AN INVITATION FOR A MULTI-PARTITE PARTNERSHIP

Transcription

1 AN INVITATION FOR A MULTI-PARTITE PARTNERSHIP Development of Oil Palm Plantations and Oil Mills in Bukidnon

2 Contents An Overview of the Palm Oil Industry Bali Oil The Project Proponent Projects Being Undertaken by Bali Oil Proposal for a Multi-Partite Partnership Moving Forward 2

3 Why Plant Oil Palm? High value crop easy to plant and to maintain Long productive lives (30 years) Harvest of Fresh Fruit Bunch (FFB) all year round 3

4 Why Plant Oil Palm? Highest Yielding and Lowest Land Use (compared to other vegetable oils such as soybean, sunflower and rapeseed) Starts yielding fruits in 3 years yrs economic lifespan. High yield per hectare of MT of Fresh Fruit Bunch (FBB) or 4-5 MT crude palm oil (CPO) and 0.5 MT of kernel oil (10 x more than soybean) 4

5 COMPARISON WITH OTHER HIGH VALUE CROPS (HVC) 5

6 Comparison with other High Value Crops (HVC) An environmentally friendly crop fewer pest and disease problems, so less pesticide usage. Uses less fertilizers and less herbicides for weed control Does NOT heavily deplete soil nutrients (Phosporous, potassium, nitrogen) like sugarcane, cassava and pineapple. More frequent and higher incomes for farmers harvests of fruits every days. Easier harvesting and post-harvest handling pluck the fruits and deliver to truck haulers. No shelling, drying, packaging 6

7 Comparison with other High Value Crops (HVC) Least affected by climate change (e.g., drought) Help mitigate climate change - through the reduction of greenhouse effect. Help to reforest denuded hills. Additional revenues from carbon credits Negligible pilferage and stealing vs mango, coconut and rubber 7

8 COMPARATIVE COST AND RETURNS OF HIGH VALUE CROPS (HVC) 8

9 Comparative Cost and Returns of High Value Crops (Per Hectare) FINANCIAL HIGHLIGHTS PALM OIL CORN POTATO COFFEE CASSAVA PINEAPPLE (Hybrid) (White) (Robusta) Fresh Roots Dried Chips Initial Investments: Gestation Period (Years) mos 3 mos mos 8-12 mos 12 mos Number of Croppings per year Year round Crop Lifespan (Years) mos 3 mos 50 years 8-12 mos 8-12 mos 12 mos Investment (Per hectare) 120,000 35,182 X 2 194,184 82,000 28,000 42,250 66,372 (Peak Period) Year 9-20 Year 1 Year 1 Year 3-8 Year 1 Year 1 Year 1 Average Yield Tons kg Farmgate Price Per kg (2 yr ave) /kg Gross Income 172, , ,000 98,000 56,250 82,500 92,816 Less: Production Costs 47,891 92, ,184 27,000 28,000 42,250 66,372 Net Income 124,609 75, ,816 71,000 28,250 40,250 26,444 Source: Dept of Agriculture (Bureau of Agricultural Statistics), Dept of Trade, Pioneer Seeds, Nestle 9

10 AN OVERVIEW OF THE PALM OIL INDUSTRY 10

11 Global Palm Oil Production 2011 Total World Production: 49 million MT Indonesia produced 24 million MT (48%) Malaysia produced 18 million MT (36%) Country Production (Mt) Yields(T/ha) Mature area (M ha) Indonesia 19,40 21,00 22,20 23, ,91 3,87 3,92 4,98 5,37 5,74 6,09 Malaysia 17,73 17,57 16,99 18,00 4,55 4,38 4,11 4,26 3,90 4,01 4,13 4,23 C&S America 2,31 2,40 2,31 2,51 3,00 2,93 2,66 2,70 0,78 0,82 0,87 0,93 Other countries 4,13 4,30 4,35 4,31 2,24 2,17 2,09 2,12 1,84 1,98 2,08 2,16 Total World 43,54 45,27 45,85 48,98 3,79 3,72 3,58 3,65 11,50 12,18 12,82 13,41 Source: Oil World 11

