Kathrina Dineros

i IMPACT OF TARIFF REDUCTION OF VEGETABLE OILS ON PHILIPPINE COCONUT OIL INDUSTRY KATHRINA SUBOL DINEROS Submitted to the Faculty of the Department of Agricultural Economics College of Economics and Management, University of the Philippines Los Baños, in partial fulfillment of the requirements for graduation for the degree of BACHELOR OF SCIENCE IN AGRICULTURAL ECONOMICS Major in Agricultural Policy and Development April 2013 Permission given for the following people to have access to this thesis: Available to the general public Available only after consultation with author/ thesis adviser Available only to those bound by confidentiality agreement ii Yes No No BIOGRAPHICAL SKETCH The author is the eldest daughter of Mr. Reginald C. Dineros and Mrs. Marilou Dineros. She was born in Batangas City. She had her primary education from Bauan East Central School. In 2005, she entered Mataas na Kahoy National High School. She participated in many academic competitions and conferences. She graduated as the class valedictorian in the same school in the year 2009. She was admitted at the University of the Philippines Los Baños with a course of Bachelor of Science in Agricultural Economics. She chose Agricultural Policy and Development as her field of specialization. In July 2010, she joined the UPLB Thespian Circle, a theatre organization in the university. She became a part of different plays and events through this organization. She plans to take master’s degree or courses in fashion designing after college. iii ACKNOWLEDGEMENT I would like to express my deepest and sincerest gratitude to the following people who helped me finish this thesis manuscript. First of all, the Almighty God for giving me strength and wisdom in doing my piece of work and conquering my fears and problems in life. To my adviser, Dr. Prudenciano U. Gordoncillo, for pushing me to my limits and never gave up on helping me in order to produce a piece of work like this. To my panelists, Prof. Antonio Jesus Quilloy and Dr. Marilyn Elauria, for the expert suggestions and comments to help me improve this study To Powie Lucero, my jog/siomai/spicy chicken/videoke buddy, thank you for reminding me always to do my thesis and for cheering me up. In fairness, it helped. To the Sardido Family for letting me stay at their house for one and a half year and for being very kind to us, thank you Lola and Lolo and family. To Lea Catherine Gonzales and Maria Tricia Cruzada, my roomies, whom I shared my happiness and sorrow with, I love you roomies! To Cristine Tacsiat, for proof reading of my manuscript and being my fashion consultant. To Anna Charmaine Guerrero, my co-advisee, for being my data gathering/gala buddy and for supporting me all throughout, I will treasure our friendship planner forever. To Bea Maria Macalaguim who cheered me up like crazy, made me laugh a thousand times, and helped me on the editing of my manuscript I love you. To Divine Olaguera, Jhine Irish Corpuz, Blanca Ventinilla and Danica Wines who adopted us at times when we needed a place to stay in at night. You guys are simply the best! To my sister, Regina Marie Dineros, and her friends, who helped me during my data gathering in Manila and continued to cheer me up at times that I thought of giving up. To the UP Bangsoc members, (Bea, Lea, Chrys, Dona, Chumie, Divine, Joyce, Danica, Gelic, Jhine, Blanca, Ann, Mac, Arf, Michael, Christian, Tricia, Jaf,and Jay) who became my second family here in the University, thank you so much for the laughters, and sorrows. My college life wouldn’t be so meaningful with you. I LOVE YOU GUYS! iv To my aunt, Elmie Subol, and to my godmother, Cheryl Valenzuela, who financed my tuition fees and school expenses since first year college. And lastly, to my parents, who never gave up on me, supported me all the way, and cheered me up. This one is for you Mama and Papa. I know that I had a lot of failures in life. I am very sorry. It’s now time for me to give back everything that you both have given me. I love you so much! v ABSTRACT The study aimed to analyze the impact of reduced tariff on vegetable oil imports on the Philippine coconut oil industry. Specifically, the objectives were to analyze the situation of coconut oil production from-; to analyze the impact of tariff on the demand for coconut oil and its substitutes; to differentiate a tariff reduction era from a non-tariff reduction era and; to determine the effects of tariff reduction on Philippine coconut oil industry. The study employed the t-test and piecewise regression analysis. Results showed that reduction on tariff of vegetable oils favors the consumers because of the lower price of the commodity in the market. Consumers will tend to buy the substitute vegetable oils which have lower prices as a result of reduced tariff on vegetable oils compared to Philippine coconut oil products. Previous studies also showed that Coconut oil products continue to be export competitive with the help of export promotion. Based on the results of the study, world production of coconut oil increased from the pre GATT-WTO to post GATT-WTO. As for the prices, there had been large increases in the domestic prices of coconut oil. The average domestic price during the post-tariff reduction era was higher than the mean domestic price during the pre-tariff reduction era. World prices of CNO, soybean oil and palm oil showed an increasing trend from- but based on the data and graph, coconut oil has the lowest growth rate of increase in world prices. The piecewise regression analysis was used to analyze the impact of vegetable oil tariff reduction on production, domestic supply, domestic price and domestic consumption of Philippine coconut oil. Results showed that for production, there had been an increase in production of CNO during the post-tariff reduction era. The graph showed that there has been a positive change in the slope of the trend line of export after the imposition of GATT-WTO. The full impact of tariff reduction in our economy was believed to happen in the long run. Generally, it can be said that the impact of tariff reduction on Philippine coconut oil industry is not yet so visible at the moment. Its effects can be better observed in the long run. But based on this study, tariff reduction on vegetable oils benefits the local consumers in a way that they have choices on what vegetable oil to use depending on their willingness to spend for that particular commodity. On the other hand, it did not severely affect the Philippine coconut oil industry since large amount produced in the country were for export purposes. As for recommendations, the government must still keep an eye on the trend of the production and consumption because the effect might be seen in the long run. It is strongly recommended to conduct a long run study about the impact of tariff reduction on the coconut industry so that we will be able to determine the real effect of this policy to the industry and our economy. vi TABLE OF CONTENTS Title Page Chapter I. II. III. IV. V. VI. Title page Approval page Biographical Sketch Acknowledgement Abstract Table of Contents List of Tables List of Figures List of Appendices INTRODUCTION Background of the Study Statement of the Problem Significance of the Study Objectives of the