Carpio_Viability of Coir Processing Plants

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Viability of Coir Processing Plantsiability of Coir Processing Plants::Philippine ExperiencePhilippine Experience

By:

Chalito P. Dizon, Dina B. Masa, Carlos B. CarpioPhilippine Coconut Authority

Diliman, Quezon City, Philippines

International Workshop on Ecocoboards, 1-3 October 2007, Days Hotel, Tagaytay City


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I. IntroductionI. Introduction

A. Historical Background

1. Earlier Developments

- Philippine Gov. Gen. Sebastian Hortado de Corcuera decreed the planting of200 coconut trees by village chiefs and 100 by serfs.

- Coir used for caulking leaking ships for both military and commercial ocean-

going vehicles (Galleon Trade between Mexico & RP).

- Latter part of 17th century coir was used as coir ropes/twines in fishing andfarming purposes.


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2. Modern Developments

- Japan paid RP with coir extraction machineries as part of its war-damagereparations payment.

- 60s till 80s, about 47 processing plants were established, producing even

car seats.

- arrival of synthetic fiber and polyurethane with cheaper prices affected thecoir industry

- only one (1) coir processing plant survived

- estimated daily coir production amounts to 160 MT (2006)


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II.II. SituationerSituationer

A. Industry SWOT Analysis

1. Strengths- Enough raw materials, about 4.8B coconut husks annually(40% of 12B coconut husks)

- Save the Earth/Environment Movement- Return to the use of natural fiber rather than synthetic ones

2. Weaknesses- High freight costs- High energy and labor costs- Low or unstable prices

- Inefficient machineries and equipment- High lending interest rates of banks

- Major players tend to produce baled raw fiber only

3. Opportunities- Emerging new applications of coir and coir dust products

- Growing markets for coir and coir dust products- Availability of locally fabricated coir processing machines

4. Threats- Cheaper substitutes such as foam and plastics

- Lack of research and development- High prices of locally fabricated coir processing machineries

and equipment


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B. Firm Level Analysis

The viability of coco coir processing plants is affected by the following factorsand how these factors are made to work positively:

1. Investments

- beginning production capacities at 5 MT coir (50T CH3)/day

- financial exposure of P 7M and up

- enough working capital

2. Freight Costs

- strategically located near international ports

- good roads, communications, power and water systems

- competitive freight costs.


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3. Quality and Efficiency

- RP shall improve on quality of its coir products

- Competitors India & Sri Lanka have comparatively better quality coirproducts

- Quality products fetch good price

4. Credit

- banking system but high interest rates at most 18% (prohibitive)

- Agricultural Competitive Enhancement Fund (ACEF)

* interest free and collateral-free for projects of small farmers andfisherfolk

* collateral-free loan, except when required by the EXECOM of ACEF

* subject to equity participation by private sectors proponents


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a. Mode, Credit

- interest-free loans to eligible proponents with income generatingprojects

- collateral-free loan, except when proponent is required- subject to equity participation by a private sector proponents, viz:

SME Category ACEF Loan Equity TotalProj. Cost

Micro 80% 20% 100%(not more than P3M)

Small 70% 30% 100%(P3.000001M to P15M)

Medium 60% 40% 100%(P15.000001M to P100M)

- interest-and collateral-free loans for projects of small farmers andfisherfolk falling below the minimum of ACEF assistance of (P0.500M)


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b. Loan Disbursement/Repayment Mechanism

Loan disbursement/repayment mechanism shall be governed byexisting guidelines, rules and regulations of the government on therelease of funds to, and collection of loans from, the proponents.

5. Others

- Lack of market

- wrong location planning

- concentration of deco plants in one (1) area

- high energy and labor costs

- fluctuating prices


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III. Production/Supply by RegionIII. Production/Supply by Region

- Last ten (10) years, coir production concentrated in Southern Tagalogaveraging 1,368.38 MT

- Southern Mindanao slowly caught up averaging 1,058.38 MT

- Worthwhile watching are Eastern Visayas & Northern Mindanao with bigprocessing plants put up in these areas.

