DAVAO CITY, April 7 Asia Pulse - The Philippine Palm Oil DevelopmentCouncil, Inc. (PPDCI) painted a bleak picture of the Philippines palm oilindustry as "supply gap" is projected to increase.PPDCI Secretary Abdulla Pendatun said the supply gap scenario is expectedto continue following increases in domestic demand but a sharp reductionin local production.

He said palm oil production is projected to decrease further due to ageingof existing oil palms, adding that the newly-planted trees are stillimmature.

In 2003, the country produced only 45,000 metric tons of crude palm oil,way below the domestic consumption requirement of 150,000 metric tons.

We have to import at least 105,000 metric tons from other countries tomeet our domestic demand, Pendatun said.

As of end of 2004, the total area planted to oil palm in the Philippinesreached 25,277 hectares.

Going by the present trend, he said, the Philippines would have a deficitof 255,000 metric tons by the year 2010, or about P2 billion-worth ofimported palm oil.

In order to prevent this supply gap, additional areas have to be developedwith oil palm, he said. There is a need to develop at least 64,000hectares with oil palm to cover the supply gap by year 2010. Palm oil isused principally for cooking and industrial frying because of its highboiling point. It is also used for margarine, chocolate products,confectionery, soap, cosmetics, and pharmaceuticals.

He said the country needs about P4 billion (US$73 million) investments inplantation development, excluding the cost of setting up the mills.

A mill with a capacity of 30 metric tons can only process about 8,000hectares but needs an investment of P450 million. We need more than 60,000hectares of plantation - that is where investment opportunities come in,he said.

Pendatun said the global demand for palm oil just continues to grow. Herevealed the consumption of palm oil of increases by three to five percent annually while production grows only by 3.4 per cent. Exports of palmoil grew from 13.22 metric tons per hectare in 1999 to 18.94 metric tonsper hectare in the year 2001. This is fired-up by the emergence of bignon-traditional consumers like China, Latin America, and even severalAfrican countries, he said.

The PPDCI is a consortium of government agencies and oil palm growers inan effort to develop the countrys palm oil industry, improve thelivelihood of small farmers and promote peace and security.

It was in the late 1960s when the first commercial oil palm plantation inthe Philippines was established in Sultan Kudarat. But it was only in 1999when new nurseries were re-established in the Mindanao region.

(PNA)