Study REVIEW OF LITERATURE General Agreement on Tariffs and Trade (GATT) ASEAN Free Trade Area (AFTA) Implications of Trade Liberalization Trade Liberalization on Production, Consumption and Trade Revealed Comparative Advantage of Philippine Coconut Oil Industry DRC Analysis Nominal Protection Rate (NPR) Effective Protection Rate (EPR) Government Policies Affecting the Coconut Industry Industrialization Policy Subsidy Program Other Support Programs Product Diversification Market Diversification Crop and Income Source Diversification Source of Funds Piecewise Regression Analysis CONCEPTUAL FRAMEWORK THEORETICAL FRAMEWORK HYPOTHESES OF THE STUDY RESEARCH METHODOLOGY Scope of the Study Types of Data and Data Collection vii I Ii Iii Iv Vi vii x xii xiii- VII. VIII. IX. X. XI. Methods of Data Analysis Trend Analysis Piecewise Regression Analysis RESULTS AND DISCUSSION Coconut Oil Economy World Production Domestic Price: Before and After Tariff Reduction Export Price: Before and After Tariff Reduction World Price Coconut Oil Production: Before and After Tariff Reduction Piecewise Regression Analysis SUMMARY AND CONCLUSIONS POLICY IMPLICATIONS AND RECOMMENDATIONS BIBLIOGRAPHY APPENDICES viii - LIST OF TABLES Table no. Title Page 1 Revealed comparative advantage of coconut oil, Philippines,- 10 2 Competitive advantage of crude coconut oil production in the Philippines, 2001 12 3 Nominal protection rate of coconut oil,- 13 4 Effective protection rate of coconut oil,- 14 5 Comparative production of coconut oil, soybean oil and palm oil,- 29 6 Estimated parameters of t-test on the domestic price of coconut oil before and after the imposition of tariff reduction,- 30 7 Estimated parameters of t-test on export price of Philippine coconut oil before and after tariff reduction,- 30 8 Comparative price trends of selected oil mills,- 32 9 Estimated parameters of t-test on the world production of coconut oil before and after the imposition of tariff reduction,- 33 10 Volume of Philippine coconut oil production,- 35 11 Estimated parameters of t-test on the world production of soybean oil and coconut oil,- 36 12 Domestic supply of Philippine coconut oil,- 38 13 Estimated parameters of piecewise regression model on domestic supply of Philippine coconut oil,- 39 14 Domestic price of Philippine coconut oil (PhP/kg),- 41 ix 15 Estimated parameters of piecewise regression model on 43 domestic price of Philippine coconut oil,- Domestic consumption of Philippine coconut oil,- 44 17 Estimated parameters of piecewise regression model on domestic consumption of Philippine coconut oil,- 45 x LIST OF FIGURES Figure No. Title Page 1 Trend in the revealed comparative advantage of Philippines and Indonesia,- 11 2 Conceptual Framework on the Impact of Tariff Reduction on Philippine Coconut oil Industry 20 3 Theoretical Framework on the Impact of Tariff Reduction on Philippine Coconut Oil Industry 22 4 Trend on the Philippine coconut oil Production,- 37 5 Domestic supply of Philippine CNO,- 40 6 Domestic price of Philippine coconut oil,- 43 7 Domestic consumption of Philippine coconut oil,- 46 xi LIST OF APPENDICES Appendix Title Page no. A Comparative production of CNO, soybean oil and palm oil- (in million metric tons) 53 B Comparative price trends of soybean oil, palm oil and coconut oil,- 54 C Philippine coconut oil export prices (in FOB US Dollars per metric ton) 55 D Domestic price of Philippine coconut oil (PhP/kg),- 56 xii 1 IMPACT OF TRADE TARIFF REDUCTION ON PHILIPINE COCONUT OIL INDUSTRY1 1 Thesis manuscript in partial fulfillment of the requirements for graduation with the degree of Bachelor of Science in Agricultural Economics, major in Agricultural Policy and Development from the Department of Agricultural Economics, College of Economics and Management, University of the Philippines Los Baños. Prepared under the supervision of Dr. Prudenciano U. Gordoncillo KATHRINA SUBOL DINEROS INTRODUCTION Background of the Study Coconut has been one of the most important exports of the Philippines, accounting for more than half of agricultural exports and about four-fifths of processed food product export. According to United Coconut Associations of the Philippines Inc. (UCAP) executive director, Yvonne Agustin, industry shipped some 74,694 metric tons of CNO in December 2012, or a 6-percent increase from last year’s 70,495MT. The increase can be attributed to the increasing demand from traditional markets abroad. Coconut oil alone belongs among the country’s top ten merchandise export products in the year 2012 (www.census.gov.ph). Major markets of coconut oil produced in the Philippines are the US, United Kingdom and Japan. 2 The Philippines supplied an average of 65 percent of the total world demand for coconut oil during the period- (Oil World, 2009). However, the ratification of the General Agreement on Tariffs and Trade (GATT) and the membership of the Philippines in the World Trade Organization (WTO) have implications on the global competitiveness of our country in the production and export of coconut oil. According to the study of C.T. Aragon (2003), the RCA (revealed comparative advantage) of Philippine coconut oil (PCO) from 1998 to 2000, PCO was highly competitive in the world vegetable oil market. One implication of trade liberalization is reduction on tariffs. Import tariff reduction lowers the import price of vegetable oils, which has an effect on the production, and price of Philippine coconut oil. Statement of the Problem Reduction of tariff lowers the price of the good in the world market. Cheaper price of goods leads to an increase in the volume of imports. Consequently, there will be a decrease in the domestic consumption of coconut oil, which affects its price and domestic production. One of the major concerns of the coconut industry is the lower import tariffs of other vegetable oils such as soybean and palm oil compared to coconut oil. It has been argued by the Philippine coconut sectors such as the Philippines Coconut Producers Federation (COCOFED) and Philippine Coconut Oil Producers Association (PCOPA) 3 that extremely low tariffs will encourage large imports of vegetable oils, potentially leading to a decrease in the consumption of Philippine coconut oil. Significance of the Study It is important to understand the effect of import tariff reduction of vegetable oils on the Philippine coconut oil industry. This study will help the producers and farmers through a better understanding on the impact of free trade on the yield of the production of coconut oil. It will benefit the government policy makers in the analysis of the effects of free trade in the economy, and in decision making regarding this. It will also help consumers to understand shifts in the pricing of imported or exported coconut products brought by global trade liberalization. Objectives The main objective of this study is to determine the impact of import tariff reduction on vegetable oils on the production, export volume and domestic consumption of Philippine coconut oil. The specific objectives are: 1. to analyze the situation of coconut oil production from-; 2. to analyze the impact of reduced tariff on vegetables on the demand for coconut oil and its substitutes; 3. to differentiate a tariff reduction era from a non-tariff reduction era; and 4. to determine the effects of tariff reduction on Philippine coconut oil industry. 