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THE STATUS, OPPORTUNITIES AND CHALLENGES OF THE PHILIPPINE PALM OIL INDUSTRY 1 /

THE STATUS, OPPORTUNITIES AND CHALLENGES OF THE PHILIPPINE PALM OIL INDUSTRY 1 /. Pablito P. Pamplona, Ph.D. and April Grace D. Pamplona 2 /. 1 / Paper prepared for presentation during the Malaysian Palm Oil Council Forum on Malaysian Palm Oil in Cebu City, 27 August 2014.

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THE STATUS, OPPORTUNITIES AND CHALLENGES OF THE PHILIPPINE PALM OIL INDUSTRY 1 /

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  1. THE STATUS, OPPORTUNITIES AND CHALLENGES OF THE PHILIPPINE PALM OIL INDUSTRY1/ Pablito P. Pamplona, Ph.D. and April Grace D. Pamplona2/ 1/ Paper prepared for presentation during the Malaysian Palm Oil Council Forum on Malaysian Palm Oil in Cebu City, 27 August 2014. 2/ Secretary and Board of Director, Philippine Palmoil Development Council, Inc. and Assistant Manager, Triple P Farms and Nursery.

  2. Southern Visayas and Mindanao are among the places which is highly suitable to oil palm Thailand • Potential area > 1,000,000 ha • Area planted > 625,000 ha • Per capita income > US$ 8,051 • Palm oil export > US$ 400 million Philippines • Potential area > 1,000,000 ha • Area planted > 54,748 ha • Per capita income > US$ 3,516 • Palm oil import > US$ 225 million at P6.68 billion in 2010 and to increase to P27.26 in 2022 15o 10o Krabi Songkla Malaysia • Potential area > 5,000,000 ha • Area planted > 4,850,000 ha • Per capita income > US$ 13,800 • Palm oil export > US$ 17 billion 5o Malaysia EQUATOR Indonesia • Potential area > 10,000,000 ha • Area planted > 7,500,000 ha • Per capita income > US$ 4,160 • Palm oil export > US$ 15 billion Indonesia 5o 10o 15o Member countries of the ASEAN within 10o North and South of the equator which have areas highly suitable for palm oil production. These include the whole of Malaysia and Indonesia, Mindanao, Philippines and Southern Thailand.

  3. Potential Production Area (has), Philippines, 2012. Source: PPDCI

  4. The current. . . . Areas (ha) planted to oil palm in the Philippines as of April 2013 (Pamplona, 2013). 2014 preliminary data = 73,340 ha

  5. The current. . . . Milling plants, location and capacity.

  6. Univanich Milling Plant, Carmen, Cotabato

  7. THE FUTURE OF OP . . . NATIONAL SCENARIO • Philippine population of 95.8M • Palm oil import of 500,750 MT • Import value of P27.50 billion • Philippine population of 120.1 M • Palm oil import of 1,000,000 MT • Import value of P54.50 billion

  8. Direction of oil palm expansion under PPDCI Help overcome part or the whole of the domestic vegetable oil shortage. Produce palm oil to reduce the pressure of using coconut oil as domestic vegetable oil so coconut oil can be positioned to a higher price in the oleochemical market. Focus the OP expansion to large idle and underutilized upland; areas devoted to coconut and remaining virgin forest be left out.

  9. Direction . . . . Focus the expansion to improved small landholders productivity help promote peace in Mindanao and improved the socio-economic lives of indigenous people in the upland. Consider OP expansion for the enhancement of environmental quality, agricultural productivity and sustainability.

  10. KNOWING THE OIL PALM TREE • Known as Asia “Miracle palm tree”, it has yield potential of over 60 tons of FFB/ha; best current yield in Malaysia 35-40 tons/ha per year; farmers yield in the Philippines of 18 to 25 t/ha per year; best yield of over 30 t/ha per year. • There is an increasing demand of palm oil for food, oleochemicals, biofuel, etc. • This high yield enable farmers to earn high income – higher than with most crops.

  11. Oil palm provide a model for improving the productivity of coconut to overcome poverty. Oil yield – tons/ha per year 6 Potential yield = 5.0 t 5 Potential yield = 4.0 t YIELD GAP (1 t) 4 Actual yield = 4.0 t (Malaysian’s national ave) 3 YIELD GAP (3 t) 2 Actual yield = <1.0 t (Phil’s national ave) 1 0 OIL PALM COCONUT PALM Comparison of the potential and actual yields of the two palms (Pamplona, 2013).

  12. OPPORTUNITIES AND CHALLENGES Opportunities in the expansion of PO industry Overcome part of the huge domestic shortage of vegetable oil and for export, provide farmers with high income. A huge market is awaiting for domestic PO production. Imminovate the technologies/programs currently being used in neighboring countries for high palm oil yield, productivity and income on a sustainable manner under the concept of zero waste management sans environmental problem.

  13. Modeling Malaysian success story in oil palm farming in overcoming poverty among small landholders (3-5 ha) (a) Yesterday’s income of less than US$ 3,000 = P132,000 (b) Today’s income of US$ 6,700 = P288,000 (c) Tomorrow - transform the smallholders (5.0 ha) to high income society earning US$ 15,000/year or P645,000 by 2020 to promote countryside prosperity. (a) (a) (b) (b)

  14. 3. High income. . . projected income of various crops under good management (Pamplona, 2013) under USAID study. * Base on average price.. ** Using the new high yielding latex-timber clones.

  15. AVAILABLE financing on oil palm farming Self-finance – the landowner buys his own planting materials and other inputs. Plant-now-pay later – the LGU provide the poor farmers with planting materials - good for two ha. The farmers take care of the plant with the title (or TD) of the land as his collateral.

