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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed

12 April 2012

USDA GAIN: Philippines Oilseeds and Products Annual 2012USDA GAIN: Philippines Oilseeds and Products Annual 2012

The Philippines was the 3 rd largest market for U.S. soybean meal (SBM) and the world’s largest coconut oil (CNO) exporter in both 2010 and 2011. Continued economic growth and an expanding middle class drove imports of SBM to 1.72 million tons in 2011. Though consumption will likely continue growing modestly, imports in 2012 are expected to slightly decline to 1.6 million tons due to adequate stocks, before increasing to 1.70 million tons in 2013.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

After declining in MY10/11, copra output will likely increase 20 percent to 2.50 million tons in MY11/12, and reach 2.55 million tons in MY12/13. As a result, copra meal and CNO consumption are likely to increase through MY12/13. However, increased use of imported palm oil (estimated at 250,000 MT in 2011) to replace CNO for local food purposes is expected to continue through MY12/13 due to persistently high CNO prices. Copra meal exports are expected at 500,000 tons while exports of CNO are forecast at 925,000 tons in MY11/12. Exports of copra meal and CNO are likely to increase to 510,000 tons and 950,000 tons, respectively, in MY12/13 as a result of the forecasted improvement in copra supply.


Oilseed, Copra

Oilseed, Soybean


According to the Bureau of Agricultural Statistics (BAS) of the Philippine Department of Agriculture (DA), the value of farm output in 2011 expanded 2.3 percent, up from the 0.3 percent contraction in 2010 but below the DA’s target of 3 to 3.5 percent. The DA had expected farm growth at 5 percent but reduced its target due to significant losses as a result of strong typhoons in 2011. The DA expects that a return to normal weather patterns combined with improved investments will result in farm output growth of 4.5 to 5.0 percent in 2012.

Downward adjustments were made to Philippine copra production in MY10/11 and MY11/12 (October to September) consistent with similar revisions made by industry to its original CY2011 forecast. On a market year basis, coconut production in MY10/11 was pared down to 2.1 million tons from the previously predicted 2.3 million tons. The combined effect of the El Nino dry spell in early 2010, and the stress of three successive years (2008–2010) of heavy nut-bearing on coconut trees were more acute than earlier predicted.

Industry forecasts coconut production in 2012 to recover and increase by close to 20 percent to over 2.57 million MT. The growth is largely based on favorable weather conditions (above normal precipitation) in key coconut growing areas and copra output is expected to increase modestly in MY12/13 compared to the previous year’s level.

Area harvested and coconut tree numbers were adjusted based on BAS data. The area and number of trees have been increasing due to replanting and fertilization programs by the DA. These programs are likely to be enhanced by the DA’s increased budget for 2012.

Soybean production, on the other hand, is expected to remain insignificant through 2013. Meanwhile, oil palm production, while also insignificant relative to local coconut production, has been growing modestly. From 516,000 MT in 2009 (in fresh fruit bunch terms), oil palm output grew 10 percent to reach 565,000 MT in 2010, according to the most recent data available from the BAS. Oil palm production will likely continue growing for the next 3-5 years, enhanced by strong palm oil demand brought about by persistent high CNO prices.


In the Philippines, the coconut palm is called the tree of life as almost all its parts are utilized by small rural households. Copra is the dried white flesh of the coconut fruit that is then crushed to extract CNO. The nut itself is a source of other high-value products which are starting to become commercially available for the local and/or export markets. These include coco water, virgin coconut oil, coco chips, coco jam, coco sugar, coco vinegar, frozen coco meat, liquid coconut milk, coconut milk powder, coco liquor, among others. Increased production of these products, however, displace coconuts that otherwise could have been used for copra production. Hence, while coconut supply dwindled in 2011, demand for alternative uses increased. This combination drove copra prices up starting in 2010.

Annual average local copra prices were at P29.88 ($0.69) per kilo in 2010, and increased 61 percent to an average annual price of P48.03 ($1.11) per kilo in 2011. Copra prices in 2011 peaked in April at P60.51 ($1.40) per kilo.

Copra crush was pared down due to downward revisions made to copra output in MY10/11. For MY11/12, crush consumption is forecast to increase 12 percent to 2.55 million MT as coconut production recovers and increases from the previous year’s level. Copra prices have started easing but remain comparatively high. Current prices are in the in the vicinity of P33.50 ($0.78) per kilo. Copra crush in MY12/13 is predicted to modestly increase as coconut production increases.

There remains to be only one soybean crusher in the country that imports a small amount of soybeans each year. The small amount of locally-grown soybeans is mainly used for food purposes. There is a small but growing feed demand for whole beans (full-fat soya) from the U.S. that the trade expects will continue through at least 2013.