4 REVIEW OF LITERATURE The General Agreement on Tariffs and Trade (GATT) GATT was implemented in 1948 to establish rules for international trade. In its framework, a number of negotiation rounds were organized such as the Uruguay Round. Prior to this round, agricultural trade was largely kept off the agenda by the US and other developed countries (Ratya, 2002). High levels of protection, increasing use of subsidies, aggravated fluctuations of world prices and an increasing cost of national budget to support the production were afflicted with agricultural trade. Agreements on Sanitary and Phytosanitary Measures (SPS) explains the provision in GATT that governments may restrict trade when needed to protect human, animal or plant life and the environment as well. The agreement stresses that SPS measures in conformity with relevant international conventions are necessary to protect the environment, human, animal and plant life. In order to improve market access, the agreement also covered all non-tariff barriers such as quantitative import restrictions, variable import levies, minimum import prices, discretionary import licensing, intervention by state trading enterprises and voluntary export restraints and tariff measures (Octaviani, 2000). 5 ASEAN Free Trade Area (AFTA) The ASEAN arrangement contains a provision for the establishment of a subregional zone. There are three sub-regional zones of the ASEAN countries: the IMS Growth triangle (Indonesia, Malaysia and Singapore), the IMT Growth triangle (Indonesia, Malaysia, and Thailand) and the BIMP-EAGA (Brunei, Eastern Indonesia, Eastern Malaysia, and Philippines). The countries in each sub-region are mutually complementary to produce location advantages. Tariffs are brought down under the AFTA agreement through Common Effective Preferential Tariff (CEPT) mechanism. In this mechanism, tariffs on agricultural products are excluded. For the Philippines and other members of ASEAN, fulfilling the AFTA commitments represent an intermediate phase of a joint free trade are enroute to the wider regional trade areas under the Asia-Pacific Economic Cooperation (APEC).The individual member country can expand its trade liberalization from the AFTA regional program to global trade (Anindita, 2002). Implications of Trade Liberalization Trade regimes throughout the developing countries have been heavily distorted by both tariff and non-tariff barriers (Mosley, 1992). This is because these trade policies became the major sources for rapid industrial growth. Direct protection like tariffs, quotas, and export subsidies affects commodities as they enter international trade. Indirect protection such as exchange rate management, 6 marketing support, input subsidies and input exemption, and long-term investment assistance affects trade flows and has general effects since this applies equally to all imports and exports across the abroad (FAO, 2000). In trade liberalization, a reduction of protection will reduce the trade barriers, thereafter increasing the volume of trade. Increase in volume, however, does not mean that the participating countries will gain from trade. The benefits derived from trade liberalization depend on the openness and the economic reforms of each country (Anderson and Tyers, 1990). According to Goldin and Knudsen (1990), developing countries will be among the most affected, either positively or negatively, by the outcome of the GATT negotiations on agricultural trade liberalization. The result in the Asia-Pacific region showed that the effect of trade liberalization on each participating country depends on at least four factors: scope of liberalization; form of the commitment to conduct liberalization; coverage of the liberalization scheme; and the speed with which the liberalization schemes proceed. The result of the trade liberalization in Uganda is dependent not only on the trade reforms but also on the appropriate macroeconomic policies or indirect protection instruments (Matin et al., 1990). Economic theory suggests that the primary effect of trade liberalization will be on the overall level of trade, with a roughly parallel increase in exports and imports as a percentage of GDP (Williamsom, 1999). This requires a modest depreciation of the real 7 exchange rate in order to ensure that exports increase as much as imports, and leave the balance of trade unchanged. It was concluded that some import-substituting industries are likely to find themselves squeezed, but others will respond to the competitive challenge by modernization. The net effect will be an increase in the growth rate through channels. The reforms could possibly lead to an increasing returns-to-scale in some of the export industries and the exposure of import-competing industries to competition from imports. It may also improve technology when there is a decline in the price of imported capital goods and when the country can afford to use imported intermediate goods (Hachete et al., 1992). Liberalization of the domestic market for agricultural products and inputs, both tradable and domestic, should accompany trade liberalization. Subsidies on agricultural inputs provided for the public sector should be eliminated to stimulate the efficient use of productive resources. Since liberalization is likely to reduce the income of poor farmers, special assistance is needed to compensate for the abandonment of redistributive price policies (Hachete, et al., 1992). Trade Liberalization on Production, Consumption ad Trade The positive relationship between the growth in productivity and trade policy lies in an implicit mechanism. International trade forces and domestic industries move to improve their efficiency performance and adopt new technologies (Kirkpatrick and Maharaj, 1992). 8 According to Keller (2000), the country’s intermediate goods imports affect its level of productivity because a country that imports such goods primarily from technological leaders receives more technology than a country which imports primarily from follower countries. There are four reasons why trade liberalization affects production: trade liberalization can change the opportunity cost of leisure in such a way that managers work harder; the existence of economies of scale implies that a widening of the market through trade should lead to reduction in real production costs; in a protected market dominated by several firms, trade reform will lead to increased competition; and trade reforms are likely to accelerate the transition to state-of-the art technologies since domestic producers are more exposed to foreign competition (Haddad,1993). On the demand side, trade liberalization affects the consumption through increasing exports and imports. The lowering of tradable prices through eliminating the trade barriers will raise the consumption. Revealed Comparative Advantage of Philippine Coconut Oil Industry Revealed comparative advantage index (RCA) is another popular measure of competitiveness of a country developed by Balassa (1965). The RCA has a minimum value of zero and no upper bounds. A positive RCA value indicates that a country has a competitive edge in producing and exporting a given commodity. The larger the RCA index, the higher level of competitiveness (Yanagida, 1996). It is computed using the expression (Mangabat 1998): 9 RCA = (Eij / Eit) / (Enj / Ent) where: E = Exports i = Country Index n = Set of countries j = Commodity index t = Set of commodities As we can see on the RCA values of the Philippine coconut industry in the years- (Table 1), the country’s coconut oil was very competitive in the vegetable oil market. However, the Philippine coconut oil exhibited a decreasing trend in its level of competitiveness from-. It is seen that that the average RCA value Philippine coconut oil was significantly higher than that of the Indonesian coconut oil based on the results of t-test means. The RCA of the Indonesian coconut oil illustrates an upward trend (249.09% / year) from-. Indonesia clearly creates a threat, as the RCA of Indonesian coconut oil continues to rise while the Philippine coconut oil is decreasing. 