7/6/2004 BUSINESSWORLD (PHILIPPINES) - The government's push to developthe local palm oil sector should not be seen as a threat to the coconutindustry, an agriculture expert said.

"There is no conflict between coconut oil and palm oil since investing onthe latter means you have to be market-driven and private sector led(since it requires a lot of initial investments)," Rolando T. Dy, directorof the University of Asia and the Pacific (UA&P) Center for Food andAgribusiness, said in an interview.

The palm oil sector needs about P12.5 billion in new investments withinthe next six years to meet requirements of local food processors andmanufacturers such as cosmetics and pharmaceutical companies.

Users of crude palm oil imported around P1 billion worth of the producelast year due to the lack of domestic supply. Local palm oil productionlast year was only at 44,890 metric tons (MT) way below the 150,400 MTnational requirement.

"There are lots of potentials for a directed market for palm oil, andconsidering we could only supply half of the [100,000 tons annual] demandwe should not prevent the private sector from participating," Mr. Dyadded.

He said the concern that oil palm plantations may replace coconut grovesis unfounded as each has different geographical requirements.

"The proposed [palm] plantations are inland compared with coconut treesthat thrive best in coastal areas," Mr. Dy noted. He also said it would beunwise to take over around 3.5 million hectares of coconut trees as thePhilippines is a major exporter of coconut-based products.

A total of 25,227 hectares in the country is planted to palm trees. Theplantations are mostly located in Mindanao, with around 3,994 hectaresfound in Central Visayas.

Mr. Dy also said private investors are now going into growershiparrangements with small farmers to make palm oil production more efficientthrough a centralized provision of planting materials and technicalsupport.