Soybean crush was pared down in 2011 reflecting downward adjustments made to bean imports during the year. No dramatic change in soybean crush is predicted through 2013.


Overall 2011 export earnings for coconut products reached $1.96 billion, over 20 percent higher than the $1.63 billion in 2010 revenues, according to the Philippine Coconut Authority (PCA). An estimated 39 coconut-derived products were exported to at least 100 countries in 2011.

The following are copra import statistics for 2009-2011 based on Global Trade Atlas (GTA) data (copra imports for CY2011 in the PSD Table were adjusted accordingly). Indonesia was the dominant source of Philippine copra imports in 2011.

Copra imports are likely to decline from the MY10/11 level through MY12/13 as a result of improving copra production and supply. Exports of copra are expected to remain minimal through MY12/13.

For soybeans, imports through 2011 are insignificant and provided in the following table based on GTA data. Bean imports in 2011 declined from the previous year’s level due to high global bean prices. Imports from the U.S. dominated the market with a 61 percent share, an improvement from the 39 percent share in 2010. In terms of value, bean imports from the U.S. in 2011 were valued at roughly $36 million, 24 percent higher than the previous year’s level, according to BICO data. Soybean imports are likely to increase modestly through 2013 as prices stabilize and ease.

As in most years, there were no Philippine soybean exports in 2010 and 2011.


Oilseed inventories are basically on-farm and/or private stocks. Copra stocks in MY10/11 were adjusted downwards as a result of reduced supply, but are expected to increase in MY11/12 as coconut production increases compared to the previous year’s level.

Soybean stocks were pared down in 2011 due to less than expected imports, and are expected to marginally decline in 2012. Stocks are likely to stay at this level in 2013.


Executive Order No. 61 (EO 61) signed October 2011 took effect in January 2012 and adjusted Most Favored Nation (MFN) tariff rates on a range of agricultural products. Copra (HS Code 12.03) and soybean (HS Code 12.01) duties were unchanged at 10 and one percent, respectively, under EO 61 for the period 2011-2015.

On the other hand, copra and soybean imports originating from countries of the Association of South East Asian Nations (ASEAN) are duty-free (starting January 1, 2010) under the Common Effective Preferential Tariff (CEPT) scheme of the ASEAN Free Trade Area (AFTA). The lower CEPT duties of the AFTA were implemented by Executive Order no. 850 signed by then President Gloria Macapagal-Arroyo on December 2009.

Increased coconut production in the next 3 years will be enhanced by a higher DA budget. Under the 2012 General Appropriations Act, the DA has been allotted a P48.7 billion ($1.1 billion) budget, 61 percent higher than the P30.4 ($0.71) billion allocation in 2011. The majority of the 2012 DA budget will be used for improving rural infrastructure including irrigation, farm-to-market roads, and post-harvest facilities.

The PCA is the DA-attached agency which oversees the development of the Philippine coconut and other palm oil industries. For 2012, the PCA has been allocated P838 million ($19.5 million) to fund its planting/replanting efforts and P502 million ($11.7 million) for its fertilization program.

Meal, Copra

Meal, Soybean


Copra meal production was revised downwards in MY10/11 and MY11/12 consistent with similar adjustment made to copra crush as a result of reduced copra production in CY2011. Copra meal output in MY11/12, however, is still expected to surpass the previous year’s level. For MY12/13, a further slight increase in copra meal output is likely as a result of increased copra production during the period.

With just one local soybean crush facility, local SBM production remains insignificant. SBM production was pared down in 2011 due to reduced crush. Downward revisions were also made to SBM production in 2012, but output is still likely to marginal increase from the 2011 level. The slight increase in output is predicted to extend through 2013.


After expanding 7.3 percent in 2010 (the highest in 24 years), Philippine Gross Domestic Product (GDP) slowed to 3.7 percent in 2011, below the revised 4.5 to 5.5 percent Philippine government (GPH) forecast. Agriculture, fisheries and forestry expanded by 2.6 percent in 2011, up from the 0.2 percent contraction in 2010. Industry grew by 1.9 percent in 2011 from 11.6 percent in 2010, while the service sector expanded by 5.0 percent from 7.2 percent in 2010. The slowdown in 2011 was attributed by economists to under spending by the GPH in infrastructure, the weak performance of the farm sector, and the crisis in the U.S., Europe and Japan which affected export performance. Inflation in 2011 averaged at 4.7 percent, well within the GPH target range of between 3 and 5 percent, but higher than the 3.9 percent average in 2010.

