SHORTAGE OF SUPPLY PUSHES PRICE TO RECORD P90 PER KILO


Abaca, a plant originally found only in the Philippines and known as the world's strongest natural fiber, is in short supply and the buying price has shot up from a low of P46 per kilo to about P90 now.

Yesterday, I received an urgent email message from Alberto Fenix, one of the stalwarts of the abaca industry in the country, informing me of a crisis because of the inability of the Philippines to supply the huge demand in the world market.

While the Dept. of Agriculture has started the revival and rehabilitation of the Abaca industry with a P100-M assistance for the abaca farmers of Southern Leyte, it will still take about two years before the production could increase.

So, if you know of anybody who has wide and unharvested Abaca in the different parts of the country, please send me a message so the DA could assist you harvest and market your Abaca.

Here is Alberto Fenix's message sent to me yesterday:


"I write to bring to your immediate attention and action the current crisis in the abaca industry.
1. Low availabiity of abaca fiber. Reported abaca fiber production is only around 60,000 tons per year, versus the around 80,000 tons five years ago.

2. Quality is also down, with insertions of spurious abaca into the bales being delivered to the processors, and lower grades into bales supposedly of higher grades.

3. Prices for the higher grades S2, I and G are now at record highs of P80.00 to P90.00 per kilo, delivered to abaca processors and FOB export. The price benchmark in previous years is for abaca fiber prices of U.S.$1.00 to $1.50 per kilo, which at today’s exchange rate should be P46.00 to P70.00 per kilo only.

4. The biggest use for abaca fiber today is for processing into abaca pulp, which is an important and necessary material in the manufacture of specialty papers such as teabag, coffee filter, electrolytic, battery, currency and security papers, among others. Abaca, being the strongest natural fiber, is the preferred natural fiber for use in these appications. At its heyday, before World War II, abaca fiber’s biggest use was for cordage and rope, and abaca fiber was one of the country’s major exports, with production reaching about 200,000 tons per year. This market went dramatically down with the advent of synthetics nylon and polypropylene.

5. With today’s lack of supply, lower quality, and record high prices of abaca fiber, the specialty paper manufacturers like Glatfelter Gernsbach GmbH, mother company of Newtech Pulp, Inc., are being forced to change their manufacturing processes to use less and less abaca, by switching to synthetic or man-made fibers and to other natural fibers like sisal.

6. Lenzing, the biggest fiber producer in the world is now making available Tencel, a man-made fiber made out of wood pulp. Dumfil is another producer offering similar fibers.

7. These fiber alternatives will not fully replace abaca, but will have the potential of replacing easily 60% to 70% of the total demand.

8. Once the specialty paper manufacturers make the switch to other fibers, there will be no turning back to abaca.

Recommendations:

1. Please proceed with your initiatives to increase abaca hectarage, and to organize the abaca farmers into cooperatives or associations that will set up their own general baling establishments (GBEs), and be able to sell directly to the abaca processors, bypassing and keeping for themselves the margins of the middle traders. These initiatives will have a gestation period of at least three years, and by that time, the downtrend in the world market demand for abaca fibers might already be a reality.

2. Today, it is urgent for the DA/PhilFIDA to locate and identify unharvested abaca areas. PhilFIDA field personnel have some knowledge where these areas are, and within a couple of weeks, they can submit a mapping of these areas. Then, PhilFIDA should bring decorticating and stripping machines into these areas with technicians who can train the abaca farmers in those areas the use of these machines, fiber cleaning and grading. And if there are enough volumes in an area, a baling press should also be brought in. This initiative should be able to produce some abaca fiber within three months, and thereby give the processors and specialty paper manufacturers the message that Philippine abaca fiber will have reliable supply, quality and reasonable price.

3. A third course of action is for the PhilFIDA Laboratory to research additional and new uses for abaca fiber. Today, what is taking off is abaca pulp for use in the manufacture of coffee filter paper which has the potential of becoming a bigger market than teabag paper. With renewable energy like wind and solar, the market for batteries, and with it the battery paper in them, is also set to explode. There was also research done by Daimler Benz on using abaca fiber in composite auto parts. The research was successful, but there was no reliability of supply and abaca fiber prices were too high to be able to replace fiberglass or carbon fiber."



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