12 World Prices (US$ Per MT) US$ 53 Billion market for palm oil in global production of Total 49 million tons Price of Palm Oil (US$ per Metric ton) Source: World Bank 12

13 Oil Palm Tree Products & Uses Plantation Fresh Fruit Bunch (FBB) (10-40 kg) Palm Nut (6-10 grams) Oil mills produce crude palm oil (CPO), palm kernel oil (PKO) from Fresh Fruit Bunch (FBB) Crude Palm Oil Pericarp: outer oily flesh (CPO) Endosperm: oil rich kernel (PKO) 13

14 Oil Palm Tree Products & Uses Palm Oil Is Versatile Cheapest traded edible oil with food and no-food uses Examples of food uses: Cooking oil Shortening Margarine Cocoa butter substitute Key ingredient in instant noodle production Examples of non-food uses: Oleochemicals Biodiesel Power generation Palm Oil Is Healthy Cholesterol free, no transfat acid. (no hydrogenation when used) High carotene content: 15X higher than carrots 50X higher than tomatoes Balanced composition of saturated and unsaturated fatty acids. Saturated acids (40%) Monosaturated acids (40%) Polysaturated acids (10%) Contains Vitamin E 14

15 Palm oil Food & Non-food Uses 15

16 Best Oil Palm Growing Regions Prime Areas 5⁰ 0⁰ 5⁰ 0⁰ Plantable Areas 16

17 Best Oil Palm Growing Regions Oil Palm spreading to dryer areas up to 15⁰ of equator using drought tolerant hybrid seeds 15º 10º 0º 10º 10º 17

18 Physical Conditions for Oil Palm Plantable = + / - 10 degrees off the equator Prime Areas = + / - 5 degrees off the equator Agro-Climatic Conditions Temp range of ~24 32º C throughout the year. Ample sunshine (~5-7 hours a day) Evenly distributed annual rainfall (2000 mm) Soil ph, 7.5; Relative humidity ~ 85% Ideal Soil: flat, heavy, water retaining alluvial soil 18

19 IDEAL LOCATION: Advantages of Mindanao Closer to Equatorial Line than Luzon and Visayas Availability of suitable land for Oil Palm Favorable agro-climatic conditions Familiarity of farmers to out-growership BIMP-EAGA initiative 19

20 Potential Land Areas for Oil Palm LOCATION POTENTIAL AREAS (Ha) 1. R-IVB Palawan 16,300 (1.68%) 1. R-IX Western Mindanao 102,000 (10.6%) 2. R-X Northern Mindanao 154,000 (16.1%) 3. R-XI Southern Mindanao 104,000 (10.8%) 4. R-XII SOCSARGEN 112,000 (11.7%) 5. R-XIII CARAGA 384,000 (40.0%) 6. ARMM 103,000 (10.7%) TOTAL 975,300 (100.0%) Source: PPDCI (June 2013) 20

21 Areas Planted to Oil Source: PCA, Oil Mills and PPDCI (June 2013) 21

22 Palm Oil Mills as of 2012 Source: PPDC (June 2013) 22

23 PCA-Accredited Oil Palm Nurseries 2012 Source: PPDC (June 2013) 23

24 Palm Oil Industry Supply Chain UPSTREAM MIDSTREAM DOWNSTREAM PROCESSING CONSUMER PRODUCTS ACTIVITIES Seed Production Nursery Cultivation Harvesting Oil Milling Trading CPO bulking Refining Fractionation Oleochemicals Esterification Oil storage Packaging and branding of food and non-food products PRODUCTS Palm oil seeds Fresh fruit bunches Crude palm oil Palm kernel Biomass (FFB, kernel shells) Oil mill effluents Crude Palm Oil Palm Kernel Crude Palm kernel oil Palm kernel cake RBO palm oil RBO palm olein RBO palm stearin RBO PK olein RBO PK stearin Palm fatty acid Cocoa butter equivalent, subs Cooking oils Margarine Shortening Ice cream, nondairy cream Confectionery Candles, soap Animal feeds 24

