21/02/2013 (Manila Standard Today) - This refers to Rep. Danilo Suarez’s article entitled “A Mystery in the Coconut Industry” in his February 5 column and Christine Herrera’s news  story entitled “Coco Levy Fund Used to Import Palm Oil” that came out on February 18.

In said article/news item, Cong. Suarez claims that the importation by the CIIF Oil Mills Group (that includes San Pablo Manufacturing Corp., Cagayan de Oro Oil Co., Inc. & Legaspi Oil Co., Inc.) of palm cooking oil and its distribution in the domestic market is against the interests of the coconut industry and the coconut farmers.

The truth of the matter is despite the distribution by SPMC of Mitra palm oil, the sales of coconut oil products by the CIIF Oil Mills Group (OMG), to which SPMC belongs, actually grew. Also, the group’s sales of palm oil represent only a small fraction of total sales.

• The group’s production of coconut oil and by-products went up 35 percent, from 285,647 MT in 2011 to 386,154 MT in 2012.

• The coconut oil volumes allocated by the CIIF OMG for the domestic market had increased 43 percent, from 75,862 MT in 2011 to 108,362 MT in 2012.

• Mitra sales by SPMC (or 3,717 MT) represent only 1.0 percent of the group’s total sales and 3.0% of total domestic sales in 2012.

The truth is SPMC is engaged in the sale of palm oil only for the purpose of maintaining its share in the domestic cooking oil market and to generate incremental revenues.

• Minola oil, which is being produced by SPMC, is the number 1 coconut cooking oil in the market. SPMC has to face the reality that there are now 34 brands of palm oil being sold in the country today. Clearly, these products directly compete with coconut oil products. However, the majority of the poor buy palm oil because it is cheaper.  Why? Because palm oil is abundant. Both Indonesia and Malaysia produce about 5,000 kilos of palm oil per hectare of palm plantation. However, a hectare in our country planted to coconuts produces only 600 kilos of coconut oil.  It is therefore also incorrect to say that the importation of palm oil by SPMC has caused the price of palm oil to become cheaper.

• The prevailing scenario where demand for palm oil is continuously increasing in our local market has forced SPMC to engage in the business of selling palm oil as well. This is the same reason why other local producers of coconut oil are also now importing and selling palm oil.

• Had SPMC refused the offer to distribute Mitra palm oil in the country, SPMC would have lost a business opportunity where Mitra sales would offset any decline in the company’s coconut cooking oil sales. Surely, another trader would have immediately agreed to distribute Mitra oil and benefits from the incremental income derived from such business.

A prudent businessman would surely have adopted the same strategy. SPMC cannot afford to be left out in the market.

All told, the production and sale of coconut oil and other by-products remain the main business of CIIF OMG including SPMC. Through the years, the group has continuously increased its production of coconut oil and other by-products. This means only one thing ….. the purchases by the group of copra feedstock from our coconut farmers have also been increasing. Clearly, this is indicative of the CIIF OMG’s strong and consistent support to the coconut industry and our coconut farmers.

I therefore welcome the proposed congressional investigation on the matter so that all the stakeholders in the industry especially our coconut farmers may be enlightened about the entry of palm oil in the local market. This will also be an opportunity for our lawmakers to explain the programs and projects they have initiated, if any, to help the coconut industry and our coconut farmers.  Also, our coconut farmers want to know what specific measures our lawmakers have taken to prevent the entry of smuggled palm oil into the country.  As you are aware, the Federation of Philippine Industries (FPI), which I chair, has been helping the Bureau of Customs in fighting smuggling of palm oil.

JESUS L. ARRANZA

President & CEO

San Pablo Manufacturing Corporation/CIIF Oil Mills Group