10 Table 1. Revealed comparative advantage of coconut oil, Philippines,-. Source: Arao, 1975 YEAR REVEALED COMPARATIVE ADVANTAGE 1980 246.22 1981 253.25 1982 255.47 1983 258.05 1984 199.98 1985 201.18 1986 306.54 1987 279.8 1988 225.67 1989 213.76 1990 261.29 1991 232.08 1992 207.65 1993 188.51 1994 167.03 1995 212.53 1996 140.52 1997 113.63 1998 113.46 1999 66.76 2000 100.26 11 Figure 1. Trend in the revealed comparative advantage of Philippines and Indonesia,-. DRC ANALYSIS The estimation of DRC and RCR values was used to determine the cost competitiveness of the coconut oil. The formula used in computing the DRC was: where DC is the domestic cost RP is the border price of output FC is the foreign cost per unit of output in border prices 12 RCR is needed to evaluate the efficiency of the competitive advantage. Thus for the computation of the RCR the formula used was: { Table 2 summarizes the computation of the DRC and the RCR of the coconut industry in the Philippines. The DRC and RCR values are 48.80 and 0.96, respectively. The RCR having a less than 1 value implies that our country has a competitive advantage in coconut oil production. This also bears out that it would be better to produce domestically the coconut oil and it is better to import the coconut oil rather than export it. Table 2.Competitive Advantage of Crude Coconut Oil production in the Philippines,2001 ITEM PHILIPPINES Average quantity of coconut oil produced (mt) 102,808 Domestic Cost (P/mt) 14,670 Foreign Cost (P/mt) 323 Domestic Resource Cost* (P/$) 48.80 RCR* 0.96 Source: Azores, 2001 13 Nominal Protection Rate (NPR) NPR or the Normal Protection Rate is computed as the percentage difference between domestic wholesale price and border price converted then using the official exchange rate. The world price is adjusted by 15 percent as a measure of CIF import unit value for the importable products. On the other hand the border price is a measure of FOB export unit value for exportable products. Table 3. Nominal Protection Rate of Coconut Oil,-. Coconut YEAR Oil Copra 1985 -16 -31 1986 -16 -31 1987 -16 -31 1988 -16 -31 1989 -16 -31 1990 -7 -26 1991 -7 -26 1992 -7 -26 1993 -7 -26 1994 -7 -26 1995 -12 -20 1996 -12 -20 1997 -12 -20 1998 -12 -20 1999 -12 -20 2000 -17 -33 2001 -21 -33 2002 -13 -18 2003 -21 -20 2004 -10 -30 2005 -16 -34 2006 -11 -32 2007 -10 -28 Source: David, Intal and Balisacan (2007) for 1960 to 2005, International Monetary Fund Commodity Prices (2008) and Bureau of Agricultural Statistics (2008) for 2006 and 2007 14 Effective Protection Rate (EPR) EPR is a measure of the percentage effect of the entire tariff structure on the value added per unit of output in each industry. In our country in which copra would require very small amounts of the foreign inputs, the EPR of copra would be in point of fact equal to the NPR. The coconut oil, meanwhile, reveals slight raise during the 1970’s and rapidly increase in the early 1980’s (Table 4). This is because of the increase in the domestic value added. This increase in the domestic value addition was caused by government policies that created the United Coconut Oil Mill’s, Inc. monopsonistic profits. Additional increase was generated because of the reduction in the producer price of copra, seeing that the value added of copra decreased during the same period of time. Table 4. Effective protection rate of coconut oil,-. Period- Copra (%) -8 -24 -29 Coconut Oil (%) -2.3 -2 42 The Philippine coconut oil industry is being penalized. This is because of a consistent negative value of it EPR. In addition, a study by Clarete and Roumasset (1982) as cited by Guerrero concluded that there have been negative repercussions of protection and taxation policies on the Philippine coconut industry. The study employed 15 comparative estimates of the NPR and EPR of the coconut oil and copra to examine the greater encouragement of coconut oil as an export commodity. To strengthen this argument, the authors mentioned these issues that were obtained in their results: 1. Limited competition with UNICOM as copra buyer and exporter of copra and coconut oil in the coconut industry. 2. Increased government intervention in marketing coconut products in addition to intervention in investment and pricing which can lead to an unending spiral of offsetting regulations. 3. The possibility of a variable levy (corresponding to fluctuations in world prices) on 31 domestic and export products in order to stabilize producers’ income and provide balance to overall tax system. Government Policies Affecting the Coconut Industry Industrialization Policy The industrialization policy of the government bore direct consequences on the production, manufacture, processing and trade of coconut as a leading export crop and its by-product. The protection and taxation policies, however, bore negative insinuation for the coconut industry . Using comparative estimates of nominal protection rates (NPR) and effective protection rate (EPR) for copra and coconut oil, they discussed the greater incentive given to CO exports. The study cited several issues resulting from their 16 findings: 1) limited competition with UNICOM as copra buyer and exporter of copra and coconut oil; 2) increased government intervention in marketing coconut products in addition to intervention in investment and pricing which can lead to an unending spiral of offsetting regulations; and 3) the possibility of a variable levy (corresponding to variations in world prices) on domestic and export products in order to stabilize producers’ income and provide balance to the overall tax system. Virata (1982), on the other hand, justifies the higher tax imposed on copra exports, stating that the measure aims to counteract tax and trade policies of copra importing countries. He further notes that the policy of limited exportation of copra is “part of a general plan to integrate an industrialized coconut industry and to diversify the uses of coconut oil.” The Subsidy Program The subsidy program aimed to provide coconut based products at subsidized prices to domestic consumers. The products include cooking oil, laundry soap, filled milk and copra meal. The subsidy is used to compensate for manufacturers’ losses when they sell at government controlled prices. Other Support Programs In response to the “bearish market situation” and to cushion its adverse effects on coconut farmers, several support programs have been instituted that has since then gained momentum in the industry. These support programs are merely cited in the literature but not described in detail. 