Poverty reduction and the lowly coconut tree


The government officially placed close to 40% of all Filipino families and 48% of all Filipinos today as either poor or subsistence poor.  How and where the government sets the poverty threshold will always be questioned by some quarters, but even these figures are more than alarming and tragic for a country which is so rich in natural and human resource endowments.

Joblessness is at the core of extreme poverty in the country today.  Poor people without jobs will remain poor.

In the past we tried to create more jobs by pursuing a model of industrialization with no indigenous base.  We imported cold rolled steel sheets, corrugated them in the Philippines, and called it industrialization.  We imported chemicals, shook them in the Philippines, and called it industrialization too.

Many decades and governments later we are still stuck up with ckd (completely-knocked-down) assemblers and sub-contracting industries that are neither producing downstream products nor providing enough jobs as we had hoped for.

We keep forgetting that agriculture is the mother of industry.  In fact, our poverty reduction goal and industrialization aim are never fully achieved because we persist in focusing our development strategy on import-dependent industries (that are already the domain of many other countries) instead of industries that utilize our indigenous resource.  

Manufacturing creates the wealth of a nation.  While more people may be employed in the service sector, it is the manufacturing sector that builds a vibrant export-oriented economy.  But in a world that gets more global by the day, the Philippines must determine and develop its peculiar, distinctive advantage, or else be drawn into global competition with a handicap.

What really constitutes our comparative advantage vis-a–vis the rest of the world?  Is it the electronics industry?  Or the garment industry, perhaps?  These industries are, no doubt, great foreign exchange earners.  But they are also so import-dependent for their raw materials and other production inputs that the value added to their products is less than 10%, most of which representing mere savings in terms of labor costs.  This is not to say that we should not have these industries at all.

What do we have in abundance which very few countries have to the same degree and which has great potential as a complete engine of development and growth?  Banana, sugar cane, pineapple, mango?  These agricultural products are also excellent foreign exchange earners, but not nearly as abundant and endowed with literally a thousand and one commercial and industrial uses.  This is not to say too that we should not support these agricultural products.

But take another look at the coconut tree.  Our combined export of coconut products has consistently stayed on among the top ten merchandize exports of the country with an average annual export revenue of close to US$900 million.  Coconut oil alone has remained up to now the country’s number one agricultural export in terms of value, accounting for about 67% of our total agricultural exports and surpassing all other agricultural products combined.  Coconut is still the largest, in fact the number one, net foreign exchange earner of the Philippines.

One in four Filipinos depends on coconut and its industry for a living.  Yet we hardly use our coconut.  While other coconut-producing countries like Indonesia, India and the South Pacific island states use their coconut to as much as 85%, our domestic utilization of coconut up to now is a low 20%.

We make soap and detergent products by importing hard alkyl benzene (HAB) at great cost to our foreign earnings, instead of simply using coco-fatty alcohol (CFA).  While many countries had already banned the use of HAB as a dangerous non-biodegradable pollutant, we continue to ignore our replenishable, biodegradable coconut which is all around us in 68 of our 79 provinces.

If we could constantly increase our domestic utilization of coconut, we would achieve many things — agri-based rural industrialization, for one.

Rural industrialization is possible by empowering small coconut farmers to own integrated coco processing plants through a corporation or entity owned by several coconut cooperatives.  This would provide us with an excellent opportunity to disperse industries and, thus, pump-prime development in the countryside.

Averaging 4 hectares or less in size, these owner-operated coconut farms cover nearly 1.9 million hectares, representing roughly 60% of all the coconut farms in the country.

Based on 3oo productive days in a year and the current production average of one ton copra per hectare, the initial processing capacity of a nucleus oil mill for such a venture, as an example, could be 50 tons per day, which can be achieved by installing two 25-tonner expellers within a consolidated estate area of say 15,000 hectares.

Such a consolidated estate could be formed by organizing fragmented holdings of small coconut farmers into a producer-supplier cooperative that will produce and supply copra to the nucleus oil mill at a much improved price for the farmers.

Around the nucleus oil mill can be established small to medium scale satellite manufacturing enterprises that will feed on the oil output and by-products of the oil mill, produce a variety of value-added downstream products and provide employment and livelihood opportunities to many of the people living in the area.

Based on a degree of success, the estate can be enlarged to cover bigger areas and milling capacity increased by just adding more 25-tonner expellers.

Envision a dispersal of medium size integrated coco processing plants throughout the entire coconut-growing areas in the country. And we are talking here of not just producing raw materials for the volatile world market but cooperative value-added production of a diversified range of finished products made out of coconut.  

