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THE PHILIPPINE PALM OIL INDUSTRY: MOVING TOWARD A BRIGHTER FUTURE FOR THE SMALL LANDHOLDERS Pablito P. Pamplona, Ph.D. and April Grace D. Pamplona Paper prepared for presentation during the PPDCI and Province of Sarangani Business Forum, General Santos City, 28 August 2014. 1

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4 Potential Production Area (has), Philippines, 2012. REGIONAREA PLANTED (has) R IVB MIMAROPA16, 300 (1.68%) R IX Western Mindanao102,000 (10.46%) R X Northern Mindanao154,000 (15.8%) R XI Southern Mindanao104,000 (10.7%) R XII SOCSKSARGEN112,000 (11.5%) R XIII Caraga384,000 (39.4%) ARMM103,000 (10.6%) TOTAL975,300 (100.0%) Source: PPDCI

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Philippine population of 95.8M Palm oil import of 500,750 MT Import value of P27.50 billion Philippine population of 120.1 M Palm oil import of 1,000,000 MT Import value of P54.50 billion THE FUTURE OF OP... NATIONAL SCENARIO 6

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Opportunities in the expansion of PO industry 1.Overcome the huge domestic shortage of vegetable oil and for export, provide farmers with high income. A huge market is awaiting domestic PO production. 2.Imminovate on massive scale the technologies currently being used in neighboring countries for high palm oil yield, productivity and income on a sustainable manner under the concept of zero waste management sans environmental problem. OPPORTUNITIES AND CHALLENGES 7

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8 3. Investment friendly early return to investment giving income through the year.

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9 4. High income... projected income of various crops in Mindanao under good management (Pamplona, 2013) under USAID study. TREE CROPS YEARS TO PRODUCTIVITY Projected annual income at 10 years* 1.Oil palm2.475,000 2.Coffee3.035,000 3. Cacao2.040,000 4.Rubber3.5**65,000 5.Coconut6.015,000 6.Abaca2.035,000 7.Rice2 crops/year12,000 8.Corn2 crops/year12,000 * Base on average price.. ** Using the new high yielding latex-timber clones.

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11 1.Self-finance the landowner buys his own planting materials and other inputs. 2.Plant-now-pay later the LGU provide the poor farmers with planting materials - good for two ha. The farmers take care of the plant with the title (or TD) of the land as his collateral. Financing strategies on oil palm farming

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12 3.SMEs financed an association/family of farmers borrow part of the expenses from the bank Landbank and other banks. 4.Landbank financing thru coop on a tripartile agreement to include the investor/miller Landbank shoulder 80% of the expenses; milling plants provide the planting materials and technical service. Farmers pay the loan through deduction from the sales of FFB. Financing strategies on oil palm farming

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13 1.Easy to plant and maintain 2.Wide range of adaptability 3.Provide early and long years of income even in adverse condition rainy days or dry season. 4.An environmentally friendly crop; almost pesticide-free as compare to pesticide dependent crops like coffee and cacao 5.More frequent and higher income than most high valued crops Comparative advantages of oil palm farming with other crops

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14 6.Easier harvesting and post-harvest handling 7.Cheap harvesting and post-harvest handling 8.Least affected by climate change; help mitigate climate change. 9.Negligible pilferage and stealing 10.Give rise to additional productive farming enterprises eg. kalakat making Comparative advantages...

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INCREASING ADMIRATION OF OP. Once a misunderstood, despised and neglected crop now a crop which many farmers would like to plant. OP has demonstrated to the Filipinos that: 1.Small landholders (3-5 ha) are amazingly transformed from surviving to thriving (prosperous) farmers. The change from traditional crops to OP easily liberated smallholders from poverty. 15

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2.Fields which are difficult to farm with traditional crops, risky to invest or for bank to finance due to low and uncertain income are transformed to high productivity with OP. Farmers are provided with high bi-weekly and sustainable income thus expanding the breathe of the Philippine agriculture. Increasing admiration.... 16

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Flooded fields risky for investment to traditional crops. Reclaimed marshlands Grass and brushlands Second growth forest lands/left over timber farms providing low income. Unproductive cogonal idle lands Fields planted to low income forest plantations are transformed to OP with high and regular income. INCREASING ADMIRATION... OP is productive in: 17

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20 INDONESIAN SUCCESS STORY IN OIL PALM FARMING IN OVERCOMING POVERTY Before After Typical house of a small landholder in Indonesia before and after engaging in oil palm farming. From: * Janurianto, A. 2011. Paper presented during the International Conference and Exhibition of Palmoil, Jakarta Indonesia, May 11 to 13, 2011. The World Bank credited the major role of OP in reducing poverty in Indonesia

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21 (a)(b) (a)(b) (a) Yesterdays income of less than US$ 3,000 = P132,000 (b) Todays income of US$ 6,700 = P288,000 Malaysian success story in oil palm farming in overcoming poverty and promoting prosperity among small landholders. (c) Tomorrow - transform the smallholders (5.0 ha) to high income society earning US$ 15,000/year or P645,000 by 2020 to promote countryside prosperity.

