The Department of Agriculture is investigating allegations of illegal use of imported palm olein that has been robbing the government of billions of pesos in revenues while hurting the domestic coconut industry.
Federation of Philippine Industries (FPI) chairman Jesus L. Arranza wrote a letter to President Bongcong Marcos about the alleged modus operandi of unscrupulous palm olein traders.
In response, the Presidential Management Staff directed Agriculture Undersecretary Domingo F. Panganiban to evaluate and take appropriate action on the issues raised by Arranza.
“Side by side with other industry leaders, I’ve been fighting smuggling and other illicit trade for more than half of my life, and certainly there were frustrations along the way. But this response from the Office of the President is like receiving 10 doses of booster shots and strengthens our resolve to continue with the fight,” said Arranza.
He said the FPI received reliable reports and obtained some documents that could lead to a thorough investigation and catch unscrupulous importers who are actually using palm olein for other purposes but are declaring their importations as for compounding of animal feeds to avoid the payment of value-added tax (VAT) and other taxes and duties.
“The reality is that a big portion of the imported palm olein is being diverted for sale to either – 1) producers of biodiesel an additive to diesel fuel, and 2) to the retail market (public markets, groceries, supermarkets, and sari-sari stores) as cooking oil for eventual sale to the consuming public,” the FPI chairman said.
He said pertinent Department of Energy regulations specifically provide that only coconut oil can be blended with diesel to produce “biodiesel” but these importers are actually delivering palm olein instead to substitute for coconut oil.
Since coconut oil is always priced much higher than palm olein, Arranza said these importers are getting another windfall of cash from substituting coconut oil with pam olein.
“This is naturally hurting the coconut farmers and industry,” he said.