12/6/06 (Manila Bulletin)  - Malaysian investors who have put up palm oil plantation in Bohol are eyeing more potential palm oil land in Panay Island—perhaps in Iloilo or Antique — in an aim to fill up robust demand for palm oil locally and in the world market.

"I will be meeting Malaysian investors interested in Iloilo. But I told them they have to see to it first that they’ve looked into the compatibility of the soil in Iloilo," said Philippine Coconut Authority (PCA) Administrator Oscar G. Garin in an interview.

Garin said these investors are the same proponents of the palm oil plant in Bohol under the joint venture Philippine Agricultural Land Development and Mill.

Authorities are worried that since palm oil plant requires steady rainfall because of its shallow root, it may not really be suitable in Visayas soil compared to Mindanao which enjoys regular rainfall throughout the year and is not hit by typhoons. However, the opening of palm oil land in Bohol has paved the way to the assumption that other Visayas lands can be planted with palm oil.

"Maybe they’ve seen that there are a lot of idle lands in Panay Island when they visited it and that they can deliver the raw palm easily because of the good road network. Palm oil is good, but unlike coconut, you have to plant it in a big contiguous area to supply the requirement of one processing plant," he said.

Unlike coconut which can be planted individually and still give the farmer the benefit of the coconut’s juice, or husks and leaves, palm oil has to be grown in plantation at a minimum of 4,000 hectares to supply a 20 metric ton (MT) per day processing capacity; or else, the fruit spoils over a 24-hour period.

Despite this disadvantage, palm oil has registered the most dynamic growth among vegetable oils.

"Traditionally, coconut oil (Philippines’ niche export oil) had enjoyed price premium over palm kernel oil (PKO). But there has been a significant change in the price structure of lauric oils with the advantage of CNO deteriorating progressively since 2000 and finally suffering discounts versus PKO in 2005," said Danilo M. Coronacion, CIIF Oil Mills Group president and chief executive officer.

This is apparently a vote of confidence in the supply stability and demand future of PKO as Malaysian investors have consistently looked for means to expand palm oil outside of Malaysia.

To keep its leadership in palm oil, Malaysia has restricted its export of seedlings which is a problem for the Philippines in trying to establish its own industry amid high demand for palm oil. The country’s palm oil consumption reached to 173,381 MT in 2005 of which a large chunk of 129,381 MT was imported. Import value was million in 2004 at 7 per MT for refined palm oil.

World imports of palm kernel oil (PKO), according to the Asia Pacific Coconut Community (APCC), will grow at an estimated 7.96 percent in 2006 from 2005. This is a contrastingly better performance than the projected declining world import for coconut oil over the same period.

PKO imports to Europe will be 723.4 million metric tons (MT) for this year, up from 629.15 million MT; Asia Pacific, 735.05 million MT, up from 666 million; US, 335 million MT from 330.3 million MT; and other markets, 208.7 million MT, down from 408 million.

Asia Pacific has consistently demanded higher PKO beginning at just 167 million MT in 2000,then rising to 323 million MT in 2001, 347 million MT in 2002, 462 million MT in 2003, and 511 million MT in 2004.

Among vegetable oils, palm oil has recorded the highest growth rate in production. While coconut oil posted a negative 0.61 percent performance from 2000-2005, the APCC records showed that palm oil production expanded by 10.62 percent while palm kernel oil increased by 9.03 percent in the same period.

Growth rates for other vegetable oils over the same period were 6.05 percent, cotton; 6.07 percent, soybean; 2.86 percent, olive; 2.16 percent, rapeseed; negative 0.04 percent, sunflower; and 0.22 percent, groundnut.