25 DOWNSTREAM PROCESSORS Asian Plantation Phils Inc. Mina Oil Mill Corp. Oleo Fats Inc. Pacific Oil Products RFM Corporation Universal Robina Corp. 25

26 DOWNSTREAM USERS Food Manufacturers Nestle RFM URC Non-Food United Chemicals Malabon Soap Trigon Link 26

27 Philippine Palm Oil Demand and Supply Gap (As of 2010) Demand = 293,000 Tons Supply* = 34,000 Tons (11.6%) Imports = 259,000 Tons (88.4%) Est. Annual Demand Growth = 10% * 2010 supply is a decline from a 2000 high of 54,000 tons due to old maturing trees 27

28 Demand and Supply Gap (As of 2010) YEAR PRODUCTION DEMAND IMPORT (Tons) (Tons) (Tons) , ,000 59, , ,000 72, , ,000 86, , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 Source: Dept of Agriculture 2009 Powerpoint Presentation 28

29 AGRICULTURAL TRENDS IN SOUTHERN BUKIDNON 29

30 Challenges Faced by Bukidnon Farmers Coffee Very stringent quality requirements of a multinational company resulting in low buying prices or reduced volumes bought. Pineapple High fertilizer inputs and low prices offered by buyers. Contract growers are losing. Banana Growing opposition to toxic spraying High depletion of soil nutrients (sugar, cassava and pineapple) 30

31 Trends in Bukidnon Agriculture By 2015, tariff of imported sugar will be 5%. Flooding of cheap sugar imports expected. Some sugar planters have started to convert their land to oil palm (1,200 hectares already converted). Farmer Coops and independent planters have signified converting to oil palm. Availability of seedlings and financing are essential. 31

32 Agricultual Areas in Bukidnon Potential areas for oil palm Kalilangan: Pangantucan: Talakag: Maramag: Quezon: Don Carlos: Valencia: 17,000 Has 17,000 Has 30,000 Has 20,000 Has (sugar) 10,000 Has (Corn) 20,000 Has 13,000 Has 20,000 Has Total Areas Planted (Major Crops) Corn 194,000 has (51%) Sugar 62,000 has (17%) Palay 60,000 has (16%) Pineapple 20,000 has (5%) Coffee 11,000 has (2.5%) 32

33 SWOT ANALYSIS (STRENGHTS, WEAKNESSES, OPPORTUNITIES & THREATS) 33

34 SWOT ANALYSIS STRENGTHS Strong local and global market for palm oil (293,000 tons worth US$234 Million and 49 million tons worth US$53 billion respectively) Oil palm is highly competitive with other High Value Crops (high returns, suitability, ease of planting and maintenance) Available large areas for oil palm in Bukidnon Oil palm is a forest tree species that can be part of National Greening Program 34

35 SWOT ANALYSIS Weaknesses Limited local supply of local FFBs (aging oil palm trees in Agusan and few oil mills) Lower priority by Dept of Agriculture and Phil Coconut Authority in terms of Policy, incentives, infrastructure and financial support. The private sector is driving the development of oil palm. Absence of oil mills near potential areas of oil palm plantation areas 35

36 SWOT ANALYSIS OPPORTUNITIES Create an integrated, sustainable poverty alleviation and livelihood programs in Bukidnon Through the development of an oil palm plantation intercropped with hybrid corn (first four years) and other high value crops thereafter (potato, squash) and/or livestock raising (goat, cattle, carabao,) Involving Coops (CARP beneficiaries), Indigenous Peoples and groups awarded by DENR with ISF or CBFMA and by NCIP with CADTI and rebel returnees And supported by Bali Oil, Landbank, DAR, DENR, DAR, DND, OPPAP CDA and LGUs 36

37 SWOT ANALYSIS OPPORTUNITIES CONTRACT GROWING PARTNERSHIP WITH BALI OIL For sugar planters Oil palm will mitigate the impact and effects of the reduction of sugar tariff in Oil palm intercropped with hybrid corn will provide new sources of income For farmers, Coops of other high value crops Sustainable sources of high income from intercropped high value crops 37

