2005-04-12 - THE Philippines needs to develop new areas for palm oilplantations because palm oil importation is expected to drain its coffersof about P2 billion in 2010, an expert in the palm oil industry said.

Abdullah Pendatun, Philippine Palm Oil Development Council Inc. secretaryprojected that by 2010, the Philippine will have a palm oil deficit ofabout deficit 255,000 metric tons, or about P2 billion worth of importedpalm oil.

In 2003, the country produced only about 45,000 metric tons of crude palmoil, while it imported about 105,000 metric tons, Pendatun added.

To be able to bridge the deficit, the palm oil industry needs at least P4billion in plantation investment of about 60,000 hectares to be plantedwith palm oil, said Pendatun. However, the investment does not includethe setting up of oil mills, he added.

Pendatun pointed out that a 30-ton million, which can serve at most 8,000hectares of palm oil plantation needs an investment of about P450 million."That is where investment opportunities come in," he pointed out.

But he said the palm oil industry in the country is still in the infancystage, unlike Malaysia which has been the leader of the industry duringthe last 40 years, he pointed.

By the end of 2004, the Philippines had planted 25,227 hectares of palmoil in a five-year development period with about 11,500 hectares ofnursery set up. Of the areas developed of nursery, 40 percent of theseedlings will be planted by next year as seedlings are released after 10months to a year in the nursery.

Despite this, Philippines, he said, can produce higher than Malaysia basedon the recent study on ratio against the Malaysian standards. Based on thestudy, he said, the Philippine ratio against standards is 1.4 in the thirdyear of the plantation and 2.6 on the

fourth year. So if in the third year the harvest in Malaysia is threemetric tons per hectare, it would be 4.2 metric tons per hectare, and thisrises to 13 metric tons per hectare in the fourth year because theMalaysian standards by then is five metric tons per hectare.

He also pointed out that return of investment (ROI) in planting palm oilis higher, increasing every year and that prices have gone up. "Theexpansion of oil palm farmers and the desire of new ones prove thatfarmers are already satisfied with the prices," he said, pointing out thatalthough palm oil farm prices have been fluctuating during the last fiveyears, but its prices have been stable at about P3,000 per metric ton.

However, to entice foreign investors to partner with local farm owners,Pendatun said the national government should have a program that willprovide "good incentive package that could attract investors, foreign anddomestic, to develop the industry."