Effects of the Lockdown on Exports and More

The lockdown in the Philippines caused a massive decline in production volumes, looking at data from UCAP (United Coconut Associations of the Philippines Inc) this shows that export of coconut products dropped by 71.6% year-on-year for July 2020 in the Philippines.

That is a lot, and the effects of this in the delays we see now, factories are catching up, but production volumes are still down at approx. 60% – 70% usual levels.

The knock-on from this is delays and shortages into quarter four of 2020, plus delays caused by shipping adding to the challenges faced by the industry.

Factories and businesses have had to make significant infrastructure changes due to COVID, and this has seen costs go up without the local markets moving in the same way; therefore margins are down, and costs are up for producers.

But changes in the market goes all the way down the line to farmers, the past ten years they have seen their incomes drop significantly, and with the effects of COVID, times are incredibly challenging.

Coconut oil has been used as the primary cooking oil in the Philippines for hundreds of years. Coconut trees (Cocos nucifera), grown in the Philippines, producing not only coconut oil but also coconut milk, sugar, water and a variety of other products, with a majority produced for internal use.

Since 2010, palm oil that imported from Malaysia & Indonesia has overtaken coconut oil as the top-selling oil in most grocery stores in Manilla and across the country, according to data from the United Coconut Association of the Philippines. With the main reason, being is its low price, often half that of coconut oil.

Coconut Palms grow alongside other crops like bananas, cassava, coffee and cacao, part of the diverse farming in the Philippines. Palm oil Palms are mainly grown in commercial plantations with about 60% of coconut palms grown by small family-run farms. (We will not go into rainforest clearance in this article).

The Philippine government has promoted the expansion of palm oil, as have most governments in South East Asia, especially on the southern island of Mindanao, where two new mills to produce palm oil have been built along with the development of several plantations.

The Philippine government is looking at several solutions for the coconut farmers, including the Coco Levy Fund Bill, which if passed, would administer the distribution of a P100-billion trust fund for the benefit of coconut farmers. It’s a complicated story originating from a scam in the 1970s.

Which you can read about here https://en.wikipedia.org/wiki/Coco_Levy_Fund_scam )

It is unpopular in some quarters and has some issues that need to be addressed (you can read more about it here https://onenews.ph/coco-levy-fund-what-now)

Like most of south-east Asia, the politics and economics have affected the smaller producers and farmers, TM Duché and Primex work with the local farmers and government to ensure they get a fair price for the raw materials, in a market-led environment.

As we come into the end of 2020, we know it’s been a tough year, production started behind due to the late typhoon season, that is almost upon us again, we know that the market will face similar challenges moving forward.