* To take years to restore Philippine coconut exports after
* Key livelihood for millions and country's top agricultural
* Coconut oil and products have wide uses
* Craze for coconut water as a health drink also adds to
By Anuradha Raghu and Erik dela Cruz
KUALA LUMPUR/MANILA, Dec 19 The destruction of
an estimated three million coconut palms in last month's deadly
typhoon in the Philippines is set to squeeze global supply for
years of the tropical fruit used to make products from fuel to
Even before Typhoon Haiyan tore through the Philippines, the
United Nations had warned that global demand for coconuts was
outstripping production in Asia, home to 85 percent of output.
The crop losses in the Philippines, the world's top exporter
of coconut oil, have already helped drive prices up as much as
40 percent since the storm and led to a scramble for supplies
from top producer Indonesia, and for alternatives to the edible
But with little chance of Indonesia or India, another top
producer, plugging the gap prices are expected to climb even
further next year and beyond, analysts and traders say.
There is also continuing demand pressure, helped by heavy
marketing of coconut water as an electrolyte-rich health drink
that has led investments in suppliers by soft drink giants
Coca-Cola Co and PepsiCo Inc.
Coconut water and milk account alone for 30 percent of
coconut consumption, according to data from the United Nations.
Coconut oil is extracted by crushing dried coconut, and is
widely used in items such as soap and cosmetics, due to being
rich in fatty lauric acid.
The leftover, copra meal, is often used as animal feed.
"One thing about lauric oils is they are the one oil when
things are bad on supply, they can really go up crazily because
people don't have much choice," James Fry, chairman of
commodities consultancy LMC International, told Reuters.
Philippine supply worries after Typhoon Haiyan struck in
early November drove Rotterdam coconut oil prices as high as
$1,480 per tonne on Nov. 13, up 40 percent from before the storm
and 80 percent on the year.
And analyst Fry and some traders say prices, currently at
around $1,260, could hit $2,000 next year due to lower Asian
While substitutes such as palm kernel oil could soak up some
demand, plans to raise the Philippines' mandatory biodiesel
blend could divert more coconut oil for fuel and add to demand
ONE-IN-FIVE DEPEND ON SECTOR
For the Philippines, the destruction will hurt not just
exports but also millions of families making a living from
producing and trading coconut oil and other products.
It could take years for supplies to be replenished after the
storm that killed more than 6,000 people. Replanting will start
only after relief operations are in place and trees will only
bear fruit after three years.
The typhoon has knocked out up to 300,000 tonnes of coconut
oil supply in the Southeast Asian country, according to the
Philippine Coconut Authority (PCA), a government-linked agency.
"The full impact will be felt next year," said PCA
administrator Euclides Forbes, adding he hoped the decline in
exports worth around $1 billion in 2012 would not exceed 10
Forbes said among the hardest-hit areas were Leyte and
Samar, provinces accounting for 15 percent of the 852,000 tonnes
of coconut oil exported in 2012.
"The livelihoods of one in every five Filipinos are directly
or indirectly dependent on the coconut sector," said Romulo
Arancon, executive director of the Asian and Pacific Coconut
Community, a group representing 18 coconut-producing countries.
INDONESIA AND INDIA
Indonesia could go some way in helping fill the gap in
global demand, but relief will be limited as Southeast Asia's
most populous nation typically consumes a lot of supply locally.
Indonesia produced about 850,000 tonnes of coconut oil in
2012, half of which was exported. However, the sector faces its
own struggles from land scarcity to ageing trees.
Donatus Gede Sabon, secretary general of the Indonesian
Coconut Forum, estimated the country's output could drop by
0.5-1 percent this year and fall further in 2014.
India, which exports only about 6,500 tonnes of the world's
1.9 million annual coconut oil exports, will also offer little
help as its domestic consumption grows alongside a swelling
The UN's Food and Agriculture Organization said last month
that growth in output of coconut products in Asia was running at
2 percent annually, well behind the 10 percent global demand
growth. The comments were made before the typhoon struck.