Wednesday, December 19, 2007

[PBN] Prices of coconut oil vs. diesel in the Pacific islands

Matthias Horn - BMF wrote:

Hi Jan,

With interest I am reading thru your emails, thanks for putting me on
the mailing list. At the moment I have one question to you:

A couple of month ago there was an article on the Philippines and the
impact of various cyclones effecting the CNO production there.

Would you have more info on what is happening there? Our copra price is
slowly going thu the roof and I do not have an explanation for that;
only that the world might be short on CNO??

Our CNO market for might be coming to a halt, because we cannot compete
with the diesel prices any longer...

Would appreciate if you have some further info on the situation on CNO;
I am planning to expand, but I am scared that we are going to run
aground if the CNO gets more valuable than the diesel fuel....


Matthias Horn
Buka Metal Fabricators Ltd.

Jan Cloin of SOPAC wrote:

Dear Matthias,

Thanks for your email. You pose an interesting question.

The above graph presents the copra oil prices of the past 5 years for Samoa. (also downloadable from:

The diesel price is the landed price without tax in Samoa (but including the transport to
Samoa. The copra oil price is the world market price minus the transport costs to get the oil to the market (in this case US$130 per tonne). The price is also adjusted for the lower energy content of coconut oil vs diesel (8%). Both prices have been discounted with a commodity price
index called PPIACO.

The coconut oil price appears to be very high now, but so do crude palm
oil and palm kernel oil. The veg oil market is extremely tight through a
combination of high demand in Europe for biofuels, some producing
countries (like Argentina) using their vegetable oils for own biofuel
production. In addition, there have been some problems with this year's
harvest in a number of countries (like Philippines).

According to some experts, the vegetable oil prices might stay at this
level for a while. Others suggest even in the medium term, fossil fuel
prices might be 'coupled' to vegetable oil, sugar and grain prices (with
a distance equalling the conversion cost of that particular food
commodity to a useable fuel).

This does not bode very well for island biofuel producers, however it is
good news for the exporting of the commodities and thus for the farmers.
I still think there is an economic case for the more remote places in
the Pacific, but for the centres, the operational margin between diesel
and local coconut oil (the most expensive of the vegetable oils) will
stay slim.

What are the current prices you are facing in Buka for diesel, copra and
copra oil respectively?

Best regards,

Want do discuss further on this topic? Send and email to jan(at)

Check for earlier Pacific Biofuel posts:

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