|
Saturday, May 10, 2003
Land, peace woes deter palm oil investments
PEACE problems and limited land acquisition due to the Comprehensive Agrarian Reform Law continue to ward off investments in palm oil plantations in Mindanao despite an increasing demand for the product.
This was the finding of an undergraduate study made by Marina Pelpinosas of the University of the Philippines in Mindanao.
A total of 304,350 hectares of the 447,000 hectares of land identified as potential areas for palm oil cultivation are in Mindanao. These are in Agusan, Cotabato, Sultan Kudarat, Maguindanao, Lanao del Sur, Bukidnon and Paquibato District in Davao City. Among these areas, Agusan del Sur alone has a potential of about 50,000 hectares.
From the identified area of land suitable for palm oil cultivation, only 19,817 hectares were utilized and planted with palm oil. Out of this, about 16,550 hectares are in Mindanao, particularly in the provinces of Agusan del Sur and Cotabato.
Majority of the production of palm oil in the country comes mainly from Agusan del Sur. The province accounts for 30,000 tons of the 48,000 tons average annual palm oil production of the country.
Agusan del Sur is home to the country's two largest palm oil firms -- Filipinas Palmoil Industry Inc. and Agusan Plantations Inc.
With favorable climate, infrastructure and policies, experts say it has a greater chance of replicating the success of Malaysia's palm oil industry.
In 1981, FPII (owned by a group of Filipino investors with Guthrie in Malaysia) has developed an 8,000-hectare plantation and a crude palm oil mill. Two years after, API (a joint venture of Filipino investors with Malaysian and Singaporean partners) established a 1,800-hectare plant.
API previously delivered its output to FPII for processing but formed a sister company for the establishment of a 20-tonner mill in 1997.
"The total domestic demand of palm oil increased from 43,500 tons in 1990 to about 113,000 tons in 2000;one third of that was supplied domestically while the remaining was imported," said Rolando Dy of the Growth with Equity in Mindanao during the 1st National Palm Oil Congress held in Davao City in June last year.
While a bulk of the domestic supply comes from Agusan del Sur, he said, the total domestic demand was not met by domestic supply. In 2000, the country's palm oil imports reached 67.000 tons from 24,000 tons in 1997.
A UP Los Baños study showed that the demand-supply gap in 1998 reached 50,000 tons, with domestic demand for that year at about 100,000 tons and supply at 50,000 tons. Since then, palm oil imports have been increasing by more than 15% annually, allegedly due to the growth in the food industry.
A study conducted by GEM in 1999 showed that the country needed to develop at least 30,000 hectares in the next three years in order for the country to be self-sufficient in palm oil.
Pelpinosas's study showed that FPII has a big margin in total palm oil production over API from 1985 to 2000. In 2000 alone, FPII had a total production of 105,456.14 while API only had 30,556.69. The most obvious reason for this, she said, is that FPII has a larger area of land devoted to palm oil, it started its operation earlier than API and it has a greater number of workers than the latter.
While experts predicted that the hectarage of palm oil is likely to increase due to high demand of palm oil, the two companies hardly expand their areas due to the land reform program, peace and order condition, and increase in price of inputs such as labor and fertilizer.
Reports showed that the land reform has put off the interest of investors in Mindanao's palm oil business considering that a viable palm-oil plantation mill complex would require about 3,000 hectares as bare minimum. Reports said the firms in Agusan had once recorded losses due to insurgency problems, from the collection of revolutionary tax to labor unrest.
Aside from these problems, there are many issues and constraints that hinder the development of the industry. Poor access roads from the farm to the mill reduces farm prices due to transport cost and lowers prices of the products due to poorer quality of the brunches. The cost of shipping is also another problem that hinders the competitiveness of the industry.
Former Agriculture secretary Leonardo Montemayor said palm oil might just be then next top dollar earner of the country. Considering its many uses, he said, the industry's development might help in halting the continuous imports from other countries.
Palm oil is used for manufacturing soaps, detergents, producing oleochemicals, fatty acids, fatty alcohol and other derivatives for the manufacture of cosmetics, pharmaceutical and household products. Palm oil olein and stearin are also popularly used worldwide in making margarine and in frying snack foods.
Records showed that oil palm produces more oil per hectare than any other oil-bearing plant like soybean and coconut. Known to be the most productive oil crop, a hectare of oil palm can produce five tons of crude oil, 5 to 10 times more than the yield of any commercially grown oil crop. It produces its first crop in the second year after planting and reaches its peak on the 8th to 20th year. After planting, it takes two and a half years for an oil palm to produce fruit branches that are ready for harvesting while coconut palms begin to bear nuts in four years.
With this potential, Pelpinosas said, the country's palm oil industry at full-scale development could play a significant role in improving the balance of payments through the production of palm oil as import substitutes and as a major export. It could also play a leading role in the government's effort of effecting the social amelioration of the impoverished masses.
The farmers can be made to participate by organizing themselves as cooperatives and out-growers of nucleus farms nearest to them. The nucleus farms provide the technology and planting materials, supervises their farming activities and buys their produce for processing.
FPII chair Senen Bacani said the concept of nucleus plantation has been known as a successful strategy for other agricultural operation in the Philippines. However, he said, long term financing to fund development costs for out growers farms must be provided.
Dy said "the domestic prospect for palm oil in the Philippines is rosy; but given the pulling competition in the vegetable oil market and increasing cost of land and labor, the development of oil palm plantation must focus on areas with a mix of good soil and climate, good rural infrastructure, plus a good access to ports." (Lovely A. Carillo)
(May 10, 2003 issue)
Want Sun.Star news on your mobile phone? Click here.
Write letter to the editor. Click here.
Join the Sun.Star message board. Click here. |
|
[return to top]
[home]
[network page]
|
LOCAL NEWS
BUSINESS
OPINION
SPORTS
LIFESTYLE
FEATURE
SUPERBALITA
WEEKEND
|