The food uses of coconut alone can be quite diversified and our domestic market of about 92 million people is not really a small market.  Edible oil, for instance, is an excellent example of such food uses.  At present our annual per capita consumption of edible oil is only 7.5 kilograms.  This figure is still below the 10-13.2 kilograms of nutrient requirement set by the Food Nutrition Research Institute of the Philippines.  Considering a 2009 estimated population of 92 million Filipinos, a maximum 5.7 kilograms increase in our per capita consumption of edible oil would easily generate an additional demand of 525,400 metric tons.

There is also a growing global outcry for the use of bio-diesel instead of fossil fuels.  Keeping the air clean is the principal consideration for this.  And if coco-biodiesel (coco methyl ester, or CME) can gradually replace an increasing percentage of our local diesel and bunker oil requirement, we would reduce our dependence on imported oil and at the same time acquire another safety net in the event of a sharp decline in the world demand and prices for coconut.

In still another area, the coconut husk that our coconut farmers tend to just throw away is actually an excellent environmentally friendly material: as natural fiber for cordage, car seats and upholstery; as soil conditioner and fertilizer; as material and binder for composite panel board; and as a versatile material in a host of other industrial products and application.

When many coirflex centers are set up in the proposed consolidated estates and fibrillators are dispersed to the various cooperatives in designated catchments areas, the realization that waste is wealth can be quite dramatic.

There are literally a thousand and one commercial, industrial and pharmaceutical uses of coconut.  I merely described a few of these — enough to illustrate that a coconut-based industrialization can jump-start and sustain our economic development and achieve our goal of reducing poverty in the country.  And the political will to achieve it is quite badly needed today.

Role of government.  The idea of a government co-opting with a private industry to achieve shared goals and objectives is not new.  So many governments are providing massive state support to their comparative advantage  industries that they are sometimes referred to as Japan, Inc. or China, Inc or South Korea, Inc, and so on and so forth.  The idea is not more government per se but more government support for an important industry that badly needs it and an industry which is badly needed by a quarter of the nation’s population.

Do we have a Philippines, Inc on coconut?  It is, after all, our comparative advantage industry vis-a-vis the rest of the world.

Author:  Rene “RC” Catacutan
Published 13 August 2010


A sampling of the commercial and industrial uses/products of the Coconut Tree  


Buko (young coconut) juice, the quintessential tropical refreshment drink, which is also good for renal disorder. 


Copra — dried coconut fruit meat which is the most saturated in edible oil (about 70% oil content) among all known sources of vegetable oil. 


Coconut refined cooking oil    


The “Coconut Palace” in Manila.  Built in 1978 with materials derived from the coconut tree as a showcase on the versatility of the coconut tree and its viability as a source of materials for housing and construction, furniture and handicraft products. 


Coco-biodiesel (coco methyl ester, or CME), a renewable, biodegradable and eco-friendly fuel of the future.  It emits less smoke and is almost sulfur free.  Probably the next big thing after coconut oil (currently the country’s top agricultural export).


Coconut shell briquette charcoal, rated by the leading manufacturers of filtering elements in the world as the best carbon-based material for water and air filtration system because of its dense atomic particles.


Coconut milk for cooking and baking


Coconut husk fiber, a versatile eco friendly material:  as natural fiber for cordage, car seats and upholstery; soil conditioner and fertilizer and material for composite panel board.


Cold-pressed coconut virgin oil, dubbed as the healthiest oil on earth and the safest to cook with.  It does not contain trans fatty acids and does not break down even at high temperature.  Also used to produce pharmaceutical and cosmetic products.


Ingredient for a wide variety of meat, fish and vegetable dishes


Coconut lumber for housing and construction, furnitures and handicraft products.


Vinegar from the sap of the coconut tree, a key ingredient of the world famous “adobo” meat dish.


Bath soap made of biodegradable coco fatty acid (CFA) from coconut


Furnitures made of coconut wood


Coconut hand and body moisturizing lotions


Ingredient for a wide variety of baked products


Cordage made of coconut husk fiber 


Dessicated coconut — shredded (or flaked, or ground) and dried coconut meat used in a variety of recipes such as cakes, pastries and cookies. 


Composite panel board made of coconut husk fiber for housing and construction


Ingredient for pastries and confectioneries


Coconut hair conditioning shampoo


Unique and eco friendly tiles and panels from coconut shells and husks









Ingredient for make up remover and a host of other cosmetic and beauty products


 Nata de coco (Spanish for “cream of coconut”), a chewy, translucent, jelly-like food product produced by the fermentation of coconut water.  Originating in the Philippines, nata de coco is commonly sweetened as a candy or dessert.  Also used in pharmaceutical products as tablet coating agent.


Coconut shells, husks, leaves and wood used as materials for a wide variety of handicraft products. 


Sugar, drink, nectar/syrup and vinegar derived from the sap of the coconut tree.


Lambanog liquor, a sampling of a variety of liquors, wines and fermented beverages derived from the sap of the coconut tree.