The Philippine coconut industry is more worried about having enough supply to meet the US market’s growing demand than the impending reciprocal tariffs on its exports.
“We have what is called a demand pull. The US market has a fast-growing need for our coconuts. The Philippines is exporting 40 different coconut products to the US and we need to increase our production for coconuts because there is so much demand internationally, and we don’t have enough supply,” Marco Reyes, chairman of the United Coconut Association of the Philippines (UCAP), said in a text message on Sunday.
The US has suspended for 90 days its planned 17 percent reciprocal tariffs on Philippine exports. The tariff baseline currently in place is 10 percent. Prior to the tariffs announced by US President Donald Trump, all 40 coconut products exported to the US were tariff-free, Reyes said.
“The DTI (Department of Trade and Industry) is negotiating to bring it back to zero,” Reyes told a forum hosted by the Philippine Manufacturing Team virtually on May 9.
Reyes said the industry regarded the tariff issue as a temporary situation. “It does not distract us from the roadmap of the (coconut) industry. These are mostly three things. First, value addition. Second, expansion of export markets, and third more foreign and local investments in value-added coconut products,” Reyes said.
Exports of coconut products in 2024 jumped by 43 percent from 2023.
Reyes said total coconut exports to the US rose both in volume and 2024 from year-earlier levels.
Last year, the value of coconut exports stood at $692 million, an increase of 46 percent from $473 million in 2023.
Volume jumped to 551,000 MT in 2024 from 385,000 MT the previous year.
“It’s still increasing. We are scrambling for the availability of coconuts, that’s the main concern of the coconut industry in the Philippines,” Reyes said.
In explaining why the industry has not been too worried about the US tariff on Philippine coconut exports, nor about their prospects in the US market, Reyes said: “The reason is because, number one, we have no competition (there). They have their own oils, soybean oil, canola, but they are not substituted for our coconut oil.”
“Number two, this is 100 percent local content. It’s a massive contribution to our domestic product because there’s no imported (counterpart). (What) we are facing right now, is actually a good problem,” Reyes said.
He added: “As soon as the US colonized the Philippines in 1898, soon after, we had Procter & Gamble putting up the plant here, we had Franklin Baker putting up a dedicated plant here. We had Peter Paul. So we have more than 100 years of American consumption of our coconut products. So we are not too concerned on this particular point.”
But Reyes said the coconut industry has been facing supply constraints since the end of 2022 and the Department of Agriculture has been aware of the urgent need to replant coconuts.
“What we are seeing right now is really a constraint on supply. Now, because by the end of 2022 … the coconut trees are really being stressed, so now the harvest has been much lower. The main goal now for the Philippine coconut industry, which the Philippine government is aware of, is to really plant more coconut trees. It’s a supply issue,” Reyes said.
In the text message on Sunday, Reyes said the coconut industry has also been looking at opportunities outside of the US market. UCAP anticipates the European Union (EU) to be buying more coconut products from the Philippines with the implementation by the trade bloc of the EU Union Deforestation Regulation that started at the end of 2024, which would favor the Philippines.
The Philippine Exporters Confederation Inc. (Philexport) said in its April 2024 newsletter, the EUDR has prohibited the sale in the EU of seven products if these have been sourced from areas affected by deforestation or forest degradation practices. While the regulation did not cover coconut oil, Reyes said this regulation would favor the Philippine coconut product.
According to a study of the Centre for the Promotion of Imports from developing countries – a Dutch governmental organization under the Ministry of Foreign Affairs of the Netherlands – concerns about deforestation open up an opportunity for coconut oil from developing countries, such as the Philippines, as an alternative ingredient to palm kernel oil, which is well-established in the cosmetics industry.
Based on the latest data available from the Philippine Statistics Authority, the country produced a total of 14.5 million metric tons (MT) of husked coconuts in 2024, a 2.6 percent decrease from 2023’s 14.89 million MT.
Coconut is the Philippines’ top agriculture product export, landing sixth in the list of the country’s overall top 10 exported commodities in 2024. Data from the Philippine Statistics Authority show exports of coconut oil alone stood at $1.18 billion, with the US purchasing $558.74 million. Other top coconut exports from the Philippines last year were desiccated coconut, $295.94 million, and coconut meal, $62.45 million.