38 SWOT ANALYSIS OPPORTUNITIES For Bali Oil Develop its own oil palm plantation and sign Growership contracts with Coops and farmers of other high value crops Bukidnon Construct oil mills near areas where it has Growership contracts with farmers 38

39 SWOT ANALYSIS OPPORTUNITIES For Lending Institutions DBP or Landbank to provide financing to support Farmers, Groups, IPs with sustainable livelihood programs for poverty alleviation and reduction Rural and countryside development The value chain in food supply and security 39

40 SWOT ANALYSIS THREATS Competition from other vegetable oils (coconut) Peace and order, land claimants and illegal settlers. Impact of Climate Change (drought, typhoons, abnormal rainfall) 40

41 THE PROJECT PROPONENT 41

42 BALI OIL: The Project Proponent Bali Oil developed 200 hectares of palm oil plantation in Balingasag, Misamis Or. Rolling hills, meter elevation and moderate climate The plantation s average yield is 30 MT FFBs per hectare or 6,000 MT per annum Annual revenues Php 42 million. 42

43 BALI OIL: The Project Proponent Palm Oil Plantation in Balingasag, Mis OR (200 hectares) 43

44 BALI OIL: The Project Proponent Bali Oil Palm Plantation in Balingasag, Mis Oriental 44

45 BALI OIL: The Project Proponent Bali Oil has the experience and track record in developing a high yielding oil palm plantation. It has the technical team to provide technical training and services To implement a month plantation development program (Malaysian technology). To operate a nursery to ensure quality seedlings are provided to farmers 45

46 BALI OIL: The Project Proponent Bali Oil has strong alliances and partnerships with Pioneer Hybrid to provide and to finance the seeds for Hybrid Corn to be used as intercrop in the first four years of the gestation period of oil palm Bali Oil has an affiliate, PASSI, a strong partner of a fertilizer company to provide and to finance fertilizers formulated specifically for oil palm and corn. 46

47 BALI OIL S CURRENT PROJECTS BEING DEVELOPED 47

48 Bali Oil Proposal to DND Bali Oil to develop 5,000 to 15,000 hectares of Camp Kibaritan, Kalilangan into an oil palm plantation intercropped with hybrid corn, sweet potato and squash. Livestock (cattle, carabao and goat) raising will be done on the 5 th year. Project costs range from Php 600 million to Php 1.8 Billion. An oil mill will be included. Production sharing scheme (70%-30% of net income) Bali-DND. 48

49 Bali Oil Proposal to DND Land Owner TRIPARTITE PARTNERSHIP PROPOSAL DND AFP Grower/Oil Mill DND Department of National Defense AFP Armed Forces of the Philippines Project Financing 49

50 Bali Oil Proposal to DND LOCATION OF CAMP KIBARITAN, KALILANGAN, BUKIDNON Cagayan de Oro Camp Kibaritan CAMP KIBARITAN MILITARY RESERVATION (42,264 HAS) 50

51 Camp Kibaritan, Kalilangan, Bukidnon Rolling hills and grass lands Large, contiguous area One Owner 51

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53 Presentation to Dept of National Defense HQ, TF Diamond, 4ID, PA Bali Oil Team Bali Oil & Phil Army Bali Oil Team USEC Manalo (DND) AFP & BCDA 53

54 BALI OIL S PROPOSAL FOR OIL PALM CONTRACT GROWING BY FARMERS AND COOPERATIVES IN KALILANGAN, BUKIDNON 54

55 Marketing Oil Palm in Kalilangan (Mar 6) Bali Oil Team Mayor s Office Conference Room Mayor Suyao Brgy Captains, Farmers Bali Oil Presentor 55

56 Marketing Oil Palm in Kalilangan Technical Training Technical Training DBP Team DBP Financing scheme Open forum (Q&A) Open forum (Q&A) 56

