DA to prop up copra prices

The Department of Agriculture (DA) might tap about P1.2 billion in revenues earned from tariffs imposed on imported agricultural products to prop up sagging copra prices.

Agriculture Secretary Edgardo J. Angara said the P1.2 billion was deposited to the Competitiveness Enhancement Fund (CEF) which bankrolls agricultural projects meant to improve the competitiveness of certain agriculture sub-sectors such as the coconut, sugar and corn industry.

The amount represents the tariff revenues from the minimum access volume (MAV) scheme which allows food and agribusiness companies to import farm products at low tariff. It varies per agricultural commodity and is the least volume of imports that the government allows at low import duty. MAV products include sensitive farm commodities like corn, sugar, pork, chicken, onion and coffee.

Angara said the DA is also considering tapping the P50-billion coconut levy fund to boost the coconut industry, but admitted this may take time because of unresolved issues that have snagged the signing of an executive order that assigns the fund to coconut farmers.

"We want to try to explore all possible means to arrest the falling prices of copra," Angara said, adding he has ordered a task force to come up with a subsidy scheme that will help boost copra prices. He explained however, that the Philippine Coconut Authority will not be buying copra from farmers like what the National Food Authority usually does when palay prices are low.

The industry is currently experiencing a "temporary crisis of sorts" as a glut of coconut oil in the world market has depressed copra prices, which have dropped to an all-time low in 15 years.

Philippine Coconut Authority data show that for the first half of the year, coconut oil prices in the world market dropped 25 percent to 25.39 US cents per pound from 33.85 cents during the same period last year; copra meal prices are down 20.49 percent to $50.73 per metric tons from $63.81; desiccated coconut, down by 9.39 percent to 48.79 cents per pound from 53.84 cents while activated carbon is down 3.88 percent to $996.29 per metric ton.

On a per metric ton basis, coconut oil is now averaging just $300 per metric ton compared to last year’s all-time high of $900 per metric ton while copra was pegged at P21 per kilo in 1999.

Farmgate prices of copra are pegged at P6 to P8 per kilo while millgate prices are at P10 per kilo. At these prices, farmers are not making money anymore.

Angara said government wants to intervene and boost copra prices to encourage coconut farmers to continue producing. "What I’m afraid of is that with low prices, farmers might change their planting pattern, and we don’t want that to happen, we don’t want a repeat of what happened this year to continue next year. One of the reasons why foreign buyers passed us up is because we don’t have the supply," Angara said.

PCA administrator Eduardo Escueta explained that while last year was a good year in terms of copra prices, it was a bad year in terms of coconut production because of the adverse effects of El Niño.

As a result, world buyers of Philippine coconut, fearing production will get worse in 2000, contracted palm oil suppliers from Malaysia and Indonesia on a long-term basis.

Escueta hinted that coconut oil and copra prices could fall further since the buyers’ requirements are fully covered till the first quarter of 2001.

Angara added that the PCA is now talking to potential users of coconut crude oil such as the National Power Corporation and other industrial users which can replace their fuel oil requirements with coconut crude oil.