A. Coconut Production/Potential Coir Equivalent

1. Coconut Production

Table No. 1 Coconut/Husk Production and Coir Equivalent

Year Copra Terms Nut Equivalent Husk Potential Coir(million MT) (Billion) Equivalent Equivalent

(Billion) (000,000 kgs.)1997 2.600 13.627 13.627 545.0801998 2.500 13.102 13.102 524.080

1999 1.374 7.201 7.201 148.0402000 2.572 13.480 13.480 539.2002001 2.868 15.031 15.031 601.2402002 2.315 12.133 12.133 485.3202003 2.631 13.789 13.789 551.3602004 2.377 12.458 12.458 498.320

2005 2.682 14.056 14.056 562.2402006 2.470 13.353 13.353 534.120

Source: PCA


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2. Annual Philippine Coir Production (MT)

Table No. 2 Coir Production by Region

Source: FIDA

0

500

1,000

1,5002,000

2,500

3,000

3,500

4,000

4,500

5,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Year

inMT

Southern TagalogBicol Region

Eastern Visayas

Western Visayas

Northern Mindanao

Western Mindanao

Southern Mindanao


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Batanes

Ilocos Norte

Kalinga Apayao

Cagayan

Isabela

Abra

Mt. Province

Ilocos Sur

Benguet Ifugao

La UnionNueva Viscaya

Quirino

Quezon

Pangasinan

Nueva Ecija

TarlacZambales

Pampanga

BulacanPolilio Is.

RizalBataan

Cavite

LagunaCamarines Norte

Camarines SurCatanduanes

MarinduqueMindoro Occ.

Mindoro Or.Albay

Sorsogon

Masbate

Romblon

Aklan

Capiz

AntiqueIloilo

Northern SamarSamar

Eastern Samar

Leyte

Southern LeyteCebu

Negros Occ.

BoholNegros Or.

Surigao Norte

Agusan Norte

Surigao Sur

Agusan Sur

Davao

Davao Or.

Davao SurSouth Cotabato

Sultan Kudarat

Maguindanao

North Cotabato

Bukidnon

Lanao Sur

Lanao Norte

Misamis OrientalMisamis Occ.

Zamboanga Norte

Zamboanga Sur

Basilan Is.

Tawi Tawi Grp.

Sulu

Palawan

Calamian Grp.

Highly Suitable (Wet)

Suitable (Intermediate)

Fairly Suitable (Dry)

Not Suitable [mainly lowland

rice areas or high altitudeareas (600 m and above)]

Highly Suitable (Wet)

Suitable (Intermediate)

Fairly Suitable (Dry)

Not Suitable [mainly lowland

rice areas or high altitude

areas (600 m and above)]

Revised: (Magat, 2001)

PCA R&D, December 2001

Revised: (Magat, 2001)

PCA R&D, December 2001

Southern Tagalog -2,998 MT

Philippine Coir

Production,2006

Western Visayas -4 MT

Bicol Region - 17 MT

Eastern Visayas - 0 MT

Southern Mindanao -4,764 MT

Western Mindanao - 132 MT

Northern Mindanao - 0 MT


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IV. MarketIV. Market

A. Domestic Utilization

The following directives were issued by the government to improve &promote utilization in the domestic market

1. A.O.s/Pres. MCs

- DA Adm. Order No. 43, S of 2000 by Sec. E. Angara on the Usage ofSeedling Containers or Receptacles Made from Indigenous OrganicMaterials

- DA Adm. Order No. 11, S of 2002 which Recommends the SustainedUtilization of Coco Peat or Coir Dust as a Complementary Soil

Amendment (Conditioner) for Optimization of Crop Yields under NormalTimes and for Drought-Mitigating Measures During El Nio Years

- Presidential Memo Circular No. 25, dated 2 Sept. 2002, or otherwiseDirecting All National and Local Government Agencies, Bureaus, and

Other Instrumentalities Including Agricultural Institutions and Councils toUse Coco Peat or Coir Dust and Coconut Fiber Materials for SoilConditioning and Erosion Control.

- Department of Public Works & Highways will soon come up with a set ofguidelines for use by its contractors in public works projects.


