The government is reassessing the long-planned sale of United Coconut Chemicals Inc. (Cocochem) as renewed global demand for coconut-based products raises fresh questions about whether divesting the asset best serves coconut farmers and the broader industry.
In a news release, Agriculture Secretary Francisco P. Tiu Laurel Jr. last week (December 22) led an ocular inspection of Cocochem’s facilities, signaling a policy review of the state’s position on the company, which was once a major player in Southeast Asia’s coconut chemicals and oleo fats sector.
“We want to see for ourselves whether it still makes sense for the government to continue operating this chemicals and oleo fats factory given the rising demand for coconut products, particularly in Europe,” Tiu Laurel said, describing the visit as a fact-finding step ahead of a final decision.
The government, through Land Bank of the Philippines, has been offering about 682 million common shares of Cocochem, targeting at least ₱2.82 billion in proceeds. The planned sale has been framed as a way to generate funds for coconut farmers while allowing private investors to revive or repurpose the asset. However, improving market conditions for coconut derivatives are prompting policymakers to re-examine whether holding on to the facility could yield greater long-term value for the sector.
Founded in 1981 under then President Ferdinand E. Marcos Sr. and Ambassador Eduardo M. Cojuangco Jr., Cocochem was once the largest coconut chemicals and oleo fats factory in Southeast Asia and the first in the region to produce fatty alcohols using German-designed Lurgi technology. Its export-oriented operations were supported by a private jetty capable of handling 35,000-deadweight-ton vessels, enabling shipments to major markets in Europe, the United States, and Asia by the mid-1980s.
The company’s decline was driven by a combination of policy and market shocks. In 2001, the non-implementation of Executive Order 259, which mandated the use of fatty alcohol in local detergent products, reduced domestic demand. This was followed by a surge in coconut oil prices relative to palm kernel oil, eroding Cocochem’s competitiveness against regional rivals. Manufacturing operations ceased in 2012.
Since 2014, Cocochem has operated primarily as a facilities-based enterprise, earning from land leases, storage and warehouse rentals, power distribution, wastewater treatment, pier and weighbridge services, dockage fees, water supply, and housing rentals. The 39-hectare complex now derives 53 percent of its income from Cocochem Agro-Industrial Park Inc., 44 percent from Cocochem itself, and 3 percent from residential operations.
Will coco farmers benefit?
Cocochem is one of the coco-levy funded and sequestered corporations, and it is included in the official inventory of coco levy assets that form part of the Coconut Farmers and Industry Trust Fund under Republic Act No. 11524.
The law creates a special trust fund from recovered coco levy assets and transfers from the national government to support 2.5 million coconut farmers and the long-term development of the coconut industry. It mandates the Philippine Coconut Authority to craft a 50-year Coconut Farmers and Industry Development Plan that will guide how the fund is invested and used for programs such as increasing farm productivity, raising farmers’ incomes, supporting community-based enterprises, and modernizing coconut processing.
The law also sets a programmed infusion of at least ₱75 billion into the fund over the first five years and requires that utilization follow the approved development plan, be audited annually, and remain separate from the PCA’s regular budget, to ensure the money is preserved and used primarily for the benefit of poor and marginalized coconut farmers.
With European demand for coconut-based chemicals and derivatives gaining traction amid sustainability and bio-based material shifts, the government’s reassessment underscores a broader policy dilemma: whether immediate monetization through a sale best serves farmers’ interests, or whether retaining a strategically located industrial asset could support a more integrated, value-adding coconut industry over the long term.