Production and Market Scenario
From 2001 through 2010, production of abaca fiber averaged 65,701 mt per year and had been decreasing at a minimal rate of 0.8% per annum caused by the devastating typhoons in 2006 coupled with abaca viral diseases that continued to affect the plantations as well as the dampened foreign demand brought about by the global economic recession beginning in the latter part of 2008, considered as the most severe downturn since the Great Depression in the 1930s. Production reached its peak in 2008 at 77,387 mt as outputs of all producing regions, particularly Bicol, Davao Region and Caraga, substantially increased during the period. This was primarily the effect of the incremental production from the abaca plantations established in 2005 and 2006 under FIDA’s program Goal I “Development of New Agri-Business Lands” and the continued strong demand and attractive prices offered for the fiber by local traders, processors/manufacturers and exporters. The abaca industry, however, suffered a setback in 2009 when fiber yield slumped to its lowest level of 54,584 mt due to the weakened market demand and falling prices as a consequence of the worldwide financial crisis.
During the decade, Eastern Visayas remained as the top abaca-producing region, contributing an average of 23,564 mt or 35.9% to the annual average production. Bicol followed with an annual average of 19,670 mt or 29.9% share while Davao Region, which supplied 13.4% or 8,783 mt, ranked third during the ten-year period under review. Starting 2009, Bicol emerged as the biggest producer of abaca, outranking Eastern Visayas which abaca areas were badly affected by viral diseases such as bunchy top, mosaic and bract mosaic.From among the abaca-producing provinces, Catanduanes remained as the biggest producer followed by Leyte. The top ten producers with the corresponding output and share to total production in 2010 were as follows:
PROVINCE VOLUME (mt) %SHARE Catanduanes 18,971 33.2 Leyte 7,089 12.4 Northern Samar 3,959 6.9 Davao Oriental 3,300 5.8 Surigao del Sur 3,105 5.4 Davao del Sur 2,994 5.2 Sulu 2,364 4.1 Bukidnon 1,993 3.5 Lanao del Sur 1,665 2.9 Southern Leyte 1,647 2.9
Of the ten-year average annual production of 65,701 mt, 54,741 mt or 83.3% were baled while the rest was traded in loose form. The major grades such as G, JK, S2 and I comprised 76.0% or 41,608 mt of the yearly average baling. Baling of G averaged 12,993 mt per annum sharing 23.7% to total output followed by JK with an average baling of 10,577 mt or 19.3% contribution. Annual baling of S2 and I averaged 10,208 mt and 7,830 mt, respectively, with corresponding shares of 18.6% and 14.3%.
Abaca baling during the decade exhibited an increasing rate of 0.7%, despite the downtrend in the output of the majority of the grades, except S2 and I.
Since 1991, local pulp manufacturers had been importing abaca fiber from Ecuador except in 2005. The pulp processors resorted to fiber importation to fill up the deficiency in local supply of specific grades and meet pulp buyers’ specifications. During the ten-year period ending 2010, importation of Ecuadorian abaca averaged 307 mt per year.
Domestic processors consumed an average of 50,592 mt or 77.0% of the country’s average yearly production of abaca fiber during the past decade. The sector’s fiber consumption level was observed to be decreasing fairly at a rate of 1.1% per year. Abaca fiber is being processed locally into pulp, cordage and various fibercraft items including furnitures.
The pulp sector consistently remained as the growth area of the abaca industry utilizing an average of 36,019 mt or 71.2% of the annual average local consumption and increasing at a minimal rate of 0.8% per annum. The pulp millers’ utilization level is highly dependent on the demand for pulp by the specialty paper manufacturers abroad as abaca pulp is the principal raw material used in the manufacture of meat and sausage casings, tea bags, cigarette paper, currency paper and other specialty papers. Processing of abaca pulp into specialty papers is done in Europe, the United States and Japan instead of in the Philippines as there is no available processing facility in the country.
The cordage sector, on the other hand, consumed an average of 10,369 mt of abaca fiber per annum or about 20.5% of the yearly average fiber usage of the domestic manufacturers but decreasing at a rate of 2.6% per year. Cordage and allied products have continuously been facing stiff competition from those made of synthetics and other cheaper natural materials.