17 Product Diversification Foremost among the products being currently developed is the coco diesel, which is a mixture of 20 percent coco oil and 80 percent diesel. Other products from the account include chemicals from coco oil, cheap protein from copra meal, detergents, explosives, et cetera. Other parts of the coconut can also be used for lumber, charcoal and raw materials for crafts (De la Cuesta 1980, 1981; Manuel and Maunahan 1982; Coconut Farmers Bulletin 1981; PDCP-ECOR 1980). Market Diversification The penetration of non-traditional markets can significantly increase the demand for copra, and this can directly influence domestic prices of copra and farmers’ incomes. Some of the countries being tapped are China, Mexico, Russia and Eastern European countries (De la Cuesta, 1980). Crop & Income Source Diversification Alternative income sources can be explored so that coconut farmers can cope with their present financial problems, brought about by low copra prices. These include intercropping in their coconut farms, fishing, cattle and poultry raising (De la Cuesta 1981). 18 Sources of Funds A funding mechanism to pursue the coconut industry programs was set up in the early 1970s. It started with the Cocofund Program which through RA 6260 provided for the collection of the Cocofund levy until the P100 million capitalization for CIC was reached (According to the PCA Annual Report 1981, the amount was reached in December 1981). Piecewise Regression Analysis Piecewise or segmented regression analysis is a method in regression analysis in which the independent variable is partitioned into intervals and a separate line segment is fit to each interval. It can also be used on multivariate data by dividing the various independent variables. It is useful when the independent variables, clustered into different groups, exhibit different relationships between the variables in these regions. The boundaries between the segments are breakpoints. 19 CONCEPTUAL AND THEORETICAL FRAMEWORK Conceptual Framework Figure 2 shows the conceptual framework on the impact of tariff reduction on vegetable oils on the Philippine coconut oil. Factors being affected are illustrated below. Import tariff reduction on vegetable oils lowers the world price and results to an increase in the volume of oils imported to the Philippines. Both price in the world market and the volume affect the price of vegetable oil in the Philippines. Domestic consumption of vegetable oils increases when the price is cheaper. This affects the domestic consumption of coconut oil in the Philippines. According to the substitution effect, there is a tendency that there will be lower consumption of coconut oil because of the lower prices of other vegetable oils such as soybean and palm oil. 20 Import Tariff Reduction on Vegetable Oils Volume of Imports World Price Domestic Price Domestic Supply Domestic Consumption Domestic consumption of Coconut oil Production of Philippine Coconut Oil Figure 2. Conceptual Framework on the Impact of Tariff Reduction on Philippine Coconut oil Industry 21 Theoretical Framework Market access is interpreted in GATT to reflect the competitive relationship between imported and domestic products. When a government agrees to reduce its import tariff on a particular product, it alters the competitive relationship between imported and domestic units of the product in favor of imported units, and it thereby provides greater market access to foreign products. Thus, by agreeing to lower its tariff, there will be an outward shift of its import demand curve- that is, all else equal, a greater volume of imports will be demanded at any given price from foreign exporters. As a result, foreign exporters can expect to enjoy an increase in sales into the domestic market. This study will measure the impact of tariff reduction on vegetable oils in the Philippine coconut oil industry. Using the piecewise regression analysis, the percent change on a particular variable, domestic production for example, will be seen through a graph. At the breakpoint year, 1995, where the imposition of tariff reduction on vegetable oils started, it was hypothesized that the domestic consumption of coconut oil will start to decrease because of lower prices of vegetable oil substitutes in the domestic market. In line with this, it was also hypothesized that the production will be affected negatively. The domestic price of coconut oil was expected to be lower after the imposition of tariff reduction in order to boost its competitiveness in the domestic market. 22 Figure 3. Theoretical framework on the Impact of Tariff Reduction on Philippine Coconut Oil Industry. Hypotheses of the Study The hypotheses to be tested and concluded at the end of the study are as follows: 1. Import tariff reduction on vegetable oils has a negative effect on the demand for the product of coconut oil in the Philippines. 23 2. Lower tariff on vegetable oil encourages higher import volume because of lower price of the product in the world market. 3. Tariff reduction on vegetable oils has a negative effect on the domestic supply of coconut oil. 24 RESEARCH METHODOLOGY Scope of the Study The study only covered the Philippine coconut oil industry due to budgetary constraints and limited time. The Philippines is one of the top exporters of coconut products in the world market. This study aimed to analyze the impact or effects of reduction tariffs for vegetable oils on the production and production of coconut oil. It covered the period from 1985 to 2011. Types of Data and Data Collection Only secondary data were used in this study. Secondary data were collected from the exporters. Secondary data comprised of the data -) on production and domestic wholesale prices of coconut oil. The data were gathered from the Bureau of Agricultural Statistics (BAS). Moreover, historical data -) on the export price, volume and value of Philippine exports of coconut oil were obtained from the United Coconut Associations of the Philippines (UCAP). Additional information of income, export volume, price, value and prospects on the coconut industry of competing countries or other exporting countries were taken from statistical books and reference materials published by various international agencies. 