An Analysis of Coconut Processing Industry in Quezon

Date

4-2010

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Victoria R. Guieb

Committee Member

Tricia C. Ascan, Teresita Flordeliz M. Ragudo, Reynaldo L. Tan

Request Access

For non-UP researchers, requests for access to this material may be directed to the CEM Library at cemlibrary.uplb@up.edu.ph or to the UKDR administrator at uscs-mainlib.uplb@up.edu.ph

Abstract

Quezon province was one of the provinces that were given abundant coconut trees, and consequently, coconut became the leading agricultural crop in the province. In addition, the province became one of the major suppliers of processed coconut products in the domestic and foreign market. Given that situation, this study attempted to analyze the coconut processing industry in Quezon that would help to picture and to determine its overall competitiveness.

This study entitled “An Analysis of Coconut Processing Industry in Quezon” was conducted to present the structure, conduct and performance of the coconut processing industry in Quezon; determine the major factors affecting the performance of the coconut processors; identify the problems, weaknesses, gaps and strengths in the industry; and, to identify the investment opportunities and development entry points in the industry.

Pertinent information and data were gathered and analyzed through several analytical tools. Smoothing linear trend and Time-Series regression analysis tools were used in projection of supply and demand gap to determine the competitiveness of the industry in meeting demand for the next ten years. Porter’s five forces of model and Cost- Benefit analysis were used to determine the attractive entry points in the industry. In addition, strategic group analysis was conducted for the analysis of the processors to determine their height of competition and to determine which strategic groups were favored in the industry. There were 34 coconut processors in the industry of which 19 were interviewed. Secondary and primary data were utilized to have better picture of the industry.

Thirty-seven percent (7 out of 19) of the interviewed respondents were micro- scale processors, 27 percent (5) were small-scale ones, 10 percent were medium-scale processors (2), and 26 percent (5) were large-scale with different products processed from coconut. Moreover, coconut processing industry in Quezon could supply up to 693,648 metric tons of coconut oil annually, which was estimated to be 64 percent of the total production of the Philippines in 2008; 68,000 metric tons of desiccated coconut; 1,995,200 liters of Virgin Coconut Oil (VCO); and 474,160 metric tons of coconut coir annually.

For the production of coconut oil in the province, the production was lowest in 2008, which was same with the copra meal production due to the typhoons that hit the country. For the desiccated coconut, there was an increased production from 2005 to 2009. Furthermore, there was no recorded importation from the province of Quezon since the processing of raw materials for the other companies were mostly done in the province. Ninety-five to 100 percent of the total production of the desiccated coconut and VCO in Quezon was exported by the large-scale processors in the industry. The past consumption trend showed that the consumption in Quezon was highly related with the consumption trend in the whole country. When the coconut oil posted high prices in the export market, the institutional buyers in the industry reduced their demand from the province. The coir processors in the industry had the difficulty in increasing their sales due to the decreased demand of their institutional buyers, which was the same with the demand with VCO.

For the marketing aspects of the industry, coconut had diverse product forms that could be used as a raw material for other products, either food or industrial items. The processors, especially the micro-scale ones depended on several channels before their products reached the final consumers. The agents and brokers facilitated the buy and sell between the coconut processors and retailers, and even with the export market. For the large-scale processors, their marketing offices facilitated all of their marketing activities. For the physical distribution of the products, most of the coconut processors used container vans and trucks both for traditional and non-traditional products from coconut. Furthermore, the traditional coconut products generated lower prices compared to the non-traditional ones. For those traditional products, the desiccated coconut generated the highest prices while shampoo, VCO, coconut powder, coconut chips, liquid coconut milk, laundry soap, nata de coco, coconut flour, and coconut milk powder generated the highest prices for the non-traditional products of coconut. Most of the coconut processors in Quezon did not practice intensive promotion and the competition in the industry was viewed low to moderate by the processors in the industry.

For the major factors affecting the performance of the coconut processors in Quezon, the demand for coconut products and the increasing globalization in the industry were the main drivers of change in the industry. Moreover, competition of the traditional coconut product processors in the local market was not tight compared with the international market competition. The processing of traditional coconut products deter the new players in the industry due to high costs of setting up processing plants, while for the non-traditional products, there were low barriers to entry. This was due to the nature of the non-traditional coconut products that employed simple processing methods compared to traditional ones. Furthermore, potential development of substitute products in the industry was high, both for traditional products of coconut and for non-traditional ones.

In general, after the assessment of several prospects and problems in the industry, it was found out that it would be more profitable to invest on the processing of non- traditional coconut products. The new entrants in the industry could tie up with the coconut farmers to ensure the stability of their supply and look up for the export market.

Language

English

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2010 M17 G35

Notes

Viewing access to electronic resources is restricted solely to UP Gmail accounts. Any access and share requests from external organizations and personal email accounts will be promptly declined.

Document Type

Thesis

Link to Full Text

Share

COinS