Representatives of coconut farmers, coco oil producers and the business sector are urging the government to immediately implement the Biofuels Act of 2006 (Republic Act 9367) mandating that all diesel fuels sold in the domestic market be blended with five percent Coco Methyl Ester (CME).
The production of the 5% Biodiesel Blend, known in industry circles as B5, can help address the problem of plummeting copra prices, the stakeholders group said in a resolution dated July 19, 2018. The very low prices of copra, the resolution pointed out, is adversely affecting the livelihood of 3.5 million coconut farmers and their families as well as the coconut-based export sector.
“Increasing the current biodiesel blend to 5% as mandated by law will increase domestic crude coconut oil (CNO) utilization and thereby contribute greatly in the stabilization of domestic copra prices,” the resolution stated. Biodiesel is a blend of diesel fuel and coconut methyl ester, a derivative of coconut oil.
The resolution was issued after a roundtable discussion attended by the various stakeholders of the coconut industry. It was initiated by the Philippine Coconut Authority (PCA) as part of the agency’s efforts to effectively resolve the current copra price crisis.
Romulo J. de la Rosa, PCA Administrator, quoting industry experts, said that the increase in the demand for coconut oil brought about by the move to B5 could push copra prices to the vicinity of P30 per kilo which, in turn will translate to about P22 per kilo at the farmgate. The current price of about P13 in the remote areas is below the break-even copra production price of P15 per kilo.
De la Rosa said that the price of copra has declined because of a glut in supply in the world market of vegetable oils as well as speculative behavior by global traders reacting to announcements by the European Union (EU) that they will ban the use of palm oil in their biofuels program.
“The country’s coconut industry is highly dependent on foreign markets. Increasing substantially the domestic demand of coco products can help wean the industry from the caprices of the global vegetable oils market,” he said.
De la Rosa is pushing for more integrated coconut-based manufacturing plants which can turn out a variety of products such as bottled coconut water, coconut milk, desiccated coconut, virgin coconut oil and coconut flour from whole nuts.
“Because they have many co-products coming out of the whole nut, these plants enable the industry to absorb declining prices somewhere in the market thus ensuring stable coconut prices at the farm level,” the PCA Administrator explained, adding that in this way “farmers are less affected by price shocks and coconut farmers shall have predictable incomes which will encourage them to introduce good agricultural practices in their farms.”
But as an urgent measure, the PCA, together with farmers and industry players, are calling for the immediate implementation of the biofuels law.
Quoting a study done by the Asian Institute of Petroleum Studies, Inc. (AIPSI), de la Rosa explained that the biofuels industry would need at least 360 million liters of CME per year if it were to implement the 5% Biodiesel Blend. To produce this amount of CME, some 489.8 million kilos of copra are needed, he said.
“But aside from helping stabilize copra prices, production of B5 biodiesel can also help the country save on foreign exchange (forex) because of foregone diesel import of about 430 million liters a year,” de la Rosa pointed out from the study. This could redound to more than US$245 million annual forex savings at the present exchange rate of P53 to US$1.
In addition, the coconut industry stakeholders also stressed in their resolution that B5 biodiesel can help address various environmental and health issues. “Coco-biodiesel is considered a superior biodiesel as it has a wide boiling point range which addresses the country’s quest for clean air and improved fuel economy,” the resolution states.
The AIPSI study shows that B5 biodiesel can:
• Reduce by 83% diesel particulate emission, thereby reducing air pollution;
• Reduction of air pollutants mitigate affliction of lung cancer and other respiratory ailments that the country spends P16.4 billion a year on to treat;
• The coconut trees planted in some 600,000 hectares of land needed to produce the 360 million liters of CME per year can absorb some 12.9 million tons of atmospheric CO2, thereby helping slow down global warming.
“If all these benefits—economic, environmental and health—are monetized, these could total more than P110 billion a year,” de la Rosa said.
To ensure that coconut farmers enjoy the full benefit of good copra prices, oil millers, farmers and PCA shall enter into a tripartite arrangement for copra direct marketing whereby farmers cooperatives deliver their copra directly to the oil mills. Millers have promised to give preferential treatment to coconut farmers cooperatives. PCA shall provide shared service facilities in the form of warehouses which will be used as copra aggregating points.
The PCA Governing Board in a Special Meeting Wednesday, July 18, re-elected de la Rosa for another term of office. Under RA 10149 otherwise known as the GOCC Governance Act of 2011, as adopted in the PCA Manual of Operations, the Administrator is elected annually by the Governing Board. De la Rosa promises to pursue a holistic program of development for the Philippine coconut industry to wean the country from heavy dependence on coconut oil exports for its sustainability.