For 2012, the Philippine economy is expected to remain resilient. GDP growth is predicted to accelerate to 5-6 percent, according to GPH economic planners, with inflation expected to average between 3 to 5 percent in 2012. Meanwhile, in its annual review of the Philippine economy, the International Monetary Fund (IMF) forecasts GDP growth at 4.2 percent in 2012, and possibly to 4.7 percent in 2013. Inflation is likely to remain within the 3 to 5 percent official target range in 2012, according to the IMF.

Despite the economic growth in previous years, the annual population growth rate of 2 percent of the more than 97 million Filipinos in 2011 has meant that the Philippines has fallen behind most of its Asian neighbors in terms of per capita income (estimated at $2,255 in 2011, according to the CIA Fact Book). Roughly half of the population is considered poor, and high income disparity persists. The richest 30 percent of families earns nearly two-thirds of total incomes, while the poorest 30 percent share roughly only nine percent.

At the same time there are growing middle and upper classes whose primary focus is on quality. Eating out for this market segment is gaining popularity as indicated by the growing urbanization and flourishing food retail industry. In addition, the millions of Filipinos in this category are consuming less grain and more protein.

Export opportunities as a result of the 2011 declaration by the Office International des Epizooties (OIE) that the Philippines is free from Foot-and-Mouth Disease (FMD) are likely to enhance higher feed demand by large commercial farms. On the other hand, small backyard hog farmers continued to struggle with high feed and production costs for most part of 2011. Increasing feed costs has made cheaper feed alternatives, including distillers dried grains (DDGS), attractive. Increased DDGS use is likely through 2013. Prices of most feed ingredients have started to abate in the first quarter of 2012, according to industry contacts. However, farmgate prices of local livestock (i.e. hogs) have not eased commensurate to the decline in prices of feed ingredients.

Although downward revisions were made to SBM consumption estimates in 2011 and 2012 due to increasing prices of feed ingredients, the expanding middle class as a result of continued positive economic growth, and meat-export opportunities are expected to result in modest growth in SBM demand through 2013. Growth in feed demand is expected to be driven by large commercial farms as small raisers continue to struggle with high production costs.

Copra meal consumption was pared down in MY10/11 as a result of the dramatic decline in copra production. As mentioned in the previous annual report, copra meal is not a protein substitute of SBM. Because a considerable volume of local copra meal is wasted and spoils due to the inadequate handling and storage facilities, copra meal consumption is not an ideal measure of domestic animal feed demand. Modest increases in copra meal demand are predicted through MY12/13 to reflect the steady improvement in overall copra supply.


Copra meal exports through 2011 are provided in the following table based on GTA data (exports in the PSD Table were adjusted accordingly). Exports of copra meal in 2011 declined 57 percent from the previous year’s level and the average traded price for copra meal was $187.05/MT (73 percent higher than the average price of $108.12/MT in 2010), according to industry data.

Industry predicts copra meal exports to increase and exceed 500,000 MT in 2012 due to increased copra supply compared to the previous year’s level. Hence, copra meal exports in MY11/12 are expected to surge close to 40 percent. For MY12/13, exports are likely to continue growing, albeit at a slower rate compared to the previous year.

There were no copra meal imports on record in 2011 and no imports are predicted through 2013.

For SBM, imports for 2009-2011 are provided in the following table and are based on GTA exporter data. Imports in 2011 were revised downwards as feed demand was less than expected. Similarly, imports in 2012 were also pared down due to adequate SBM stocks entering the year, and are expected to decline from the previous year’s level.

For 2013, SBM imports are likely to recover and increase from the previous year’s level as the meat demand by the growing middle class continues to modestly rise. SBM exports are expected to remain insignificant through 2013.

Meanwhile, mainly due to rising prices of feed ingredients, imports of DDGS increased 14 percent in 2011 compared to the previous year’s level. From 27,000 MT in 2006, the year it was first imported, DDGS imports have consistently grown to reach 186,000 MT in 2011 with the U.S. consistently dominating with an over 90 percent market share. More DDGS imports are expected in 2012 and beyond as raisers continue to search for cheaper feed ingredients.


Philippine oilmeal inventories are held by the private sector. Copra meal stocks were revised downwards in MY10/11 due to similar revisions made to copra crush. Inventories are predicted to remain at this level through MY12/13.

SBM stocks, on the other hand are expected to weaken through 2013 as local feed demand increases modestly in the next two years.


Copra meal imports (HS Code 2306.50.00) will continue to be levied a 10 percent MFN import tariff for the period 2011-2015, according to EO 61. However, EO 61, reduced import tariffs for SBM (HS Code 23.04) from three percent to one percent through 2015. Copra meal and SBM imports may also be brought in duty-free under the CEPT scheme of the AFTA.

