Pinoys shift to palm oil as coco oil price rises

MANILA, Philippines —  Filipino consumers may find themselves shifting to cheaper cooking oil this year, particularly palm oil, as the price of prized coconut oil continues to rise and could soon become “inflationary.”

The rising cost of coconut oil in the domestic market has been flagged by international observers and even by the Philippine Coconut Authority (PCA) as a factor that could affect consumption of the commodity and drive food prices up this year.

The country’s consumption of coconut oil is expected to drop in the next market year 2024 to 2026 by 20,000 metric tons to 200,000 MT after prices of the commodity soared and widened its gap with cheaper alternatives like palm oil, according to the US Department of Agriculture - Foreign Agricultural Service (USDA-FAS) in Manila.

“The increase in retail price of coconut oil is projected to shift the demand of price sensitive consumers and food establishments to palm oil,” the USDA-FAS Manila said.

The international agency projected that Filipinos’ palm oil demand for food use will expand this year by more than a fifth to 900,000 MT from 736,000 MT in 2024.

“Palm oil is widely used as a cooking oil in Filipino households and in the food service industry due to lower pricing compared to other vegetable oils, including its durability and resistance to high temperature,” the USDA-FAS Manila said.

The sudden increase in demand will drive the country’s palm oil imports this year to rise by 11 percent to one million MT from 895,000 MT last year.

The PCA already convened major industry players to address the surge in global coconut oil prices, which the agency noted is directly impacting the local price of cooking oil.

The agency attributed the spike in cooking oil prices to the surge in copra millgate prices that have reached a monthly average of P75.34 per kilo, surpassing peak prices at the height of the Ukraine-Russia conflict in 2022.

As a result, millgate prices of refined, bleached and deodorized coconut oil, which is used as cooking oil, have now ranged between P179 per kilo and P185 per kilo. This translates to a suggested retail price of P180.85 per liter.

“If not addressed urgently, the rising costs of copra and coconut oil could strain the operations of processors and ripple into widespread food inflation affecting every Filipino household,” PCA administrator and CEO Dexter Buted said.

The price of coconut oil in Metro Manila markets as of April 8 reached as much as P180 per liter, more than double the P80 per liter lowest recorded price in the same period last year, based on Department of Agriculture (DA) data.

The average price of coconut oil is now around P140 per liter, at least P40 higher than the average price of a liter of palm oil at nearly P99 per liter, DA data showed.

Palm oil prices in Metro Manila markets are also seeing upward pressure as they now range from P80 to P126 per liter compared to last year’s range of P65 to P100 per liter.

Some of the suggestions and proposed resolutions that emerged during the consultation include curbing illegal exports of mature coconuts that result in lower domestic supplies and a temporary suspension on the one percent increase in coco-methyl ester biodiesel blend this October.