supply until after new trees have been and started to bear fruit – roughly taking six to seven years.
Apart from making coconut oil, Cargill is in the business of producing animal feeds and raw materials like starches, thickeners and texturizers for food and beverage makers.
From a copra crushing plant in General Santos City, Cargill Philippines produces crude coconut oil and copra meal for domestic and export markets. The company buys 55 percent of its copra from Mindanao, 20 percent from the Visayas, and the rest from the Bicol region in Luzon.
"It's very clear that the supply of coconut, and therefore copra, was badly affected. This will continue to be felt in the long-term," said Cargill Philippines President Philip Soliven.
Until the local coconut industry recovers, Cargill Philippines will continue to helping revitalize copra supply in key areas, where it buys the commodity, as part of its corporate social responsibility.
"We will deal with the reduction in supply, arising from this particular crisis, so that we can continue to run a profitable enterprise," Soliven noted.
The challenge for the Philippines is really to hasten the planting of new trees, according to the company.
Cargill is establishing a nursery to grow up to 700,000 seedlings per year, and two 5,000 square-meter demonstration farms for cash crop production to help coconut farmers grow food and make some money while waiting for coconut trees to bear fruit.
Last month coconut oil reached $1, 350 per MT in the world market, compared to $1,281 per MT for palm kernel oil.
"The industry goes through cycles but this is a bit more drastic," Gupta said. "So I guess the market will adjust to the drop in production," he added.
The Philippines and Indonesia, where Cargill also operates, account for 90 percent of the coconut oil supply. – VS, GMA News