Fiber utilization of the fibercraft processors who are mostly cottage-based, exhibited a decreasing annual rate of 11.0% and consuming an average of 4,204 mt or 8.3% of the annual average domestic consumption. These figures, however, may not have reflected the actual situation in the fibercraft industry, as purchases of other fibercraft makers were in loose form and therefore difficult to monitor. Unlike the other sectors, the fibercraft processors are numerous, not as well-organized and are scattered throughout the country.
For the past ten years, the Philippines generated an average of US$82.1 million per year from the exports of abaca fiber and manufactures, 84.4% or an average of US$69.3 million of which came from abaca manufactures such as pulp, cordage, yarns and fabrics and fibercrafts. The rest (15.6%) was contributed by raw fiber exports with average earnings of US$12.8 million yearly.
From among the abaca manufactures, pulp continued to lead as the growth area in export with shipments worth an annual average of US$45.8 million or a 55.8% share to the average income per year. Meanwhile, export earnings from fibercrafts and cordage/allied products averaged US$10.6 million (12.9%) and US$12.3 million (15.0%) per annum, respectively, while those from yarns and fabrics accounted for US$0.6 million (0.7%) of the yearly average.
Exports of abaca fiber averaged 13,434 mt per annum, decreasing at a moderate rate 1.0% per annum during the years under study. The demand of the country’s major trading partners – the United Kingdom and Japan, contracted substantially, particularly in 2009 when financial crisis hit the global economy. Some specialty papermakers abroad likewise shifted to the importation of abaca pulp instead of the usual raw fiber due to the strict anti-pollution laws in their respective countries. In 2010, however, there was a substantial increase in the abaca imports of the major buyers including emerging market China following their gradual recovery from the global economic recession.
Europe, specifically the United Kingdom, is the premier destination of abaca fiber, absorbing an average of 6,663 mt or 49.6% of the ten-year average exports. In 2003 and 2004, UK imported more abaca fibers as a US-based abaca pulp mill concentrated its pulp operation in the country that eventually led to an increase in its fiber demand. However, in 2005, there was a shift in the preference from abaca fiber to pulp that shipment drastically went down and leveled off at 6,650 mt and continued to be at approximately the same level in the succeeding years until 2008 and further slumped to 3,329 in 2009 due to global economic downturn. In 2010, abaca exports to UK made an upturn with shipment reaching 4,216 mt.
The Asian market was the second most important destination of abaca fiber with Japan as the leading buyer. Japan continued to influence abaca trade in the region accounting for the biggest market share averaging 4,914 mt or 80.5% of the 6,105 mt annual average Asian imports. Thus, when the Japanese market weakened in 2001 and 2002, the trend in the overall Asian demand exhibited the same pattern. Since 2003 through 2008, imports of Japan rebounded due to the printing of the Japanese yen that has new designs and sophisticated security features as protection from counterfeiting. Furthermore, businesses in Japan have picked up supported by its strong exports to the United States and Asian countries, especially China. In 2009, however, the Japanese market slowed down following the onslaught of the global economic recession thereby severely contracting its fiber imports to a very low level of only 1,502 mt but only to rebound in 2010 when its demand picked up to 4,680 mt. On the other hand, India and Indonesia have consistently been buying abaca fiber although the quantities were very minimal with combined aggregate share of 2.3% to the annual average foreign trade. Abaca fiber is used as raw material in the manufacture of cordage and fibercrafts in these countries. China showed great promise that its imports accelerated, averaging 1,712 mt in the last four years and is presently the second biggest Asian market for Philippine abaca fiber. It is now using the fiber in the manufacture of tea bag, capacitor paper and fibercrafts.
The importation of North America averaged 417 mt from 2001 to 2010 with the United States as the sole market destination. Imports of the United States drastically declined in 2003 to only 29 mt from 1,168 mt in 2002 and then stopped in 2004 but resumed in 2005 with only 20 mt because its biggest abaca pulp mill ceased its pulp operation in the country to concentrate in the United Kingdom. The same low trend was recorded in the next three (3) years (2006 – 2008), with corresponding fiber imports of 26 mt, 50 mt and 23 mt. In 2009 and 2010, the US market was seriously hit by recession which led to its non-importation of abaca from the Philippines.
From among the four major grades of abaca, JK and G were the top exports averaging 4,357 mt and 4,033 mt per year respectively, or corresponding annual shares of 32.4% and 30.0%. Shipment of I averaged 1,547 mt or 11.5% while S2 posted an average annual shipment of 1,824 mt or 13.6% of the average during the last ten years. Foreign demand for these major grades except S2 slowed down with I recording the highest rate of decrease of 18.6% per year. Overall, exports of minor grade H recorded the maximum reduced rate of 19.7% during the 10-year period under review.
