May 22 10:04 AM - Philippines, The Coconut Industry Investment Fund OilMills Group (CIIF-OMG), the country’s largest coconut oil producer takingup about 50 percent share of the export market, may embark in the tradingof palm olein in order to boost its coconut oil export.

Danilo M. Coronacion, CIIF-OMG newly-appointed chairman, said it isadvantageous for the company to engage in palm olein trading in order todivert much of its coconut oil (CNO) to the export market.

"What might happen is the possibility of CIIF engaging in marketing palmolein in the domestic market. We’ll have to review (our mandate) to dothat. It’s basically good to adopt that as a strategy in time of scarcecopra or low copra production," he said in an interview.

Palm olein is a cheaper cooking oil substitute to the coconut-basedcooking oil. One of CIIF-OMG’s companies produces the cooking oil brandMinola.

He said that while there is no definite schedule yet as to this function,he said the task is apparently imperative.

"It’s just an idea we want to put forward because of the scarcity of coprawhich is affecting our level of supply of domestic oil. Our domesticcooking oil market now is being served palm olein. It’s cheaper on a permetric ton basis. Right now it should be about $100 cheaper. Coconut oilhas an average premium of $50 over palm olein in the market, so theMalaysian palm oil is cheaper by $50," he said.

The plan is part of an objective to keep a grip on both the domestic andforeign market.

"When the supply of copra is tight, we have to service the domesticmarket. We don’t want to lose this market, but we have to continue servingthe foreign market," he said.

The Philippines only produces about 40,000 metric tons (MT) of palm oilyearly, but the local requirement is reaching to 100 MT, prompting importsof 60,000 MT.

While government has a target of growing palm oil plants on 100,000hectares over 10 years or a yearly target of 10,000 hectares, palm oilproduction is currently on a downtrend even as it takes about five yearsfor the palm plant to be harvested.

Nevertheless, Coronacion said the local palm oil industry’s productionappears to be promising with investments pouring in specially as a palmoil processing plant in Bicol is set to be inaugurated in September thisyear.

CIIF-OMG itself, having been established under a presidential order in the1970s to develop the local coconut industry, is not allowed to engage inplanting palm oil. And yet, palm oil is a complementary product to CNOwhich has a niche in the world market that palm oil cannot supply havingthe medium chain fatty acid that makes it more useful in industrialapplications. CNO has varied uses in the pharmaceutical, cosmetics,consumer products and is used as input in manufacturing products asdetergent soaps and shampoos.

Because of its wide industrial applications, economists have suggested thePhilippines’ tapping its full potential by engaging in industrialmanufacturing that will put added value to the product, raise its price,and raise farmers’ income from it.

CIIF-OMG produces about 40 percent of the local copra crushing market.

The CIIF-OMG companies are Legaspi Oil Co. Inc., Granexport ManufacturingCorp., Cagayan de Oro Oil Co. Inc., San Pablo Manufacturing Corp.,Southern Luzon Coconut Oil Mills Inc., Minola Corp., Iligan Bay ExpressCorp., and Legaspi Oil Coconut Fibers Corp.