  16. AVAILABLE financing on oil palm farming SMEs financed – an association/family of farmers borrow part of the expenses from the bank – Landbank and other banks. Landbank financing thru coop on a tripartile agreement to include the investor/miller – Landbank shoulder 80% of the expenses; milling plants provide the planting materials and technical service. Farmers pay the loan through deduction from the sales of FFB.

  17. Comparative advantages of oil palm farming with other crops Easy to plant and maintain Wide range of adaptability Provide early and long years of income even in adverse condition – rainy days or dry season. An environmentally friendly crop – less use of pesticides than most high value crops. More frequent and higher income than most high valued crops

  18. Comparative advantages. . . Easier harvesting and post-harvest handling Cheap harvesting and post-harvest handling Least affected by climate change; help mitigate climate change. Negligible pilferage and stealing Give rise to additional productive farming enterprises – eg. kalakat making

  19. INCREASING ADMIRATION OF OP. Once a misunderstood, despised and neglected crop now a crop which many farmers would like to plant. OP has demonstrated to the Filipinos that: Small landholders (3-5 ha) are amazingly transformed from surviving to thriving (prosperous) farmers. The change from traditional crops to OP easily liberated smallholders from poverty.

  20. Increasing admiration. . . . Fields which are difficult to farm with traditional crops, risky to invest or for bank to finance due to low and uncertain income are transformed to high productivity with OP. Farmers are provided with high bi-weekly and sustainable income thus expanding the breathe of the Philippine agriculture.

  21. INCREASING ADMIRATION. . . OP is productive in: • Flooded fields risky for investment to traditional crops. • Reclaimed marshlands • Grass and brushlands • Second growth forest lands/left over timber farms providing low income. • Unproductive cogonal idle lands • Fields planted to low income forest plantations are transformed to OP with high and regular income.

  22. Drivers and supporters . . . 4. The banking institutions - special mention of Landbank which show faith in the capacity of the FILIPINO farmers and oil palm to bring countryside prosperity to the Philippines. • Other banks on the pipeline include DBP, ONB, Enterprise Bank, etc. • Coming soon? – BDO, East West, etc.

  23. Drivers and supporters . . . 5.The Muslim leaders and to include the MILF leaders. Mr. GadzaliJaafar, Vice-Chairman of MILF who gathered and lead Muslim community leaders for training on OP with Mr. Charlie Dumile, of Yara and Ms. Marisa E. Garcia of USM and the presentor as resource person. Planting on grass and brushlands for high income and mitigate climate change

  24. 6. PCA – provided a working budget for oil palm which is expected to be expanded. PCA Administrator Romulo N. Arancon, Jr. and PPDCI officials discussed the direction of oil palm expansion in the Philippines on July 8, 2014.

  25. Challenges 1. Enhance the capacity of the LGUs to promote oil palm expansion – corruption free. • A symposium to share • strategies, improve • initiatives and expand activities maybe needed.

  26. Challenges 2. Attract more investors for infusion of capital and technologies • There is a need to help create a clear and friendly investment opportunities into the palm oil business for foreign investors. • There is a need to incorporate in the expansion the improvement in the lives of small landholders and the indigenous peoples.

  27. Challenges 3. Help promote OPF in the BANGSAMORO to bring peace and transform the depressed Muslim communities to prosperity. The senior presentor conducting the OP production training among Muslim leaders. The fruits of OP makes Mr. Jaafar happy

  28. Challenges 4. Overcome misconceptions about oil palm – NOT TRUE It does damage the habitat of wild life e.g. Orangutans – the Phils don’t have any. Does not reduces soil fertility or soil erosion; adequate fertilization makes the soil more sustainable. Does not accelerate – only mitigate climate changed as high CO2 sink. Does not requires high fertilization; only adequate nutrition for high yield and sustainable income. Also less pesticide use.

  29. Comparative fertilizer needs of crops for high and sustainable yield * Can be reduced to 50% if the empty fruit bunch are returned to the field ** For sustain high productivity

  30. Insuring success in oil palm farm Planting at suitable sites. Use F1 hybrid – quality planting materials Application of technologies on good agricultural practices. LGU supported technology dissemination and construction of farm to milling roads.

  31. GOOD AGRICULTURAL PRACTICES FOR SMALLHOLDERS

  32. GOOD AGRICULTURAL PRACTICES FOR SMALLHOLDERS

  33. CONCLUSIONS The expansion of the planting of OP in the country was slow and is now gaining momentum with increasing supporters. Gov’t support is badly in a big way to overcome the large vegetable oil import, low agricultural productivity, high rate of poverty and help solve the high unemployment problem of the country. Accelerated expansion shall provide farmers with high income to overcome poverty, promote rural prosperity and help develop the countryside upstream and downstream OP industries.

  34. About the presentors Dr. Pablito P. Pamplona, a graduate of UPLB is a retired University Professor. He was honored on March 14, 2013 by the DA-Khush Award of Distinction – the highest award given to a crop scientist by the Federation of Crop Science Society of the Philippines. Previous awards include the National Outstanding Agricultural Scientist Award, Outstanding Philippine Civil Service Award and many other national awards. April Grace Pamplona is a graduate of BSAgribusiness at UPLB and is accepted at UPM Malaysia to pursue an MS in Plantation Crops starting at September 2014.

  35. Thank You PLANTING OIL PALM IS EASY AND FUN; FARMERS LIVE IN ABUNDANCE Email: pabpamplona@yahoo.com CP #: +639189081227 / +639265450437 Website: www.goagribiz.com www.ppdci.org

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