Practically all the abaca pulp manufactured in the Philippines were shipped outside the country, especially when its use as raw material for cigarette paper by a local cigarette manufacturing company ceased in the latter part of 2002. An average of 18,593 mt of abaca pulp were exported every year over the ten-year period beginning 2001 with exports growing fairly at an annual rate of 3.6%. Some specialty paper manufacturers prefer using abaca pulp instead of raw fiber because of the stringent anti-pollution control laws in their countries require them to put up anti-pollution control mechanisms which they consider costly.
Europe was the most important destination for Philippine abaca pulp as five specialty paper manufacturers using abaca pulp are situated in this continent. Exports to Europe averaged 12,833 mt per year or 69.0% of the average annual with 7,014 mt or 37.7% being absorbed by Germany. Pulp exports to this country had been on the rise at a growth rate of 3.1% per year during the past ten years. While Germany had the biggest market share, the United Kingdom was the second biggest and the fastest European market for abaca pulp with an annual growth rate of 6.4% as a result of the transfer of the pulp operation of a US-based abaca pulp mill to the United Kingdom. France has likewise been an important export market for abaca pulp with imports averaging 1,756 mt per year or a 9.4% share to the total annual average exports.
Foreign shipments to Asian countries averaged 4,621 mt per annum with Japan as the leading destination. Japan’s purchases averaged 4,034 mt annually or 21.7% of the average annual during the period under review. Aside from the Japanese yen, abaca is processed into capacitor paper, insulation paper, tea bag, masking tape, stencil paper, filter oil absorbent paper casings and other speciaIty paper products. China and Taiwan had consistently purchased abaca pulp from the Philippines during the last ten years. Their shares though, were moderately minimal at 2.1% for China and 0.9% for Taiwan. Imports of China were noticeably growing at a significant rate of 24.9% per year. South Korea also imported the pulp but on irregular basis.
The imports of the United States, the third biggest market for Philippine abaca pulp, averaged 686 mt contributing 3.7% to the annual average during the ten-year period. Abaca is currently utilized in the manufacture of cigarette filter of the Winston and Marlboro Lights cigarettes, among others.
Abaca Cordage and Allied Products
From 2001 to 2010, foreign trade of abaca cordage and allied products such as ropes, cables and twines averaged 7,474 mt per year and decreasing, although at a minimal rate, of 0.8% annually. The stiff competition posed by cordage made of synthetics and other cheaper natural materials continued to cause setback to the country’s abaca cordage industry.The United States absorbed the bulk of the exports contributing 65.5% or 4,897 mt to the annual average. Singapore, Canada, the United Arab Emirates, the United Kingdom, Germany, Malaysia and Australia consistently remained as the other major markets for Philippine cordage.
Foreign shipments of abaca fabrics had been on the uptrend recording an annual average of 334,875 sq.m. and a high growth rate of 44.6% during the 10-year period under study. The highest volume of exports was made in 2008 at 698,335 sq. m with the surge in the demand of Hong Kong, Italy, Japan and the United Kingdom and the resumption of importation of Spain and France during the period.
Hong Kong was the biggest market for Philippine abaca fabrics, importing an average of 165,465 sq. m. per year or 49.4% of the annual average. It was followed by Italy with average purchases of 106,438 sq. m. or 31.8% of the total annual average. China, which began its fabric importation only in 2002 but on irregular basis, unexpectedly emerged as the third biggest market during the past four (4) years (2007-2010) with an annual average of 28,927 sq.m. or 8.6% share during the ten-year period. Other regular buyers were the United Kingdom and Japan, with corresponding imports averaging 6,143 sq. m. and 3,978 sq. m. per year. Nigeria’s importation had been noticeably regular in the past six years, with a yearly average of 9,266 sq.m. while purchases of other trading partners were intermittent during the last ten years.
Generally, the demand for abaca fabrics and other fiber-based products is largely dictated by fads and fashion although other consumers patronize natural-based materials not only due to its unique appeal but also due to environmental considerations.
The Philippines, specifically the abaca pulp sector, imported an average of 307 mt of abaca fiber from Ecuador during the last ten years except in 2005, when the sector was able to absorb the biggest bulk (44,470 mt or 60.2%) of the country’s total fiber output of 73,875 mt during the said period.