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Coconut Variety

In: Business and Management

Submitted By Dilan1993
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THE PHILIPPINE COCONUTINDUSTRY: PERFORMANCE, ISSUESANDRECOMMENDATIONS
Rolando Dy, Ph.D.

ANNEX 6STRATEGY MAKING BASED ON SWOT MATRIX
The coconut industry is a resilient one, full of potential but has manyweaknesses. While it hosts many opportunities, it also faces many threats.These are considerations in formulating policy directions for the industry.
Coconut Industry: SWOT AnalysisADVANTAGES CONSTRAINTS
STRENGTHS WEAKNESSES
Inputs
1. Availability of good clones 1. Only 1% of the areas are plantedwith good clones2. No irrigation system in coconut areas
Farm Production
2. Favorable climate in most areas 3. Senile trees (30% of stands)3. Availability of technologies 4. Only 1% of the farms apply fertilizers5. Plantings in marginal lands6. Intercropping in only 30% of the land
Logistics
4. Established marketing system 7. High assembly costs due to poorroads and fragmented, small holdings5. Export facilities 8. Multi-layered marketing channels
Milling
6. Presence of many mills 9. Underutilized mills7. Presence of refiners 10. Underutilized refineries11. Shortage of raw materials12. High assembly costs13. Low quality copra
Other Value Adding
8. Many product possibilities 14. Cost of raw materials
Institutions
9. Multi-stakeholders 15. Frequent changes in PCA leadership16. Lack of program support; toodependent on coco levy resolution
OPPORTUNITIES THREATS
1. Stable and growing export anddomestic markets1. Poor global image in supply reliability2. Good prospects for value addedproducts (VCO, geotextiles, etc.)2. Perception of government inaction3. Alternative fuel (coconut methylester- biodiesel) demand3. Competition from other tropical oils(i.e. palm oil and palm kernel oil)4. Low domestic oil consumption 4. Development of rapeseed and cupheawith high lauric content
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5. More stringent sanitary and phyto-sanitary (SPS) standards6. Unregulated cutting of treesBased on the SWOT analysis across the supply chain, benchmarking and issuesand program analysis, strategies have been derived. The SWOT strategy matrixoutlines the strategic directions of the industry.
Coconut SWOT Strategy Matrix
Opportunities (O) Threats (T)Strengths (S)
O-S Strategies T-S Strategies
Planting and replantingprogram – O1: S1, S2, S3,S5Expand production – T1: S1,S2, S3Establish standards andenhance marketing – O2:S3, S4, S7Enhance public sector support – T2: S1, S3, S4Expand production – O3:S1, S2, S3, S6Long term industry strategicplan – T2: S1, S3, S5, S6Expand production andimprove quality – T3: S1, S2,S3Weaknesses (W)
O-W Strategies T-W Strategies
Expand replanting andfertilization – O1: W1, W2,W3, W4, W9, W10Expand replanting andfertilization – T1: W1, W2, W3,W4, W9, W10Expand production andmarketing – O2: W1, W2,W3, W4, W5, W10Enhance public sector support – T2: W1, W4, W5, W6, W7,W8Expand production – O3:W1, W2, W3, W4, W10Expand production andimprove quality – T3: W1, W4,W5, W6, W7, W8, W9, W10The SWOT Matrix generated the following strategies given the industry’s externalopportunities and threats and its internal strengths and weaknesses.
O-S STRATEGIES


Planting and replanting program
The industry has to expand the planting and replanting program to increaseproduction to supply a stable and growing market. This must be done in strategicareas identified as having the most potential for growth. • Establish standards and enhance marketing
Given the prospects of value added products, it is imperative that nationalstandards be established which are acceptable in the international markets.
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Corollary to attaining this is the creation of village level processing plants asclose to the market to arrest quality deterioration.


Expand production
The use of coconut oil for biodiesel will need a few thousand hectares given a1% blend of biodiesel and petroleum diesel. To avoid compounding the alreadypoor supply reliability in the export market, there must be expansion ofproduction for biodiesel purposes.
O-W STRATEGIES


Expand replanting and fertilization
A focused replanting program must be complemented by a fertilization strategyfor low yielding palms in non-senile areas.


Expand production and marketing
The prospects of value adding can materialize with enough raw materialproduction to ensure supply reliability and through a sustained marketinginformation campaign. • Expand production (See above)T-S STRATEGIES


Expand production (See above)


Enhance public sector support
The public sector support for the industry through the PCA should find its way tothe farmers. PCA seed gardens should be strategic with available supply of high-yielding varieties. The PCA should act as catalyst and look at possibilities for theLGUs and private sector/farmer to establish their own seed farms and nurseries.A major source of government support would be the utilization of the coconutlevy funds.


