PCA mulls retention policy, price ceiling on coconut oil

MANILA, Philippines — The government is considering a policy that will keep a portion of the country’s coconut oil for domestic use to ensure supply and prevent further price spikes while shipping out excess stocks to sustain the prized export market.

The policy involves setting aside a portion of the country’s coconut oil production to meet the domestic demand, which includes biofuel blend requirements, before allowing any surplus for export.

“This proposed scheme is intended to secure local supply and stabilize prices without disrupting our export commitments,” Luz Brenda Balibrea, the Philippine Coconut Authority’s trade information and relations division chief, told The STAR.

“The PCA is currently studying this policy’s viability and broader economic implications,” Balibrea added.

The PCA is already in talks with industry stakeholders and relevant government agencies regarding the proposal.

The retention policy is one of the recommendations given to PCA administrator and CEO Dexter Buted to address the “alarming” sustained increase in domestic prices of copra and cooking oil, documents obtained by The STAR showed.

The PCA has the legal mandate and basis to regulate the export of coconut oil, as provided under multiple presidential decrees including PD 1468 that created the agency’s charter and mandate.

The power was further strengthened under PD 1644 as it granted the PCA the “full power and authority” to regulate the marketing and export of copra, coconut oil and their by-products.

Neighboring countries such as Thailand, Vietnam and Indonesia have already implemented various export restriction policies to address supply shortages and rising cooking oil prices in their respective markets.

Global prices of vegetable oil, commonly known as cooking oil, have been on the rise due to supply constraints faced by various producing countries including the Philippines.

The United Nations’ Food and Agriculture Organization (FAO) vegetable oil price index in March rose by nearly 24 percent year-on-year to 161.8 points from 130.6 points in the same month last year.

The FAO attributed the increase to continued spike in the global prices of palm, soy, rapeseed and sunflower oils due to dwindling supplies coupled by rising demand by consumers.

The growth in demand for vegetable oil has also been heightened by the expansion of the global biofuels industry as they require more feedstock for biodiesel production as blend standards rise.

Despite an increase in production, the country’s coconut oil exports are projected to remain flat in market year 2025-2026 (October-September) at 1.13 million MT due to higher demand for biodiesel blending, according to a US report.

The country’s mandated biodiesel blend will increase to four percent by October from the current three percent mix.

Another policy option on the table is the imposition of a ceiling price on domestic coconut oil prices to curb the spike in retail cooking oil prices.

However, Balibrea pointed out that the measure is the “least” among the available options being considered by the PCA since it will require state subsidies to bridge the gap between the prevailing market price and the regulated price.

Nonetheless, the PCA official noted that if domestic cooking oil prices shoot up “significantly” to a level that would be detrimental to domestic industries such as food and transport, then the agency may sit down with relevant agencies to discuss the price ceiling policy.

Under PD 1644, the PCA is empowered to impose a floor and/or ceiling prices for all exports of copra, coconut oil and their by-products.

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

The monthly average mill gate price of copra has reached P75.34 per kilo, surpassing peak prices at the height of the Russia-Ukraine conflict in 2022, because of the prevailing local and global market situations.

As a result, mill gate 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.

The price of coconut oil in Metro Manila markets as of April 15 reached as much as P185 per liter, triple than the P65 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 P146 per liter, at least P48 higher than the average price of a liter of palm oil at nearly P99 per liter, DA data showed.

The rise in cooking oil prices has been flagged by the PCA and market observers could be “inflationary” if left unaddressed.

Filipino consumers may find themselves shifting to cheaper cooking oil this year, particularly palm oil, to cope with the rise in local coconut oil prices, industry players noted.