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Table No. 3 - Production, Exports & Local Consumption (in MT)

Source: FIDA


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B. Exporta. Destination

Table No. 4 Exports of Coir Fiber by Country of Destination, 1997-2006, (in mt)

Source: FIDA

Destination 2000 2001 2002 2003 2004 2005 2006

Australia - 1.9 - - -

Brunei - - - - - - -

Canada - - - - - - -

China - - - 181.1 1,669.0 2,148.0 4,042.2

Hong Kong - - - 38.3 521.6 194.7 63.2

Indonesia 14.1 - - - - - -

Japan 1.3 35.6 56.3 3.0 - - 58.1

Malaysia - - - - - - 11.4

Singapore - - - - - - 74.3

South Korea 1.2 9.0 - - 214.5 55.4 27.6

Sweden - - - - - - -

Taiwan 268.6 219.6 180.5 828.2 2,211.8 1,197.1 1,107.5

United States 13.8 - 2.0 - - 15.2 36.0

Germany - - - - - -

Chile - - - - - - 18.0

Total 299.0 266.1 238.8 1,050.6 4,616.9 3,610.4 5,442.4


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b. Demand

b.1 China

- China needs 10M units of bed mattress. Each bed mattress weighs4.5 kilos of coir equivalent to 4,000 tons per month or 48,000 tonsper year;

- China has an estimated 270,000 sq. km. or 2,700,000 sq. m. of desertconcentrated mostly in north china like Beijing and Harbin province,among others; or an equivalent of 1,080,000 tons of coir given 1 sq. m.geo-net is 400 grams;

- Desertification in China increases about 1.27% annually due tosandstorms during the months of October to December

b.2 Other Markets

- US

- Japan

- Singapore

- South Korea


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V. Plant SiteV. Plant Site

- consider good infrastructure systems: major road networks, international ports,communications, power supply

- raw material, supply from flat lowlands & price thereof

- peace and order situation

- lower energy and labor costs

- farm to market roads

- RORO cargo service will be maximized

- Mindanao and islands of Leyte and Samar are suitable sites due low energy &

labor costs

- Freight costs of Manila vs. Mindanao

- Manila Port = $500.00-$600 per 40-footer container van

- Mindanao (Davao & Cagayan de Oro) Ports = $ 1,300.00 - $ 1,500.00per 40- footer container van.


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VI. Labor and Management CapabilityVI. Labor and Management Capability

A. Labor

- tap the coconut farmers who use only about 30% of their productive time

- children of coconut farmers, mostly High school graduates can be trainedeasily

- regional wages are competitive enough

B. Management

- shall consider training its workers and staff

- consider availability of skilled laborers particularly for downstream products

in the area vis--vis contemplated technology to be used- consider availability of machine shops

- responsible for product standardization in accordance w/ marketrequirements


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VII. Technology/Process VII. Technology/Process

A. Production Capabilities

These 2 levels of production capabilities for coir processing, namely:

1. Primary Processing

a. Decorticating - processing plants extract fiber to produce CH3 grade using

a decorticating machine with capacities ranging from 500kg to ashigh of 5,000 kgs/8 hr operation

- Decorticating machines are run by either a diesel engine or motor engine

- big milling plants usually export directly while small ones are indirect

exporter- Applications of CH3 grade fiber are:

+ stuffing materials

- recovery rate is 10 husk to 1 kg of CH3 fiber

b. Defibering processing plants extract fiber to produce long fibers (CH1& CH2) through the use of spikes that work like combs.


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Utilization of coir nets in Unisan, Quezon


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B. Secondary Processing

1. Involves further processing of mattress and bristle fiber into high value coirproducts using

- looming/weaving machine

products: geo-textile net

- twining/slivering machine

products: twine, sliver, doormats

- stitching machine

products: stitched fiber, plant liners, filtration pads


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MAJOR PROBLEMS/CONSTRAINTS IN COCO PROCESSINGMAJOR PROBLEMS/CONSTRAINTS IN COCO PROCESSING

- lack of mechanical fiber and dust dryers;

- inefficiency of decorticating machines

- lack of high density baling press (100kg/ bale)

- lack of product standards for high-value coir products such as

geotextile, biologs, plant liners, etc.


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End of presentation

Thank you

Carpio_Viability of Coir Processing Plants

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