IS THERE ANY FUTURE FOR THE PRODUCTION OF ABACA? Problems of and Prospects for the Philippine Abaca Industry

IS THERE ANY FUTURE FOR THE PRODUCTION OF ABACA? Problems of and Prospects for the Philippine Abaca Industry

Dr. Roberto F. Rañola, Jr.

(San Miguel Corporation Professorial Chair Lecture in Agricultural Economics, delivered on June 24, 2004 at the Department of Agricultural Economics, College of Economics and Management, University of the Philippines Los Baños)

This paper deals with the problems and prospects of the Philippine abaca industry. There are three major aspects of the industry that are considered - production, processing and the marketing and utilization of abaca. Five major factors affect field level production of abaca. These include the area devoted to abaca production, use of different abaca varieties for commercial production, capital and farm investment, technology, use of different abaca varieties for commercial production, capital and farm investment, technology and cultural management and dissemination of location-specific technologies. On the other hand, the quality and yield of abaca are affected by methods of harvesting and fiber extraction. Lastly, the market conditions at the farmers' and local manufacturers' levels and the domestic and world markets have significant effects on the level of productivity of abaca farming.

The findings show that over time as a result of these interlinked factors, the area devoted as well as the total production of abaca have been declining over time. However, the yield per hectare has improved which may be indicative of the improvements in various abaca technologies as well as institutional support, especially in the Eastern Visayas. However, there are a number of factors which are pushing down the performance of the industry. Among these are the pest and diseases which are ravaging the abaca farms in certain areas, especially Bicol, the unfavorable biophysical conditions (e.g. steep slopes) of abaca growing areas, lack of capital and access to support services, failure to effectively disseminate technical information and the various government policies that provide incentives to convert abaca farms to other high value or staple crops. lastly, there are the market-related issues at different levels that have a significant impact on the performance of the industry.

The overall assessment of the industry shows that despite the external threats and internal difficulties, there are very good prospects for the abaca industry. Among other possibilities, the following may still be in the offing: abaca pulp as substitute for coniferous pulp in most paper and specialty paper products, the fiber craft sector, abaca fabrics for decor and wrapping purposes, abaca cordage, ropes and twines for oil dredging/exploration, navies and merchant shipping as well as constuction business and intercropping in fragile environments.

To realize these prospects, it is necessary to improve the yields and quality of abaca fiber and exploit the current and new market opportunities. Given limited resources however, it will be important thus to concentrate resources on the development and provision of technical and financial assistance in those areas and farms that have the greatest potential for improving yields and quality. To this end, it will be helpful to undertake an inventory of these areas and farms to determine the specific kinds of support that will be required. Lastly, it will also be necessary to enhance the financial and technical capacity of institutions to provide the necessary assistance to the production sector.