57 Multi-Partite MOA (Big Brother Concept) Multi Partite MOA (Growership) (CPO) BALI OIL (Big Brother) DBP provides loan funds to Bali for seedlings and Agricultural inputs Bali Provides tech training, seedlings, Fertilizers Planters delivers Fresh Fruit Bunch 3 (Bali) Buys FBB & collects Loan repayments (DBP) Financing (Bali) Marketing (COOP) Production Bali divides value of FBB delivered into % to planter and % to DBP (payment of loan) LGU Kalilangan Oil Palm Growers Association (Mother COOP) 5 LGU may pay loan interests of Growers during first 4 years of gestation period. 57

58 BALI OIL S PROPOSAL FOR OIL PALM CONTRACT GROWING BY INDIGENOUS PEOPLES IN CABANGLASAN, BUKIDNON 58

59 Conceptual Framework Cabanglasan IP Bridge, farm to market roads, seedlings, fertilizers, tech services & training, health, education, housing Public Sector Perspectives (LGU, NCIP, IP, OPPAP) Bali Oil: Plantation Devt, Purchase of FFBs, Oil Mill Private Sector Perspectives (Bali Oil/Landbank) IP Community Jesuit Mission Perspectives Umayamnen Tribe 5,000-10,000 Has CADTI Landbank: Loans to Coop with CADTI and to Bali Oil for Oil Mill Governance & management training of LGUs, IPs,; Jesuit Volunteers; XU Agri student internships at plantation 59

60 Status of Current Projects of Bali Oil Proposal to DND/AFP DND is currently evaluating Bali Oil proposal. Target signing Q1, 2014 Proposal to Kalilangan Coop and LGU Ongoing discussions, refinements on terms & conditions of MOA and the Growership Production & Purchasing Agreement (GPPA). Target: Q Proposal to Cabanglasan LGU Ongoing discussions with LGU 60

61 Future Bali Oil Marketing Initiatives Schedule of Marketing Activities (Roadshow): Central Bukidnon LGUs & Coops (Aug, 2013) o Cabanglasan, San Fernando, Malaybalay, Valencia Sugar Planters Associations (Aug, 2013) Southern Bukidnon LGUs & Coops (Aug, 2013): o Maramag, Quezon, Don Carlos, Kadilingan, Pangantucan, Talakag, Kalilangan 61

62 HIGHLIGHTS OF THE PROJECT PROPOSALS TO DND AND THE KALILANGAN COOPS AND LGU 62

63 PROJECT HIGHLIGHTS Project Timetable ACTIVITY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 MOA SIGNING NURSERY OPERATIONS LAND PREPARATION PLANTING OIL MILL CONSTRUCTION OIL MILL OPERATIONS 63

64 PROJECT HIGHLIGHTS Bali Oil Palm shall also establish nursery stations to develop mos old seedlings of Tenera hybrids. 64

65 PROJECT HIGHLIGHTS Project Components OIL PALM PLANTATION Nursery to develop one year old seedlings 5,000 Has expandable to 15,000 has OIL EXTRACTION MILL 30-Ton per hour capacity 2 shifts 65

66 PROJECT HIGHLIGHTS NORTH Typical Intercropping WEST EAST 9.2 meters equidistance between palm oil trees (max 137 trees per hectare) SOUTH Oil palm with corn Palm Oil Corn Potato 66

67 Typical Yields of FFBs Year FFB Yield (Ton/Ha) Oil Palm FFB Yield (Tons for 5000 Hectare) Low Medium High Low Medium High ,000 30, ,000 65,000 80, ,000 65, , , , , , , , , , , , , , , , ,000 * Yield dependent on soil conditions or suitability 67