Long-term industry strategic plan
The coconut industry strategic plan 2020 (under consideration by the NationalAcademy of Science and Technology) should provide a roadmap where theindustry wants to go and map out the interventions to reach the goals. This mustbe clearly understood and endorsed by industry players within the supply chain.


Expand production and improve quality
In measuring up to the competition from other oils, it may not be sufficient toexpand production to address supply reliability but quality aspects as well sincethere are cheaper oils.
T-W STRATEGIES


Expand replanting and fertilization (See Above)


Enhance public sector support (See above) 40

The 'rip-offs' which forced copra farmers to give up
PREMILA KUMAR
Monday, September 03, 2007
IT has gone down in the history books of Fiji as once having been, next to sugar and gold, the backbone of the economy.
But it failed to bounce back and was soon replaced with tourism. The demise of the copra industry has left a great open agricultural wound in Fiji's economy.
The country is reminded of just how deep the wound is whenever import and export figures are highlighted.
The Fiji Islands Bureau of Statistics recently highlighted a survey report on the analysis of poverty in Fiji which comes as no surprise. The report highlights that those residing in the rural areas are the most poverty-stricken groups and more Fijian people (32 per cent) are experiencing "effective unemployment" than Fiji-Indians (22 per cent).
To create employment in the outer islands is to return copra industry to its glory days.
About 100,000-plus people today still depend partly or wholly on the copra industry for their livelihood. The average income of these people is the lowest in the country with an estimation of less than $500 per household per year. In the 1950s, the coconut industry produced more than 40,000 tonnes of copra a year but today, it barely produces 11,000 tonnes despite creating the Coconut Industry Development Authority (CIDA), which is a statutory organisation established in 1998 to revive the coconut industry.
CIDA has been in existence for about 10 years and so far, the production level has not increased despite taxpayers' money being sunk into the institution.
The copra industry has not modernised with time as seen in other countries. It operates in the similar manner as it did during colonial time. We are still talking in terms of copra rather than the whole nut concept which has been embraced by many countries to truly reap the benefits from this wonder tree.
The copra industry in Fiji is barely surviving because of lack of attention to the many problems being faced by the producers. We need the copra industry more than ever to move toward alternative fuel such as biofuel as a response to recent increases in fuel prices.
Vanuatu is already using coconut oil for its biofuel. Why can't Fiji do the same? Recently, the producers involved in the copra industry decided to raise their grievances with the Consumer Council of Fiji rather than with CIDA. It must be noted that CIDA is the regulator, buyer and miller but it has done little to motivate the copra farmers and take the industry to greater heights. The Consumer Council wishes to highlight the plight of the producers by looking at the problems encountered by the producers along the supply chain, that is, from the farm to the milling stations. The problems faced by producers are many.
Weight of copra
The final weight and grading of copra is done in the milling stations in the absence of the producers who have no choice but to accept whatever payment is made to them by the buyers. There is always a shortfall in payment which producers fail to understand.
Loading of copra
Before copra is loaded on to a ship, producers weigh their bags of copra and carefully place a shipping mark to differentiate their bags from other producers. The weight and number of bags loaded by the producers are documented on a shipping receipt issued by a shipping officer on the assigned vessel.
Upon arrival at the destination wharf, the shipping company is required to issue a manifest to the buyers notifying them of the copra cargoes, the names of the producers or consignors of the copra, the number of bags being supplied to each buyer (as well as their respective shipping marks).
This important document, although required, often fails to exchange hands.
Unloading of copra
The initial problem arises at the point of unloading from the assigned ship where the buyer delays the collection of copra bags, sometimes for many weeks.
Meanwhile, in the absence of a proper storage facility, the copra is left unattended and exposed to conditions that affect the quality of copra. This also gives an opportunity for people to remove few bags without having anyone account for it. The council initially became involved in the issues of the copra industry after receiving complaints from producers regarding their missing bags of copra at the time of shipment. The council considered the complaints from a service-provider perspective.