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22 LGU North Cotabato successful strategy; a model for other provinces Capacitate the poor farmers to plant oil palm on PNPL* couple with effective extension services on good agricultural practices (GAP). Planting of over 4,000 ha on PNPL which provided 2,000 farmers with high and stable income, increase rural business and tax income. Found oil palm the best crop to overcome poverty. * Now converted to Plant Now Take Care.

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Smallholders training and oil palm seedling distribution on PNPL in Carmen, North Cotabato headed by Mayor Rogelio T. Talio and Gov. Emylou Lala Talio-Mendoza of North Cotabato a new innovative grass root program to generate rural employment, and create communitys prosperity, wealth and progress through overcoming poverty. 23

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24 PROVINCE OF NORTH COTABATO OP SEEDLINGS RELEASED 2012-2013 MUNICIPALITY TOTAL NUMBER OF OIL PALM SEEDLINGS RELEASED NO. OF HECTARES Alamada4,512 32.00 Aleosan1,410 10.00 Antipas15,422 109.38 Arakan11,280 80.00 Banisilan27,354 194.00 Carmen4,354 30.88 Kabacan19,174 136.00 Kidapawan City4,512 32.00 Magpet1,692 12.00 Makilala1,128 8.00 Matalam13,466 95.50 Midsayap564 4.00 Mlang19,458 138.00 Pigcawayan5,640 40.00 Pikit3,948 28.00 President Roxas2,256 16.00 Tulunan22,073 156.55 TOTAL158,243 1,122.29 Accomplishment for 2012-2013

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25 Accomplishment for 2014* 90,908 OP seedlings good for 644 ha 60,000 OP seedlings for distribution for October to December for 430 ha for a total of 1,072 ha. * Several municipalities in North Cotabato have similar PNPL program with a total seedling distribution for 300,000/year.

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A model: North Cotabato has developed a corrupt-free unique techniques of distributing oil palm on plant-now-take-care for high farmers income above the poverty threshold level. 26

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A Univanich palm oil milling plant in Carmen, Cotabato started milling in July 2014. 27 Help in the successfully negotiation with a private company from Thailand to construct an OP milling plant in Carmen, Cotabato. Another milling plant will be built up by an Indonesian Company in Pres. Roxas, Cotabato.

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28 The transformation of Mr. Sagadan of Dunguan, Mlang, North Cotabato from poverty to prosperity. Poverty brought about by planting of low value field crops prevented him to financially support his eldest daughter to finish a college degree. Planted OP on PNPL and using GAP enable him to earn high income to buy enough food for the family and financially support his five children to finish degrees in Law, Accounting, Social Services, Physical Therapy and Pharmacy. A model OP Farmer

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29 Mr. Sagadan (center) in his oil palm plantings of various ages as he finds the oil palm easy to plant, maintain and expand. His first planting in years 2000 (a), then in 2009 (b) and 2012 (c). The latest plants which came from Triple P Farms and Nursery (TPFN) have become productive in just two years. An economically transformed OP farmer

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30 (a) Mr. Sagadan implements good agricultural practices in OP farming, (b) OP in occasionally flooded fields are provided with mounted platforms to allow the intercropping of lowland rice and (c) intercropping of corn is made in the upland for income during the immature stage of the palm trees. Matures trees are kept almost weed-free and provided with adequate fertilization for high and sustainable yield income. OP + GAP = High Income!

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31 Gross income from oil palm comes from regular biweekly sales of fresh fruit bunches (FFB). Major expenses constituting 25-30% of the gross include payment of salaries of eight laborers and cost of fertilizer. The laborers and their families get extra income by webbing slitted proned OP fronds into kalakat or amakan which Mr. Sagadan buys and sells for low-cost house walling. Created jobs and livelihood!

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32 Mr. & Mrs. Sagadan infront of their D-Max pick- up and soon to be finished executive dream house; the second house constructed with his income in oil palm farming. Mr. Sagadans wooden house renovated using income from oil palm in 2008 IMPROVED QUALITY OF LIFE IN OP FARMING

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33 Mr. Sagadan catalyzed the transformation of an economically depressed to a prosperous barangay of 100% Muslim population. His neighbor observed that income in his eight ha OP enable him to provide college education for his children, construct a concrete house, buy a brand new D-max and leased land for OP expansion to over 20 ha. He shows that OP is easy to farm. He modeled the successful planting of 700 ha of marshland to oil palm by over 200 poor farmers in his barangay. This brought the transformation of an economically depressed barangay, Dunguan once the gateway to the jungles of Liguasan marsh of law-breakers, kidnappers and rebels into an economically prosperous and peaceful community of 100% Muslim.

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34 1.Planting at suitable sites. 2.Use F1 hybrid quality planting materials 3.Application of good agricultural practices. 4.LGU support to technology dissemination and construction of farm to milling roads. Insuring success in oil palm farming

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35 PARAMETERS IDEAL MODERATE LIMITATION NOT SUITABLE 1.Annual rainfall (m)+2000