25 Secondary sources of information included yearbook and financial statistics published by FAO, IMF and other reference. Methods of Data Analysis The impact of trade liberalization on coconut oil was analyzed using trend analysis, and regression analysis. Trend Analysis The trend in domestic production, domestic and export price of coconut oil as well as the world production of its substitutes, particularly palm and soybean oil, was determined qualitatively and quantitatively with the aid of tabular presentation, graphical approach and statistical test before and after trade liberalization. The t-Test was used to determine the significant difference of the variables. Piecewise Regression Analysis In order to analyze the difference between the non-tariff reduction era and tariff reduction era and its effect to quantity available for domestic consumption, the Piecewise Regression Analysis will be used. For the analysis on the effect of tariff reduction on coconut oil production, the equation is Vt= β0 + β1t + β2 (t-t*)D + ε where 26 Vt = total volume of coconut oil produced βi = coefficient t = year t* = year at breakpoint Dt = dummy variable 1 if t > t* ; otherwise 0 For the analysis on the effect of tariff reduction on the domestic supply Ct= β0 + β1t + β2 (t-t*)D + ε where Ct = total volume of domestic supply βi = coefficient/change in domestic supply t = year t* = year at breakpoint Dt = dummy variable 1 if t > t* ; otherwise For the analysis on the effect of tariff reduction on the domestic price Pt= β0 + β1t + β2 (t-t*)D + ε where Pt = total domestic price of coconut oil 27 βi = coefficient/change in domestic price t = year t* = year at breakpoint Dt = dummy variable 1 if t > t* ; otherwise 0 For the analysis on the effect of tariff reduction on the domestic consumption Wt= β0 + β1t + β2 (t-t*)D + ε where Pt = total domestic consumption of Philippine coconut oil βi = coefficient/ change in domestic consumption t = year t* = year at breakpoint Dt = dummy variable 1 if t > t* ; otherwise 0 28 RESULTS AND DISCUSSION This section presents a description of the Philippine coconut oil economy, comparative production and prices of CNO and its major substitutes such as soybean and palm oil, and the effect of tariff reduction on production and competitiveness of Philippine coconut oil products. The initial section is presented to provide a minimum background of the coconut oil industry of the Philippines. Coconut Oil Economy World production There has been a nearly constant trend in the world production of CNO from 1985 to 2011. Unlike palm oil and soybean oil, whose average production growth rate increased after the imposition of tariff reduction, coconut oil decreased from 2.4 percent (1985) to 2.1 percent (Table 5). This has been because of the low preferential tariff of its substitutes like soybean oil. Although imported mainly for its processed product soymeal for livestock feed, soybean, when crushed produces soybean oil which competes with coconut oil. Also, in the late 1980s, the American Soybean Association (ASA) launched a health-related smear campaign against coconut oil, alleging that coconut oil is high in triglycerides that are hazardous to the health. As such, coconut oil use in some parts of the US has been completely eliminated in favor of homegrown vegetable oils such as soybean oil (Mangabat, 1998). 29 Table 5. Comparative Production of CNO, Soybean oil and Palm Oil- (in Million Metric Tons) YEAR Soybean Oil - Source: UCAP Growth Rate (%) Palm Oil Growth Rate (%) Coconut oil Growth Rate (%) 3.8 9.7 0.3 -4.5 10.8 - - -6.1 5.4 -3.5 19.5 -1.3 - - 16.5 - - - - 25.5 -11.2 - -9.8 - -14.3 15.3 -4.8 - - -14.2 - 30 Prices Domestic Price: Before and After Tariff Reduction Average domestic price of CNO has increased from PhP8.58 per kilogram to PhP88.47 per kilogram from- (Table 3). Table 6. Estimated parameters of t test on the domestic price of coconut oil before and after the imposition of tariff reduction,-. Variable Mean Variance t Stat Probability Value Before - After - -E-05 - Based on the result, there is a significant difference on the domestic price between the pre- and post-tariff reduction era at 1% level of significance. The mean domestic price after the imposition of tariff reduction on vegetable oils is 316% higher compared to the domestic price in the pre-tariff reduction era. Export Price: Before and After Trade Liberalization Table 7. Estimated parameters of t test on export price of Philippine coconut oil before and after tariff reduction,-. Variable Mean Variance t Stat Before - After - 110301 -3.11267 Probability Value- 31 Statistical result shows that there is a significant difference on the export price between the pre- and post-tariff reduction era at 1% level of significance. The mean value of export price during the post-tariff reduction era (USD 693.87) is higher compared to the mean export price of the pre-tariff reduction era (USD 427.11). World Price Comparative price trends for CNO, soybean oil and palm oil was also shown to analyze the price competitiveness of coconut oil. A large increase in prices of the three commodities happened in 2007 but CNO had the lowest growth rate among the 3 vegetable oils (Table 8). According to Mangabat, the fluctuations depend on the supply conditions of the world market. 32 Table 8. Comparative price trends of selected oil mills,- Coconut Oil Soybean Oil Palm Oil YEAR (CIF, Europe) (FOB, USA) (CIF, Europe) 1985 26.25 25.88 22.56 1986 13.46 16.49 11.52 1987 20.54 16.56 15.24 1988 25.17 24.00 19.58 1989 23.84 20.58 15.76 1990 15.82 22.32 13.00 1991 20.16 20.31 15.38 1992 26.55 19.59 18.00 1993 20.95 22.78 17.23 1994 27.90 27.32 24.15 1995 30.72 26.44 28.71 1996 34.44 24.72 24.13 1997 30.35 23.83 24.66 1998 30.47 25.54 30.5 1999 33.42 17.81 19.7 2000 20.23 15.97 13.95 2001 13.91 15.74 12.67 2002 18.77 18.57 17.49 2003 20.86 22.69 20.05 2004 29.74 26.80 21.33 2005 27.61 22.48 19.11 2006 27.11 25.00 21.63 2007 911.33 798.29 779.46 2008 1218.87 1134.68 950.88 2009 717.94 786.41 681.73 2010 1114.44 922.58 900.11 2011 1713.78 1215.81 1127.68 Source: UCAP 33 Statistical Tests Coconut Oil Production: Before and After Tariff Reduction Result of the t-test showed that there is a significant difference between the mean value of production of coconut oil before and after the imposition of GATT-WTO tariff reduction. The difference between the average production of the pre-tariff reduction and post-tariff reduction era is 257,642 metric tons. This means that there has been an improvement in the domestic production of Philippine coconut oil after the imposition of tariff reduction on vegetable oils. Table 9. Estimated parameters of t test on the world production of coconut oil before and after the imposition of tariff reduction,-. Variable Mean Variance t Stat Probability Value Before - After - - -E+11 - 34 Piecewise Regression Analysis The impact of tariff reduction on the production and quantity available for domestic consumption of coconut oil was determined using the piecewise regression analysis. Volume of Production For the analysis on the effect of tariff reduction on the production of Philippine coconut oil, the model used was: Vt= β0 + β1t + β2 (t-t*)D + ε 35 Table 10. Volume of Philippine Coconut Production,- Market Year Production Growth Rate (%-,-,618,-,373,640 -,087,190 -,017,940 -,462,-,153,480 -,188,-,333,-,191,810 -* 1,708,-,157,060 -,431,-,515,-,639 -,358,-,741,-,296,230 -,549,-,540,920 -,508,020 -,423,450 -,322,470 -,414,-,427,-,913,-,289,- *- breakpoint t-t* -10 -9 -8 -7 -6 -5 -4 -3 -2 - d- Ttd- Source: UCAP Data on Table 11 were used in order to compute for the estimated parameters of the regression model. 