Carting of copra
The copra bags are also off-loaded from the ship without due consideration given to the identification marks placed on each bag by the producers.
The problem also arises with regard to the carrier who loaded the bags from the destined wharf for the millers. The weight of the product becomes immaterial during the off-loading and carting phase, indeed is only important when it reaches the millers where the product is weighed to determine the producer's remuneration. However, since no document was produced on the weight of the copra collected from the wharf area, it becomes impossible to cross-check it against the weight stated by the producer.
Hence, it is a common occurrence for copra to be "pinched" from the bags during transportation. Consequently, the weight is affected and the producers get less for it than they expected.
For example, a producer who shipped 10 bags weighing a total of 450kg might still get paid for the right number of bags (10) which will be shown on the buyer's receipt but the weights documented by both the producer and the buyer are likely to differ. The producer may therefore only receive an end-payment for 390kg, since the weight of the copra supplied would have been affected during the various stages of transshipping, handling, and delivery. The question as to who should be held accountable for improper documentation and missing copra needs to be answered.
Price of packing bags
Producers buy bags to pack copra. About $17 is used to pack a tonne of copra. A single bag can be used three times before it wears out. Some millers slash the bags so there is no bag to return although return freight of the bags is deducted from the payment made to the producer. Producers therefore lose out twice financially when they are unable to reuse the bag to its maximum duration and when the return freight is deducted for bags which producers never received.
Remuneration
The problems faced by producers range from complete lack of transparency in the manner the producers are paid for their shipment of copra. The final weight and grading of copra is done in the milling stations in the absence of the producers. Producers have no choice but to accept whatever payment is made to them by the buyers. For example, Qalitu Enterprises were paid $490 per tonne instead of $500 as prescribed by the copra board. The agencies established to look into the plight of copra producers are not bothered and that's why producers are so disheartened and copra production is on decline.
Copra cess funds
For every tonne of copra sold to the buyer, $20 is deducted as cess levy. The levy is deducted by the buyer and credited to the producer's account with the Fijian Development Fund Board (FDFB). All acess deductions need to be paid to FDFB within a month of receipt of the copra being supplied by the producers. Apparently, cess levy is being deducted by the buyer but the money is not being forwarded to FDFB in a timely manner. The cess fund was set up to help producers in their time of need such as payment of children's school fees or other developments in the village. FDFB, which comes under the Ministry of Fijian Affairs, has also failed to issue statements to the producers and the FDFB is updating the accounts. In fact FDFB has not met in the past 10 years. The last statement received by the producers was in December 2004. The Consumer Council understands that there are only two millers in the country who are operating below capacity. Because of the "rip-offs" described above, many producers receive few benefits and are being forced to give up copra farming. Producers and millers are both affected as a result.
It is in the government's interest to revive the industry for a number of reasons, because it will:
Improve the quality of life for our rural people by increasing their income level and helping them to walk out of poverty,
Improve the shipping services to the outer islands and hence the state can save the franchise funds. Some of the shipping companies are making trips to the islands because of copra production. If the industry ceases to exist, these shipping companies will not consider services to the outer islands viable,
Create an alternative fuel at a time when the world price of petrol is on the increase, and n Reduce trade deficit by increasing our export.
To make the industry viable, copra producers must be encouraged same as the sugar industry to return the copra industry to its glory days. The council asks the government to:
Revamp CIDA so it operates as a commercial company and not an arm of the Ministry of Agriculture, q Address the plight of producers so 18,000 copra producers can contribute to Fiji's economy, and
Introduce an incentive scheme where producers receive rebate in cash for producing XXX tonnes of copra or reduced shipping charges or complete waiver of shipping charges

