COMMENTARY: Catching up on Palm Oil

DAVAO CITY (MindaNews/31 May) — There has been a lot of buzz lately on palm oil in the local press. The Davao City Agriculturist Office announcing the coming in of South Korean investors interested in palm oil. The Mindanao Development Authority reporting for weeks its so-called business matching with Malaysian investors since November last year. The Metro Pacific Group of Manuel Pangilinan and its parent Indonesian company’s Indofood undertaking soil tests in Davao Oriental. Thailand’s Univanich partnering with the Taliño family for an $10 million oil mill in Carmen, North Cotabato.

And there is the reaction from the local think tank Alternate Forum for Research in Mindanao (AFRIM) warning about the adverse effect of palm oil on the local coconut industry.

Another significant goings on not yet on the public radar is the drafting of the Philippine Palm Oil Industry Roadmap spearheaded by the Philippine Coconut Authority (PCA). Its latest meeting was held in Davao City last May 24 and the next one would be in Butuan City on June 14.

Why the buzz, why the increasing interests in palm oil?

Palm Oil

Palm oil is now the world’s largest contributor in the vegetable oil market, accounting for over 52 % of the global supply. Demand for it is also increasing because of its industrial use as biodiesel.

Its plant, Elaeis guineensis, originated as a wild forest tree in tropical West Africa. Oil palm is what is refered to as the plant while palm oil, its product. There are two types of vegetable oils derived from the oil palm fruits. The red-orange colored palm oil out of its pulp, and the kernel oil from its nut. Kernel oil is similar to our coconut oil. They are the only two lauric oils in the world.

The current popular oil palm variety is Tenera, a cross between the thick-shelled Dura (from Africa) and pulpy Pisefera (from South America). Germinated seeds in the country are supplied mostly by Thailand, Costa Rica and Papua New Guinea.

The imported germinated seeds grow in the nursery for 10 to 12 months before they are planted in the field. It grows another two years before it yield fruits in bunches. The fresh fruit bunches (FFB) need to be processed in the milling facilities at least within 24 hours from harvest. Otherwise, there will be shrinkage in its oil content and its fatty acid would increase.

The oil palm trees were first brought by British and Dutch colonizers as a road ornamental plant in Malaysia and Indonesia similar to tall palm trees that line up the highway going to Tagum City. The first commercial plantation to extract palm oil was set up in Selangor, Malaysia in 1917.

The oil palm grows best in areas with at least 1,800 mm of annual rainfall particularly 10 degrees south and north of the equator. In the Philippines, this is suited in Mindanao and parts of Bohol, Leyte and Palawan.

Our ASEAN neighbors Indonesia, Malaysia and Thailand are the world’s three biggest oil palm planters and palm oil producers. They account for over 90 % of the world production and export. Indonesia now has about 8 million hectares planted to oil palm; Malaysia, 5 million hectares, and Thailand, one million hectares.

Philippine experience

The Philippines is ranked only No. 16 in the world with about 53,000 hectares, although industry and government sources say as much as  one million hectares can be planted with oil palm.

The first oil palm in the Philippines was planted during the early 1960s in Basilan. But due to the absence of a milling plant, the venture did not prosper. Kenram in Isulan, Sultan Kudarat was the first plantation set up during the early 1970s with milling facilities. During the martial law period in the early 1980s, the joint venture of the state-owned National Development Corporation (NDC) with Malaysia’s Guthrie developed the plantations and mills in Trento and San Francisco, Agusan del Sur..

There was a lull since then. Only during the past ten years through the efforts of the private sector Philippine Palmoil Development Council, Inc. (PPDCI) did palm oil planting gain a new momentum in the country.

With limited palm oil production and the coconut industry suffering from many problems such as senile trees, low productivity, lumbering of coconut trees, the country has been importing a lot of vegetable oils. If you look at the grocery shelves today, only one of 10 displayed cooking oil brand is coconut oil. The rest are canola oil, corn oil, soybean oil, olive oil, peanut oil, and palm oil, almost all imported.

Last year, the country imported about 550,000 metric tons of Crude Palm Oil (CPO) not counting the CPO and refined cooking oil that cross illicitly our porous borders with Malaysia and Indonesia. Our importation last year of palm oil alone is valued at about P20 billion. Dr. Pablito Pamplona, secretary of PPDCI, estimates our importation of palm oil could reach P54 billion by 2016.

Catching up

A combination of government priority on coconut oil, prejudice on palm oil, skewed anti-poverty and agricultural policies and other factors have led the country being left behind by our ASEAN neighbors.

Thailand started its oil palm seriously only in 1969 and yet it has now become the world’s 3rd largest producer,  beating Africa’s No. 1, Nigeria, and South America’s No. 1, Colombia.

Papua New Guinea, also a relative new comer, is now planting two million hectares. Brazil is planning a similar area, but mostly for biodiesel. Many countries in Africa as well as India, Myanmar, Laos and Cambodia are also cashing in on the palm oil boom.

With the government’s renewed efforts to revitalize the ailing coconut industry with the forthcoming infusion of about P100 billion coconut levy funds, palm oil should be given an equal treatment. Otherwise, we shall be left behind even more.