36 Table 11: Estimated parameters of piecewise regression model on production of Philippine coconut oil,-. Variables Year ttD Constant 2 R =0.2975 Coefficient- Standard Error- Probability Value- The regression equation will then be Vt=- t -ttd Based on the computations, the volume of production was increasing annually by 3584.46 MT with its variation significantly affected by the changes overtime. However, it was also increasing by- MT due to some factors such as lower prices of its substitutes and the availability of other vegetable oils in countries where we export CNO. It was also found out that the explanatory variable year is significant, meaning that there is a positive relationship between year and production of coconut oil. The probability values of year and ttd or the tariff reduction era prove that there is no significance relationship between year and production of coconut oil, as well as the tariff reduction on vegetable oils and the production of Philippine coconut oil. The R2 indicates that 29.75 percent of the variations in the volume of coconut oil production are explained by changes in year. The constant (or the intercept) means that when time is held fixed, the country’s import volume of rice is 216776 metric tons. 37 - Quantity (MT) - - - 500000 0 1980 1985 1990 1995 2000 2005 2010 2015 year Figure 4. Philippine Coconut Oil Production,- The diagram above shows the trend on production of coconut oil before and after the imposition of GATT-WTO. The two trend lines show that there had been a positive change in the growth rate of production volume after the imposition of tariff reduction. This is not the expected result since lower tariffs on vegetable oils will encourage the consumers to buy vegetable oil substitutes instead of coconut oil. Higher demand for coconut oil from other countries can be one of the reasons since the Philippines is the number one coconut oil exporting country in the world. Domestic Supply As for the effect of tariff reduction on the domestic supply of Philippine coconut oil, the model used was: 38 Ct= β0 + β1t + β2 (t-t*)D + ε Table 12. Domestic supply of Philippine coconut oil,-. YEAR-*- *-breakpoint Domestic supply- t-t* -10 -9 -8 -7 -6 -5 -4 -3 -2 - D- Ttd- Source: UCAP Table 13 shows the data that were used to compute for the parameters of the regression analysis. 39 Table 13: Estimated parameters of piecewise regression model on domestic supply of Philippine coconut oil,-. Variables Year ttD Constant 2 R = 0.3202 Coefficient - Standard Error- Probability Value- The regression equation will be Ct=- -t -ttd As for quantity available for domestic consumption, volume was decreasing annually by- metric tons with its variation significantly influenced by the changes overtime. Domestic supply of coconut oil increased by- metric tons during the post-tariff reduction era at 10 percent level of significance. The explanatory variable year has a significant relationship on the quantity available for domestic consumption based on the regression analysis. The R2 implies that roughly 32.02 percent of the variations in the domestic supply are explained by changes in year and tariff. The constant (or the intercept) means that when time is held fixed, the country’s domestic supply of coconut oil is- metric tons. 40 - Quantity (MT) - 1985 1990 1995 2000 2005 2010 2015 year Figure 5. Domestic supply of Philippine CNO-. The figure shows that the change in domestic supply of CNO had increased after the imposition of tariff reduction. This is not the expected result before conducting the study. Since lower tariffs on vegetable oils will enocurage the country to import more, the tendency is for the coconut oil to produce lower volume of the product for domestic consumption and just focus on the export promotion of cocout oil. But since the volume continued to increase even during the post-tariff reduction era, it means that lower price of other vegetable oils has no effect on the domestic supply of coconut oil. Domestic Price As for the effect of tariff reduction on the domestic price of Philippine coconut oil, the model used was: 41 Pt= β0 + β1t + β2 (t-t*)D Table 14. Domestic price of Philippine coconut oil (PhP/kg),- Year-*- *-breakpoint Source: UCAP Price (Peso/kg- t-t* -10 -9 -8 -7 -6 -5 -4 -3 -2 - D- 42 Table 15 shows the data that were used to compute for the parameters of the regression analysis. : Table 15. Estimated parameters of piecewise regression model on domestic price of Philippine coconut oil,-. Variables Year ttD Constant R2= 0.7404 Coefficient - Standard Error - Probability Value- Using the value from the table, the regression equation becomes Pt=-+- t -ttd The result of the regression analysis showed that the domestic price of coconut oil was increasing by 0.55 pesos annually on the period from- at 5 percent level of significance. The domestic price of coconut oil also increases by PhP2.10 due to the effect of tariff from-. The difference showed that post-tariff reduction era has higher domestic price compared to pre-tariff reduction era. The R2 denotes that roughly 74 percent of the variations in the volume of rice imports are explained by changes in era. The constant (or the intercept) means that when time is held fixed, the country’s domestic price of rice is PhP7.67. 43 - Price (PhP/kg) - 1985 1990 1995 2000 2005 2010 2015 year Figure 6. Domestic price of Philippine coconut oil,- The graph shows an increasing trend of the domestic price of coconut oil during the post- tariff reduction era. This shows that even there are lower prices of vegetable oils in the country due to import tariff reduction, the domestic price of coconut oil still continues to increase. Domestic Consumption As for the effect of tariff reduction on the domestic consumption of Philippine coconut oil, the model used was: Wt= β0 + β1t + β2 (t-t*)D 44 Table 16. Domestic consumption of Philippine coconut oil,- (in 1000 MT) Year Domestic Consumption 1985 286 1986 257 1987 306 1988 293 1989 382 1990 348 1991 353 1992 340 1993 363 1994 365 1995* 341 1996 384 1997 316 1998 272 1999 325 2000 375 2001 376 2002 419 2003 347 2004 461 2005 456 2006 547 2007 587 2008 595 2009 675 2010 703 2011 688 *-breakpoint Source: UCAP t-t* -10 -9 -8 -7 -6 -5 -4 -3 -2 - D - 45 Table 17 shows the data that were used to compute for the parameters of the regression analysis. Table 17. Estimated parameters of piecewise regression model on domestic consumption of Philippine coconut oil,-. Variables Year ttD Constant R2=.8200 Coefficient - Standard Error- Probability Value- Using the value from the table, the regression equation becomes Wt=-t-ttd Regression analysis results showed that the domestic consumption of coconut oil was decreasing by- (1000 MT) annually on the period from-. The domestic consumption of coconut oil increases by- (1000 MT) due to the effect of tariff from-. The difference in the era showed that post-tariff reduction era have higher domestic price than pre-tariff reduction era. The R2 denotes that roughly 82 percent of the variations in the domestic consumption of coconut oil are explained by changes in era. The constant (or the intercept) means that when time is held fixed, the country’s domestic price of rice is- (1000 MT). 46 800 Quantity ( 1000 MT) - 1985 1990 1995 2000 2005 2010 2015 year Figure 7. Domestic consumption of Philippine coconut oil,- The figure shows the domestic consumption for Philippine coconut oil during the pre-tariff reduction era and the post-tariff reduction era. Based on the graph, the posttariff reduction era has higher slope compared to the pre-tariff reduction era. This is the reason why the domestic price continues to increase even after the imposition of tariff reduction. It was expected that the consumption will decrease due to availability of vegetable oils which have lower prices compared to coconut oil. But since it has an increasing trend, it means that the domestic consumption of coconut oil is not affected by the changes in price of its substitutes. 