Oil, Coconut

Oil, Soybean


CNO production in MY10/11 and MY11/12 were pared down due to the considerable drop in copra output, and consequently copra crush in 2011. CNO output in MY11/12, however, is expected to grow compared to the previous year’s level as copra production begins to recover and increase. CNO output is expected to continue growing modestly in MY12/13.

Philippine SBO production is insignificant relative to overall Philippine vegetable oil production and is supported mainly by imported beans. SBO output in 2011 and 2012 were reduced due to tightness in overall soybean supply. SBO production will likely stay flat through 2013 due to weak demand.

Like SBO, local palm oil production remains miniscule (data in not readily available), but is expected to slightly grow for the next 3-5 years as a result of high CNO prices.


Mainly due to the decline in coconut output, CNO prices were volatile starting 2010. From P33.81 ($0.78) per kilo in January 2010, CNO prices more than doubled reaching P71.52 ($1.65) per kilo by December 2010, according to industry reports. The average CNO price for 2010 was P48.37 ($1.12) per kilo. Prices continued to increase in 2011 peaking at P98.71 ($2.27) per kilo in February before settling at P69.29 ($1.60) per kilo by December 2011. The average CNO price for 2011 was P78.25 ($1.80) per kilo, or 62 percent higher than the previous year’s average.

Edible oil prices have started to ease in early 2012 but remain comparatively high. CNO was priced at P76.20 ($1.78) per kilo in mid-March 2012, according to data from the PCA. Trade sources attribute increasing global edible oil prices to the increasing demand from India and China, as well as increasing fuel oil prices as CNO is the preferred local biodiesel feedstock.

All components of domestic CNO consumption (i.e. industrial, food and feed use) were adjusted downwards in MY10/11 due to high prices. Much of the decline in CNO demand was attributed to the drop in food use consumption as shifting to palm oil increased significantly (see Oilseeds, TRADE). While overall CNO consumption is likely to recover and increase in MY11/12 as coconut production improves, increased palm oil use for food consumption is predicted through MY12/13 due to high CNO prices.

SBO, on the other hand, is mainly used for mayonnaise and salad dressings, and the local industry does not consider it to be a complete CNO-substitute. SBO industrial demand was pared down in 2011, and is expected to stay at this level through 2013. Food use consumption, although revised downwards in 2011, is likely to increase marginally through 2013 as a result of the growing middle class, and expected to drive overall consumption during the period (see Oilmeals, CONSUMPTION).


CNO is the top agricultural export of the Philippines. After CNO exports increased 62 percent in 2010, 2011 exports declined roughly 40 percent to 830,000 MT, as copra supply tightened due to the delayed effects of the drought in early 2010. Prices in 2011 reacted and surged 83 percent to an average $1715/MT from an average $936/MT in 2010, according to industry data. CNO export revenues reached $1.41 billion in 2011 for a 12 percent increase over the 2010 earnings of $1.26 billion, according to the PCA.

On a market year basis, CNO exports in MY10/11, including those destined for the U.S., were adjusted based on GTA data. Exports in MY11/12 are expected to post a 4 percent increase to 925,000 MT, from the 897,000 MT level during the previous year.

The following are SBO imports for 2009-2011 based on GTA data (trade figures in the PSD Table were adjusted accordingly). Imports increased 77 percent in 2011 as CNO prices surged. SBO imports are likely to marginally increase through 2013 due to the expanding middle class.

There were likely no SBO exports in 2011, and none expected through 2013.

Provided below are palm oil imports for 2009-2011 based on GTA exporter data. Palm oil imports increased 78 percent in 2010 as a result of the elimination of import duties under the AFTA (see Oils, POLICY). In 2011, imports again dramatically increased by 353,000 MT or roughly 170 percent from the 2010 level to reach nearly 572,000 MT. Palm oil imports are likely to be significant through 2013 due to high CNO prices.


Like Philippine oilseed and oilmeal stocks, CNO inventories are private sector held. CNO ending stocks were revised downwards in MY10/11 as copra output declined steeply. Stocks are likely to increase in MY11/12 and MY12/13 due to increased coconut production and copra supply.

No dramatic change in ending SBO stock levels are predicted through 2013. SBO inventories are also held by the private sector.


EO 61 raised tariffs for crude CNO (HS Code 1513 11.00) from 3 percent to 10 percent through 2015. However, imports of CNO may still be brought in duty-free under the CEPT scheme. Imports of SBO, (HS Code 15.07) are subject to a 7 percent MFN duty through 2015, unchanged prior to the issuance of EO 61, but may also be imported free of duty under the CEPT scheme.

Palm oil imports (HS Code 15.11) are levied a 15 percent tariff under EO 61 but are duty-free under the CEPT of AFTA as of January 1, 2010.

April 2012

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