PHILIPPINE PALM OIL INDUSTRY

I. History1

1950 Menzi Agricultural Corp. established the first palm oil plantation
covering 280 hectares in Basilan, which was later turned over to farmers
cooperative.

1960 Kenram Industries, Inc. in Sultan Kudarat converted their ramie

plantation to palm oil and established 1,100 hectares nucleus farm and 3,000
hectare outgrower farms with a 20-ton capacity crude palm oil mill.

1981 Guthrie of Malaysia and a group of Filipino investors established the

Filipinas Palm Oil Plantations, Inc. in Agusan Del Sur and developed 8,000
hectares of oil palm and established a 40-ton crude palm oil mill.

1983 Filipino, Singaporean and Malaysian investors organized the Agusan

Plantations, Inc. (API) through a joint venture; developed about 1,800
hectares in Agusan Del Sur.

1997 API formed a sister company, the Agumil Phil. Inc. which established a
20-ton crude palm oil mill that started operating in 1998.

2000-2012 Oil palm plantations were developed in Agusan Del Sur, Sultan
Kudarat, Compostela Valley and Bohol. As of 2012, the total palm oil area in
the country reached about 56,000 hectares.

2013 The Philippine Oil Palm Industry Roadmap 2014-2023 was launched.

II. Market Size

A. Production

The Palm Oil Industry Roadmap 2014-2023 aims to increase the cultivation
areas to 353,000 hectares from 56,641 hectares in 20122. As of 2016, the
total land area dedicated to palm oil is approximately 66,000 hectares.3

Oil palm plantations are concentrated in Mindanao, particularly in Region XII

and CARAGA. The Philippines has eight existing palm oil mills with a total
rated capacity of 265 metric tons of fresh fruit bunch (FFB) per hour, which
are owned by six (6) companies namely, 1) Agumil Phil Inc. (AGPI), 2) PALM
In., 3) A. Brown Energy Resources Devvelopment (ABERDI), 4) Kenram
Industrial and Development, Inc. (KIDI), 5) Filipinas Palm Oil Plantation, Inc.,
and 6) Univanich Carmen Palm Oil Mill.

1
Presentation of Dir. Brielgo O. Pagaran, Regional Director, DTI-CARAGA and Palm Oil Industry Cluster National
Coordinator
2
http://www.philstar.com/business/2013/12/24/1271450/pca-prepares-palm-oil-industry-roadmap
3
https://www.indexmundi.com/agriculture/?country=ph&commodity=palm-oil&graph=area-harvested
 With the total of 265 metric tons per hour capacity, the Philippines is capable
of producing 1.5 million metric tons of palm oil per year. If fully utilized, this
production capacity requires a total of 86,660 hectares of palm oil plantation.4

Table 1. Palm Oil Production in the Philippines by Region as of 2016.

Area Planted Volume
Region Province
(has) (metric tons)
MIMAROPA Palawan 5,900 19,426.84

Central Visayas Bohol 6,500 25,468.50

Zamboanga Del Norte 4,553 2,984.49

Zamboanga Peninsula
Zamboanga Sibugay 15 28.33
Bukidnon 1,550 29,650.00
Northern Mindanao
Misamis Oriental 2,790 12,747.00
Davao Del Norte 122 807.81

Davao Oriental 72 76.50

Davao Region
Compostela Valley 855 3,077.19

Davao City 20 168.40

North Cotabato 6,115 55,913.68

Sarangani 250 24.40

SOCCSKSARGEN
South Cotabato 1,525 8,221.84

Sultan Kudarat 9,955 89,015.09

Agusan Del Norte 372 1,765.00

Agusan Del Sur 16,397 165,271.58

CARAGA
Surigao Del Norte 3 --

Surigao Del Sur 625 1,780.97

ARMM Maguindanao 2,450 23,101.00

TOTAL 60,069
Source: CountrySTAT, Philippine Statistics Authority.

4
Presentation of the Philippine Palm Oil Industry Roadmap 2014-2023 by Dr. Pons Batugal, Director, Governing
Board, Philippine Coconut Authority.
 B. Import / Export

The Philippines is a net importer of palm oil as local production is only 15

percent of demands in the local market. However, in the last several years,
the exports of crude palm oil (CPO) increased from 3,513 MT in 2010 to
73,294 MT in 2013. Export destinations of CPO include Germany, Malaysia
and India among others.

C. Investments and Institutional Support

Since the time of President Gloria Macapagal-Arroyo, the Philippine

government has viewed palm oil as a low lying fruit that can be maximized for
national development. The industry has been deemed as a sunrise industry
in CARAGA due to its economic potential.

President Benigno Aquino actively pursued the strategy of aggressively

expanding palm oil plantations culminating in the efforts to craft the Palm Oil
Industry Roadmap.

Currently, President Rodrigo Duterte is pushing for the development of about

80,000 hectares in country for palm plantation with Malaysia as target market.
This was a result of the Presidents two-day state visit in Malaysia in
November 2016. Presidential Spokesman Ernesto Abella stated that
Malaysian investors were upbeat in investing in palm oil production. 5

Following this statement, Alif Oil Trading Co., a Malaysian company is

planning, to set up a $1-billion palm-oil plantation in the Philippines, according
to the Philippine Economic Zone Authority (Peza). 6Peza Director General
Charito B. Plaza said the company requires 128,000 hectares of land for palm
oil in Agusan del Sur. Plaza also said the $1 billion is just an initial estimate
as refinery plants will likely be set up in Mindanao and Palawan. The Peza
chief hinted at the possibility that the Malaysian firm may also produce oil for
the domestic market.

Due to the expanding size of the industry, Sec. Manny Piol of the
Department of Agriculture proposed the creation of a separate agency for oil
palm to hasten the industrys development and unlock the potential of palm-
oil production, which is badly in need of government support. Towards this
end, Philippine Palm Oil Development Council Inc. (PPDCI) Vice President
Erwin Garcia said a bill calling for the creation of the Philippine Palm Oil
Development Authority is now being crafted by Sec. Piols team.7

In the absence of a dedicated regulatory body, the palm-oil industry is being

overseen by the Philippine Coconut Authority (PCA), an attached agency of
the Department of Agriculture (DA).

5
http://www.philstar.com/headlines/2016/11/13/1643291/philippines-opens-doors-malaysia-palm-oil-
production
6
http://www.businessmirror.com.ph/malaysian-firm-to-invest-1-billion-in-phl-palm-oil-plantation/
7
http://www.businessmirror.com.ph/pinol-eyes-palm-oil-regulatory-body/