MARKET DEVELOPMENT
29-05-2001
Coconut chemical firms offer compromise on soap pr
Coconut chemical firms offer compromise on soap productionPhilippines (BusinessWorld) 5/25/2001- Coconut chemical companies arewooing soap manufacturers to agree to an out-of-court settlement that willeffectively lift a restraining order against a law on the mandatory use ofcoco-based surfactants.An official from United Coconut Chemicals, Inc. (Cocochem), the country'sbiggest coco chemical firm, said the industry is offering to support therepeal of Executive Order (EO) 259 in exchange for the withdrawal of thelawsuit filed by soap producers against the EO. The presidential directiverequires soap makers to use coco-based surfactants in making detergent.The company official who works for Cocochem, however, said the industrywould like the directive to remain in effect for a certain period to helpthem to find alternative markets for coco chemicals."Our offer to them (soap companies) is that we will work jointly with themfor the repeal of EO 259 but we want them to give us time, probably threeto five years, to develop our markets," the official told BusinessWorld.Signed by former president Corazon Aquino in 1987, EO 259 requires soapcompanies to manufacture detergents containing 60% coco-based surfactantsand 40% petroleum-based surfactants."We are asking them to continue buying their regular volumes from us untilwe are able to tap new markets," explained the Cocochem official, whosefirm ranks as one of the country's biggest coco chemical manufacturers.The Soap and Detergent Association of the Philippines (SDAP) secured apreliminary injunction against the implementation of EO 259 last December.SDAP members want the EO eventually recalled so they can have theflexibility of using cheaper petroleum-based surfactants.But coco chemical firms are concerned the immediate repeal of thedirective will cause the collapse of their industry and create a localoversupply of coconut oil (CNO). Coco-based surfactants are produced usingCNO.This glut, they said, will further disadvantage coconut farmers who arealready suffering low prices of copra, dried coconut meat from which CNOis extracted.The Cocochem official, however, lamented that soap companies have rejectedtheir proposed compromise accord."We've been talking about it but they're not amenable. Actually, they justwant to buy 20% of their old volumes but we also can't agree to thatbecause it would be tantamount to killing our industry," the source said.The source said industry leaders will continue negotiations until theyforge a mutually acceptable agreement since coco chemical firms arealready hurting from the backlash of the court order.The source said monthly sales of coco-based surfactants have dropped byhalf since the issuance of the restraining order by the Manila RegionalTrial Court in December last year.Coco chemical firms use 150,000 metric tons (MT) of CNO yearly for theproduction of oleochemicals like surfactants.This represents a third of total yearly domestic consumption whichaverages 450,000 MT, said industry group United Coconut Associations ofthe Philippines (UCAP). The other two-thirds of this volume is mainly usedto manufacture cooking oil.Surfactants or surface active agents, the main ingredient of laundrydetergents, remove dirt from clothes.There are three types of surfactants: coco-based surfactants, technicallyknown as coco fatty alcohol sulfates (CFAs); soft petroleum-basedsurfactants or linear alkyl benzene sulfunates (LABs); and hardpetroleum-based surfactants also known as hard alklyl benzenes (HABs).But soap companies can only use soft petroleum surfactants or coco-basedsurfactants since a new law Republic Act 8970 bans HABs because theycannot be broken down by the environment.While both coco-based and soft petroleum surfactants are known to beenvironment-friendly substances, coconut industry players argue that ittakes a longer time for soft surfactants to break down.The UCAP notes that unlike developed countries, the Philippines lackstreatment facilities needed to speed up the breakdown of soft surfactants.The organization adds that the polluted conditions of Philippine riversystems will also prevent the decomposition of such substances due to thelack of oxygen.Former president Aquino signed EO 259 to support coconut farmers andprotect the environment.The Philippines produces 1.2 million MT of coconut oil every year.Of this, 20% or 240,000 MT is used to manufacture cooking oil,oleochemicals and other coco-based products. The other 80% or about960,000 MT is shipped out to the world market.
