Vargas said the government offered to help these farmers by tapping their cooperatives and opening lending opportunities to them. Current farm prices of copra since the start of the year have hovered between P4 and P5 a kilo, below farm production costs of P5 to P6 a kilo. In some places, the price had fallen to as low as P2 a kilo. Copra prices started plummeting to P4 to P5 a kilo in the third quarter of last year from an average price of P6 to P8 a kilo in 1999 due to dwindling demand for coconut oil in the world market. The PCA expects export prices of coconut oil to remain soft this year due to a vegetable oil supply glut.
Coconut oil is the country s biggest farm export product.
Agriculture Secretary Leonardo Montemayor said the government would finance a food aid program for coconut farmers, which would mean access to cheaper rice and other food products. He said the agriculture department would release around P90 million for this program that should help a million farmers. The government earlier abandoned plans to subsidize local copra producers through a coconut oil-diesel fuel substitute program. Montemayor said the government decided to shelve this program as this would entail an additional cost of around P1 billion. Agriculture officials earlier proposed that excess coconut oil equivalent to about 10,000 metric tons could be used as substitute for bunker fuel oil that the National Power Corp. uses to run its power plants.