The Philippines is the second largest producer of coconut products in the world, next to Indonesia. In 2019, the coconut sector contributed more than $1 billion in export revenues. As the top exporter of coconut oil in the world, the Philippines cornered 52 percent of the global market in 2020.
The country has about 3.5 million coconut farmers, according to the Philippine Coconut Authority. On top of this, some 25 million Filipinos are dependent on the coconut industry.
Unfortunately, in 2010, palm oil overtook coconut oil as the top-selling cooking oil in our grocery stores. Most of the palm oil products are reportedly imported from Indonesia and Malaysia.
Dr. Jesus Lim Arranza, BusinessMirror columnist and chairman of the Federation of Philippine Industries, blames the unabated smuggling of palm oil for the shrinking share of coconut oil in the local market. In his column on September 7, 2022—Palm oil smuggling: Triple whammy to the country—Arranza said: “Coconut industry players have been complaining to me that imported palm olein has been flooding the market. This smuggled oil is allegedly being sold in the country as cooking oil.” He added that smuggling of palm oil is threatening to kill the country’s coconut industry that employs millions of Filipinos.
“I am pleased that the House Committee on Ways and Means has initiated a probe on palm oil smuggling in April. Committee Chairman and Albay Rep. Joey Salceda estimated that government revenue losses has reached P45 billion as a result of the misdeclaration of P300 billion worth of palm oil as animal feeds additives,” Arranza said.
The injustice gets worse. “Our coconut oil is currently being used as biodiesel additive. Some of the complaints I received was that palm olein products are not only sold as cooking oil in the country; they are also being used as biodiesel additives, giving unfair competition to our coconut oil,” Arranza said.
Based on Bureau of Animal Industry and Bureau of Customs records, millions of kilograms of palm olein that entered the country were declared as additives for animal feeds, hence not covered by the 12-percent value-added tax (VAT), according to Arranza. The BAI is the agency that issues sanitary and phytosanitary certificates for palm oil imports.
Arranza, who has been fighting smuggling and illicit trade for years, said: “What I find extremely anomalous is the fact that VAT-free importation of palm olein being declared as animal feeds additives has been growing by leaps and bounds despite the fact that the Philippine hog sector has been devastated by African swine fever outbreaks.”
He cited the Food and Agriculture Organization report saying that“since the Department of Agriculture confirmed the first outbreak of African swine fever in the Philippines in July 2019, as of July 2022, 53 provinces, 704 cities and municipalities, and 3,832 barangays have experienced ASF outbreaks.” There was an unresolved ASF outbreak until July this year, Arranza said, but imports of palm olein being declared as additives to animal feeds surged to 14,281,972 kilograms in 2021!
“We have an anomalous situation that can cause a triple whammy to the country: First, the government is losing billions of pesos in foregone revenues as a result of the misdeclaration of palm oil imports as animal feeds additives, which is VAT-free; second, palm olein imports unjustly compete with our own coconut oil products in the market, which may ultimately kill the coconut industry; third, millions of jobs will be lost if coconut farmers stop planting the crop and coconut oil mills are forced to stop operations. This is bad for the Philippine economy,” Arranza said.
When President Marcos decided to hold the post of Agriculture secretary in June, he cited the urgent need to address challenges in the sector and boost production to prevent food shortages and price increases.
The President said he has three “dreams” for the country’s agriculture sector—sustainable livelihood for farmers, food security, and affordable food for all. It would do well for the Chief Executive to protect our coconut farmers by stopping palm oil smuggling. Our 3.5 million coconut farmers and the 25 million Filipinos employed by the coconut industry can help him realize his wonderful dreams for Philippine agriculture.