Dr. Emil Q. Javier If the rice farmers are hurting grievously from the 30% drop in the farm gate price of palay as a consequence of rice tariffication, the coconut farmers, who are poorer than the rice farmers in the first place, are even worse off. The price of coconut has dropped 40% since last year. The coconut farmers need help NOW. Not within 25 years as proposed in the Coconut Levy Fund (CLF) bill which was vetoed by President Rodrigo Duterte. Short of direct cash payments to coconut farmers, the option with the greater and more lasting impact is farm subsidy for fertilizers and intercropping. The benefits from fertilization of the existing crops under the coconuts can be felt within six months. The replanting of senile, unproductive coconut palms and planting of tree intercrops like coffee, cacao, black pepper, pineapple, and various fruit crops will take longer but will be lasting. For these purposes, a pay-out of P15,000 per hectare will be adequate for annual intercrops. However, for perennial trees and other intensively grown annuals, the farmers will need more that P15,000. With three million hectares planted to coconut, and a cash pay-out of P15,000 per hectare, this option will require P45 billion. This amount can be sourced from the CLF whose value is estimated at P100 billion (P75 billion cash + other disposable assets). The Land Bank of the Philippines (LBP), the rural banks and the other commercial banks, as required under the Agri-Agra law, should be mobilized to provide the necessary credit. Apart from credit support, the Philippine Coconut Authority (PCA), the Bureau of Plant Industry (BPI), the Bureau of Soils and Water Management (BSWM), the Department of Agriculture’s (DA) High Value Crops Program, the Agricultural Training Institute (ATI), the DA Marketing Services Office, the DA Regional offices, and the local government units (LGUs) themselves should work together to attain the objective of having all the three million hectares of coconut intercropped within a five-year period. The balance of CLF worth P55 billion will still be available for other purposes such as scholarships for dependents of coconut farmers, additional health benefits beyond PhilHealth, financing of village-level coconut processing plants and organizing the farmers into viable cooperatives. Sufficient amounts will still be left for technical and market support for industry-sized processing plants for high value coconut products other than coconut oil, and the downstream oleo-chemical industry. The ball is now in the hands of Congress and the President to finally enact a CLF law along these lines. Coconut product diversification There will always be a place for food grade coconut oil. Coconut oil is only a minor player in the global vegetable oil market but what we lack in quantity, we can make up in quality. In the long run, we should capitalize on the scientifically recognized health benefits of medium-chain fatty acids in coconut and position ourselves much like olive oil as a healthy, high-end, albeit limited, plant-based oil. Moreover, in the medium to the long term, our coconut has so much upside in the unique freshness of coconut water and the many uses and applications of coconut cream (milk). In recent years, the world has discovered something we knew all along — the delectable freshness of all-natural, electrolyte-rich coconut water and the versatility, healthfulness and ecological-friendliness of coconut cream as substitute for cow’s milk. There is a burgeoning global market for these products for which Thailand has taken the lead but which we should be able to overtake with our huge raw material supply advantage. Leading the way are the two venerable coconut processing companies, Franklin Baker and Peter Paul, both based in Laguna and Quezon. Two of the relatively new but significant players and exporters are Celebes Agricultural Corporation and Alexum Resources Corporation. Celebes which is based in Butuan, Agusan del Norte offers the full range of coconut products: Desiccated coconut and flour, coconut oil, coconut milk and cream, coconut water and juice, coconut sugar, fiber, coco peat, and charcoal. It has 2,000 employees and exports to 48 countries. Alexum for its part specializes in coconut oil, coconut cream, coconut milk powder, and coconut water. Alexum is one of the major suppliers of Vita Coco, the global leader in coconut water. It also supplies global brands like Hershey’s, Nestlé, Unilever, Ferrero, General Mills, Campbell’s and Con-Agra Foods. Among its products, Alexum reports that its margins are highest with coconut milk powder. A University of Asia and the Pacific study cited that coconut milk powder exports are growing 38% per year on volume, and 60% per year on value. Alexum is based in Medina, Misamis Oriental and is due to debut shortly in the Philippine Stock Exchange with an initial public offering (IPO) of P4.77 billion. A new potential entrant is Nu Agri Asia Corporation which offers a novel business model which is also built around coconut water and coconut cream but with the added feature of producing banana chips and being able to process other fruits and vegetables into juices, purees and soups. Their plant will extract coconut water and squeeze the coconut meat to produce high grade coconut cream. The residual grits will be optimized through a second squeezing operation to recover low fat skim milk which will be used as raw materials for non-dairy beverages, coffee creamers and fermented drinkable yogurt. The heart of their processing plant according to the proponents is a flexible ultra-high temperature (UHT) system with dual sterilization mode functions. The plant has the option to choose between direct and indirect steam processing methods, depending on the sensitivity of the products to be produced aseptically. In addition, there is a separate line for free-flowing products and another for high viscosity products. Among the other non-coconut products they claim their plant can process are fruit juices like calamansi, papaya, mangosteen, guyabano, and watermelon as well as purees like banana, mango, and squash, whichever the farmers plant along with their coconuts or whichever are in excess or in season. This raw material versatility dovetails well with the INTERCROPPING pillar of the modernization of the coconut sector to make it more productive and resilient. The coconut farmers will not be entirely dependent on the coconut but will be able to derive additional income from the intercrops. Interested investors may wish to get in touch with the proponents, Dan Barron and Crisanto Gualberto II, at www.nuagriasia.com. No to exports of whole coconuts For the above reasons the idea of exporting whole coconuts as a quick fix to the depressed income of coconut farmers is myopic. Our huge advantage in the growing global market for coconut water and coconut milk products (like fermented yogurt and kefir) is availability of raw material. We will foolishly give away that competitive advantage if we export our whole coconuts to competitors. Kefir for the uninitiated is a variant of yogurt but with other beneficial microorganisms (probiotics).

* Dr. Emil Q. Javier is a member of the National Academy of Science and Technology (NAST) and also chairman of the Coalition for Agriculture Modernization in the Philippines (CAMP). For any feedback, email [email protected]