47 SUMMARY AND CONCLUSION This study determined the likely impacts of reduction on tariff for vegetable oils on the Philippine coconut oil industry. It analyzed the impact of tariff reduction on domestic and export prices, production, and quantity available of Philippine CNO.. Two methodologies were used to attain the objectives: the t-Test, to measure the significant difference between the variables; and the Piecewise Regression Analysis to measure the impact of tariff reduction on the CNO export and the quantity available for domestic consumption. Based on the results of the study, world production of coconut oil decreased from 2.4 percent (1985) to 2.1 percent (2011). As for the prices, there had been a large increase in the domestic price of coconut oil due to the increase in value of peso. The average domestic price during the post-tariff reduction era is higher than the mean domestic price during the pre-tariff reduction era. The increase in price despite the reduced tariff on its substitutes is due to the increase in prices of inputs. World prices of CNO, soybean oil and palm oil has been increasing from- but based on the data and graph, coconut oil has the lowest growth rate of increase in world prices. The regression analysis was able to show the impact of tariff reduction on production, domestic supply, domestic price and domestic consumption of Philippine coconut oil. Results showed that for production, there had been an increase in production 48 of CNO during the post-tariff reduction era. However, there is a chance that it would decrease due to factors such as the price and availability of its substitutes in the world market as well as its own price. The graph showed that there has been a positive change in the slope of the trend line of export after the imposition of GATT-WTO. The full impact of tariff reduction in our economy is believed to happen in the long run. The domestic supply was hypothesized to decrease after the imposition of GATTWTO since there would be an increased in the world demand due to lower price of CNO in the world market and lower prices of other vegetable oils. But the trend showed an increasing slope from- compared to the trend line of the pre-GATT era. Filipino coconut farmers are still producing the right amount of coconut oil which is not only for export but for domestic consumption as well. It was expected that the domestic price of coconut oil would decrease to boost its competitiveness in the domestic market. But the study found out that there is still an increasing trend on the domestic price even after the imposition of tariff reduction. One reason is the increase in input cost of coconut oil which, of course, affects its market price. As for domestic consumption, the results and figure show that the post-tariff reduction era has higher slope compared to the pre-tariff reduction era. This can also be one of the reasons why the domestic price of coconut oil does not change. It was expected that the consumption will decrease due to availability of vegetable oils which 49 have lower prices compared to coconut oil. But since it has an increasing trend, it means that the domestic consumption of coconut oil is not affected by the changes in price of its substitutes. Demand for Philippine coconut oil continues to rise despite the lower prices of its substitutes. Government policies are also a big help to the coconut farmers. Coconut farmers will be encouraged to work better because of the benefits that the government offers to them. Generally, it can be said that the impact of tariff reduction on Philippine coconut oil industry is not yet so visible at the moment. Its effects can be better observed in the long run. But based on this study, tariff reduction on vegetable oils benefits the local consumers in a way that they have choices on what vegetable oil to use depending on their willingness to spend for that particular commodity. On the other hand, it does not severely affect the Philippine coconut oil industry since large amount produced in the country are for export purposes. Trends on prices and domestic consumption show that there is no effect on the competitiveness of coconut oil industry in the domestic market. 50 POLICY IMPLICATIONS AND RECOMMENDATIONS Tariff reduction on vegetable oil imports carry advantages and disadvantages on the Philippine coconut oil industry. It seems that there is, albeit minimal. But it is important that we recognize its more profound effect on the producers, consumers and the government as well. Lower tariff on vegetable oils encourages the country to import higher volume of oils such as soybean and palm oil. Consequently, lower tariff affects coconut oil but in this case, the domestic consumption of our coconut oil is not greatly affected. Consumers prefer lower price of oil that is why the consumption of coconut oil in the Philippines is supposed to be lower. But based on the results showed, there are no extreme negative effects on the production and domestic consumption of coconut oil. In fact, the trend shows that the volume continues to increase per year. Although the study shows that Philippine coconut oil is still highly competitive despite the lower price of other vegetable oils, the government must still keep an eye on the trend of the production and consumption because the effect might be seen in the long run. Also, the government must look at the export competitiveness of coconut oil. As mentioned, in some part of US, coconut oil products were completely eliminated in favor of homegrown vegetable oils. Since the Philippines is the number one exporter of coconut oil products, there is a potential that the industry will grow and lift us up above the other countries. But first of 51 all, factors that affect the industry at the moment must be considered. Most especially, prices and the production status of its substitutes must be prioritized in order to analyze the production and price of coconut oil in the market. It is strongly recommended to conduct a long run study about the impact of tariff reduction on the coconut industry so that we will be able to determine the real effect of this policy to the industry and our economy. 52 BIBLIOGRAPHY ANDERSON , K. and TYLERS. 1990. Agricultural Protection Growth in Advance and Newly Industrialized Countries. 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(UCAP) 54 60 50 Soybean Oil 30 Palm Oil Coconut oil 20 10 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 0 1985 Production (MT) 40 year Appendix A. Comparative Production of CNO, Soybean oil and Palm Oil- (in Million Metric Tons). - palm soybean 2000 cno- 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 0 Appendix B. Comparative price trends of soybean oil, palm oil and coconut oil,-. 56 - Export price - Appendix C. Philippine coconut oil export prices (in FOB US Dollars per Metric Ton) 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 0 year - price 57 100 90 80 70 60 50 40 30 20 10 0 Appendix D. Domestic price of Philippine coconut oil (PhP/kg),-. year