The plight of coconut farmers
By Danilo Suarez | May. 28, 2013 at 12:01am
9
Besides achieving the highest unemployment rate in the last three administrations, the present dispensation’s political will remains flaccid. Despite the much hyped propaganda of “Tuwid na Daan”, smuggling has gotten worse with an estimated smuggled value reaching $19.6 billion annually.

Smuggling has severely affected domestic agriculture and manufacturing. The Department of Trade and Industry and the Department of Agriculture have become so “lenient” under this administration in allowing foreign agricultural products from the region to enter the Philippine market and compete with our farmers. Related to this, the Philippine Palm Oil Development Council Inc. has expressed alarm that the market is now flooded with imported palm oil from Indonesia and Malaysia, a fact which is further aggravated by “technical” smuggling, specifically the undervaluation of palm oil products. The problem is compounded by the steep drop in copra prices. According to the Philippine Coconut Authority, current world market price for copra has stagnated at P18 a kilo in the last two years compared to P60 per kilo in 2010. PCA records also show that in 2012, the value of coconut exports dropped to P540 million from P960 million in 2011, a decrease of over 21 percent.

The coconut industry and the number of poor Filipinos it supports are just too massive to be ignored by this administration. It is one of the four major sectors of Philippine agriculture and it provides significant income, employment and foreign exchange to the Philippine economy. The PCA reports that the industry provides employment to more than 25 million Filipinos (40 percent of our national labor force) working in various coconut-based enterprises throughout the country. Over 340 million coconut trees occupy 3.56 million hectares of arable Philippine land which account for nearly 27 percent of total farmlands, yielding 15 billion nuts annually. This puts the country near the top in global coconut production, second only to Indonesia and contributing almost $2 billion in export revenues in 2011 alone.

Despite their important contribution, the coconut farmers are considered among the poorest of the poor in agricultural communities. Poverty incidence among the aforementioned 25 million Filipinos (this is more than one fourth of our entire population, mind you) who are totally dependent on the coconut industry is about 62 percent, which is three times our national average. Given this reality one can’t help but wonder how to reconcile this to the statistics provided by DA Secretary Proceso Alcala that the agricultural sector posted a 2.92 percent growth or a gross amount of P1.4 trillion at current prices last year.

Aside from problems of low productivity and small farm sizes, farmers comparatively realize a significantly much lower income than the other players in the market such as traders and processors. This has gotten worse in the past three years. Coconut farmers used to get about P4 thousand per harvest; they now get only about P1,500. Farm workers are also given to meager incomes commonly receiving only 50 percent of the legislated minimum wage rates. Due to limited cash flow opportunities in the rural areas, our coconut farmers and workers are often compelled to accept these unlawful wages out of desperation. They are also confronted with marketing-related difficulties such as the low and highly fluctuating prices and inability to find favorable market outlets for their products. Since farmers remain in the lowest levels of the market, they are primarily unable to add value to their products and reach more productive levels because of limited participation in the coconut distribution chain.

Additionally, our farmers are at the mercy of usurers and loan sharks who offer instant loans but with interest rates as high as 80-100 percent. With such a meager income, it is no wonder coconut farmers never make enough profit to pay back their loan, make enough to support their family or send their kids to school. We should not be surprised if this school year their children will make up one fourth of our national population who will not be able to enroll.

Based on PCA data, Calabarzon is still the largest contributor to the country’s coconut industry with over 529,781 hectares of land used as coconut farms and 30 percent of the population relying on the coconut industry for livelihood. 90 percent of the region’s coconut farmers are from the province of Quezon, the country’s leading coconut producer. Although primarily agricultural, the province has considerable potential for economic and business growth given the proper policy and program support. It is quite ironic that our farmers in Quezon remain among the poorest of the poor even while Secretary Alcala of the Department of Agriculture is a native of Quezon.

Incidentally, Secretary Alcala is one of the highest paid Cabinet members in this administration according to the latest COA report and is currently facing a multimillion graft charge for unlawful disbursements during his term as a congressman for his district. More intriguing is the fact that only during the interim of the campaign period for the recent elections did agricultural projects suddenly inundate the province of Quezon where his neophyte politician son ran but unfortunately lost his bid for the gubernatorial post. Do we need to wait another three years until the 2016 campaign season for the next batch of agricultural projects to reach Quezon?

The coconut industry is a dominant sector of Philippine agriculture: * Of the 12 million hectare of farmlands, 3.1M hectare is devoted to coconut * 68 out of 79 provinces are coconut areas * Over 324M bearing and non-bearing trees * 3.5M coconut farmers * 25M Filipinos are directly or indirectly dependent on the industry * Annual average of 5.97% contribution to GVA and 1.14% to GNP * 59% share in world coconut exports * Among the top 5 net foreign exchange earners, average of US $760M per year
Coconut farms are widely distributed nationwide, largely in regions of Southern Luzon in the North and Mindanao in the South. There are around 324 M coconut trees in the country, about 85% of which are considered productive. The coconut industry provides an annual average of 5.97% contribution to the GVA and 1.14% to the GNP.
A number of laws have been enacted since 1971 to institute various levies on the coconut industry. Notable among the various funds that have been imposed on the industry are the coconut investment fund, the coconut consumer stabilization fund, the coconut industry development fund, the coconut industry stabilization fund and the coconut reserve fund.
The proceeds of these funds are now the subject of a controversy on the unconstitutionality on the private nature of the funds. Our courts have not resolved the issue and the funds are still sequestered and frozen.…...

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