With President Aquino prefering to go for the so-called “whole nut value chain” for the coconut industry which calls for the development of the coco water for juice, its soft meat for skimmed milk and its left over as coco flour, then we shall have nothing left for copra to produce cooking oil.

The best alternative, therefore, is palm oil.

Indeed,  the government should develop the high potential of the country for higher value added products of the coconut such as oleochemicals and leave to palm oil the supply for cooking oil, margarine and lard. Oleochemicals are used for higher value added products such as in pharmaceuticals, cosmetics and other industries.

Both the coconut and palm oil are under the mandate and jurisdiction of the PCA.  But owing to the gap between the two – coconuts planted all over the country across three million hectares and oil palm concentrated only in a few provinces in Mindanao,  Bohol and Palawan, and planted only across 53,000 hectares, the priority of the PCA has always been in favor of the former.

But both the PCA and the PPDCI say the two complement and not compete. In fact, there is a Palm Oil Development Office based at the coconut experimental station in Bago Oshiro, Davao City and PCA nursery stations in North Cotabato and Zamboanga devoting attention to the palm oil industry.

Perhaps important to note is the experience in Indonesia where it has succeeded to develop both coconut and palm oil simultaneously such that it is now the world’s top producer of both lauric oils.

Environmental and social issues

PPDCI has been advocating for the planting of oil palm in idle and unproductive lands such as cogonal and grasslands and logged-over areas. It insists that no new forests would to be felled or burned in the process unlike the much criticized practice in Malaysia and Indonesia when in their rush to expand the oil palm plantations, forest and peat lands and even wildlife habitat were destroyed.

In Mindanao alone, close to one million of such idle and unproductive lands  as well as those devoted to low income marginal crops can be planted with oil palm. And unlike the large monocrop plantations in other countries, there are now plenty of cultural practices for intercropping and small farms system. In Thailand, small farm holders plant oil palm side by side with rice, legumes, calamansi, papaya and other cash crops. Rubber is likewise intercropped with oil palm.

One hectare of oil palm can produce the same amount of vegetable oil as four  to five hectares of coconut or 10 hectares of soya beans. Given the dwindling supply of arable lands, oil palm is the best and perhaps the only crop that can produce significant amount of vegetable oil for the growing world population.

Oil palm is popularly called the “red gold” in Africa and “golden crop” in Malaysia. It is said that a farmer with oil palm has hit a jackpot similar to finding the gold vein. Bankers told participants at the 7th National Palm Oil Congress in Kidapawan City in 2010 that their borrowers who planted mango, durian, banana and other crops have been in a boom and bust cycle. On the other hand, those who engaged in palm oil have continuously expanded their farms.

In Mindanao, oil palm is also called the “tree of peace” because it can significantly help reduce poverty, which is the root of insurgency. At the recent 8th National Palm Oil Congress in Cagayan de Oro City, no less than Gadzali Jaafar, vice chair of the Moro Islamic Liberation Front (MILF) showed up to report that they have planted 120 hectares for their pilot palm oil development. At the same time, he urged investors to help them develop idle Bangsamoro ancestral lands for palm oil.

Both Indonesia and Malaysia have long acknowledged the vital role of the palm oil industry in successfully combating poverty in their respective countries. I wonder why we have not seen this happen right by our doorsteps during the past 50 years and instead we have to borrow the ineffective conditional cash transfer (CCT) program from South America to lick poverty?

In our own practice in small farms system in Agusan del Sur, we hold true to these environmental and social affirmations: “No virgin forest felled or burned; No wildlife habitat destroyed; No lands grabbed; No indigenous peoples evicted; No child labor employed; No harmful chemicals used; No GMO and pest-infested seedlings planted.”

Roadmap

The PCA is now leading the drafting of the industry roadmap. Active in its preparations are PCA staff from almost all regions of the country, the Department of Agriculture, the Department of Trade & Industry, PPDCI through its planters and millers and academic institutions, particularly the University of Southern Mindanao.

The roadmap aims to make the country self-sufficient in palm oil in ten years time by planting at least 300,000 hectares and add a milling capacity of about 500 tons-per-hour.

Former President Gloria Macapagal Arroyo has made mentioned of palm oil development in her

previous State Of the Nation Address (SONA). Framers of the roadmap are looking forward to President Aquino including it in his forthcoming SONA but with a clear difference. That is, with peace in Mindanao in sight and the government’s political will, development of the palm oil industry can proceed faster forward.

But whether the President will say something about it in the July SONA or not, what is apparent is our catching up to do. We need to understand and appreciate the palm oil better and adopt it as a potential cash crop to help us achieve self sufficiency in vegetable oil, provide livelihood in rural areas and contribute to poverty alleviation and peace in Mindanao. [Peter Laviña is a former journalist and City Councilor of Davao. He is now engaged in the cultivation of oil palm through small farm systems in Agusan del Sur. Last year, he spent three weeks in 6 provinces of Thailand studying the oil palm industry. He is a member of the private sector Philippine Palmoil Development Council. Inc. (PPDCI].

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