68 Oil Palm Investment Costs GROWER SCHEDULE OF ACTIVITIES YEAR 1 YEAR 2 YEAR 3 YEAR 4 PLANTATION DEVELOPMENT (One Hectare) A. Development & Land Preparation (Labor) 1,500 B. Planting Labor in Planting 6,339 M aterials in Planting 41,078 Total Planting Costs Per Hectare 47,417 TOTAL PLANTATION DEVELOPMENT COST 48,917 PLANTATION MAINTENANCE A. Materials for Farm Maintenance 7,260 8, ,520 B. Labor for Maintenance 3,115 6, ,946 TOTAL PLANTATION MAINTENANCE COST 10,375 15,146 14,790 24,466 TOTAL ANNUAL COSTS 59,292 15,146 14,790 24,466 DBP LOANS DRAWDOWNS 48,338 8,499 7,890 17,520 TOTAL DBP LOANS PER HECTARE 82,247 For 10,000 hectares = Php 820 Million investment cost 68

69 Costs & Returns (per hectare) OIL PALM FFB ESTIMATED COSTS & RETURNS (PER HECTARE) Year Yield (Tons per Hectare) Price Returns (Php5,000/ton) Costs Net Income Low Medium High (Peso/ton) Low Medium High Low Medium High , ,229 (51,229) (51,229) (51,229) , ,009 (11,009) (11,009) (11,009) , ,000 33,000 12,753 (12,753) 9,247 20, ,500 27,500 71,500 88,000 20,743 6,757 50,757 67, ,500 33,000 71, ,000 40,931 (7,931) 30,569 91, ,800 52, , ,000 44,991 7,209 71, , ,800 69, , ,000 44,991 24,609 88, , , , , ,000 46,731 61,269 91, , , , , ,000 47,891 78, , , , , , ,500 47, , , ,609 * Yield dependent on soil conditions or suitability 69

70 Intercrop Plan During Gestation Period Costs & Return with Intercrop Per Hectare Per Year Oil Palm (medium yield Yield) Yield (tons) Price (Peso/ton) 5,000 5,250 5,500 5,500 5,500 5,800 5,800 6,000 6,000 6,500 Gross Revenues (Peso 1000) Production Costs (Peso 1000) Gross Margin (Peso 1000) (51) (11) Hybrid Corn White Potato Yield (tons) 80% of One hectare Price (Peso/kg) Gross Revenues (Peso 1000) Production Costs (Peso 1000) Gross Margins (Peso 1000) Combined Total Gross Revenues(Peso1000) Total Production Costs (Peso 1000) Total Net Return (Peso 1000)

71 Reference: DBP Loan Terms & Conditions DBP LOAN TERMS AND CONDITIONS TERMS 7-10 YEARS GESTATION PERIOD 3-5 YEARS INTEREST RATES Less than 10% LOAN TO THE COOP AS A GROUP ONE PASSBOOK ISSUED TO COOP PASSBOOK KEPT BY DBP ALWAYS Note: Interests due during the gestation period (1 st -4 th year) can be paid by the LGU or capitalized by DBP LOAN AMOUNTS RELEASED TO PASSBOOK NO CASH RELEASED TO COOP BALI OIL TO RELEASE AGRI INPUTS BALI OIL REIMBURSED BY DBP COLLECTION OF PRINCIPALS & INTERESTS BALI OIL COLLECTS DUE LOANS & INTERESTS FROM THE NET PROCEEDS OF FFBs SOLD BY GROWERS TO BALI OIL 71

72 BALI OIL S STRATEGIC AND DEVELOPMENT PLANS IN THE NEXT FIVE YEARS 72

73 Bali Strategic and Development Plans 73

74 Bali Oil Invites You Independent Farmers, Farmers Coops and Associations, Awardees of CADTI, ISF and CBFMA Local Government Units To Participate in an Oil Palm Growership Program in Partnership with Bali Oil and Lending Institutions (DBP, Landbank) 74

75 Moving Forward For interested parties: Please leave the following information with the Bali Oil representatives: o Individual or Organization s name, address, contact number, location and size of your farm to be included in the Growership Program. For inquiries and additional information on the Growership Program, or for presentations to farmer groups, please call or Romy Posadas ( ) rrposadas1@gmail.com PASSI c/o Manny Boniao (passi_agrisupply@yahoo.com.ph) Loloy Donque ( ) 75

76 IT S MORE FUN TO PLANT OIL PALM GO! GO! GO! PALM OIL Palm Oil Development Proposal 76

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