Philippines and Australia strengthen trade ties with new coconut oil export partnership

Ares Merchants Philippines Inc. (AMPI), a key player in coconut oil exports and a consistent supplier to Australia, is now setting a bold target to supply around 30,000 metric tons of high-quality coconut oil annually. In a recent discussion with Luisa Rust, Senior Trade and Investment Commissioner from the Australian Embassy’s Australian Trade & Investment Commission, AMPI’s Managing Director, Jose Leonardo Tañada, outlined ongoing efforts to strengthen trade flows, including continued coconut oil exports to Australia and exploring new import opportunities from Australia to the Philippines.

Tañada emphasized AMPI’s strategy of targeting premium markets like Australia, where pricing benefits can be passed along to Filipino coconut farmers. “Targeting affluent markets supports higher returns, directly benefiting local farms and helping to balance the trade deficit,” Tañada noted. In Australia there is increasing demand for coconut oil in various industries such as food & beverages and cosmetics & personal care. The demand of coconut oil from Australian consumers is due to appreciation of health benefits and taste preference. The Australia food & beverages sector is increasing the demand for coconut oil for baking goods and dairy alternatives to enhance unique flavors. This demand underpinned by the growing Australia and Philippines two-way trade relationship will boost Philippine’s coconut oil export revenues by an estimated $70 million USD.

AMPI’s strategy and support from Austrade aligns with the Philippine government’s broader initiatives to enhance trade ties with Australia. The bilateral relationship between Australia and the Philippines is at a high point, with significant momentum over the past two years leading to the recent upgrade of the relationship to a Strategic Partnership. Last September 2023, Australian Prime Minister Albanese visited Manila and met with President Ferdinand Marcos Jr. to elevate the bilateral relationship to a Strategic Partnership. This month, Department of Trade and Industry (DTI) Secretary Cristina Roque engaged with Australian Department of Foreign Affairs and Trade Secretary Jan Adams to explore ways to strengthen economic relationships through trade, investment, and shared interests.

Additionally, by increasing coconut oil exports, AMPI’s export growth aspirations also aligns with the DTI’s drive to strengthen coconut exports and boost the Philippines’ agricultural economy. As one of the largest global coconut producers, the Philippines has relied on coconut products as a cornerstone of its agricultural exports, contributing around 35% of the sector’s total share over the years. This growth strategy not only reinforces trade flows but also creates sustainable income sources for millions of Filipino farmers.

 “By showcasing companies like AMPI, we demonstrate pathways for others to follow. Australian customers are seeking to source from reputable companies with high quality products, and an experienced export track record” Rust explained.

Rust further emphasized the economic benefits of importing coconut oil from the Philippines, noting that Australia’s coconut oil market has grown significantly. This growth is driven by increasing interest in coconut-based cuisine, rising demand for natural and organic products, and awareness of coconut oil’s health benefits, particularly its high concentration of medium-chain fatty acids. Additionally, coconut oil’s diverse applications in cosmetics and skincare products contribute to its expanding market presence in Australia.

Rust noted, “The Australia-Philippines relationship is a longstanding friendship built on mutual trust and cooperation. Australia and the Philippines have worked together to ensure a close partnership grounded in a commitment to peace, stability, and prosperity in our region. Our cooperation is deep and mature, covering defense, security and development, and growing trade and investment, all supported by strong people-to-people ties.”

In addition to showcasing companies like AMPI, Austrade has plans to enhance trade opportunities with the Philippines through various initiatives. These include providing advisory support for exporters, organizing trade missions between the two countries, and facilitating support for government agencies like the DTI with a marketing campaign in Australia. 

For its part, AMPI is broadening opportunities for Philippine exports by marketing coconut oil to different industries, including food manufacturers and oleochemical applications, through its U.S. counterpart, Apical Resources America LLC. Recently, AMPI, the Philippine Coconut Authority (PCA), and Limketkai Manufacturing Corp. (LMC) signed a Memorandum of Understanding (MOU) to produce EU-compliant crude coconut oil free from MOSH and MOAH contaminants. This oil will be refined at the first Philippine-owned refinery in Europe. Under this agreement, the PCA will develop cooperatives and educate copra farmers through technology transfer, while LMC will provide logistical support. AMPI will procure a minimum of 4,000 metric tons of MOSH/MOAH-free copra monthly in Cagayan de Oro through the Limketkai Oil Mill and refine it at their European facility.

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This article is brought to you by Ares Merchants Philippines Inc. (AMPI).