Abaca Financial Viability / Dr. Feliciano Sinon

ABACA PRODUCTS
FINANCIAL VIABILITY
August 31, 2018
Trade Hall 2, SM MegaMall, Mandaluyong City
DR. FELICIANO G. SINON
VSU, Baybay City, Leyte

Bird’s eye view of the main campus facing the Camotes sea

Administration Building located in the hilltop facing Camotes sea

Abaca Power Stripper
Plant Power Shredder
DIFFERENT TECHNOLOGIES DEVELOPED AT NARC

Yarning Machine Twinning Machine

Fiber Twisting Machine Twinning Machine (bigger twines)

Vase from twine Twine mat for folding chair

Fibercraft products

Abaca Plants
Abaca Industry
Background

 Abaca is indigenous in the Philippines and widely
cultivated in the Bicol, Visayas and Mindanao
Regions.
 One of the major industrial crops in the country
grown for its fibers which are processed into pulp,
cordage and fibercrafts and exported as raw fibers
to other countries.

 It supports and sustains more than 1.5 M Filipinos
for a living

 Abaca export earning ranges to $70-85 M a
year

Specialty Paper for:
Tea bags, cigarette wrapper, antiseptic pad, lens tissue,
meat and sausage casings, capacitor, stencil paper, plug
wraps

Cable cords, twines,
ropes, marine cordage for
naval ship, oil drilling and
fishing nets

HANDICRAFTS including novelty items
from handmade paper

Pictures from Abaca Phils.
TEXTILES

New Applications (Cosmetics)
 Abaca soap, shampoo and
conditioner, moisturizing cream,
lotion and scrub
Source: Abaka Republic, Inc.

New Applications (Car Industry)
 Replacement of fiber
glass in composites
with natural fibers.
Daimler Chrysler is
already using 20 to
30kg of natural fibers
in their automobiles.

 Medical uses
New Applications:

2011
172,528
2014
176,793
2013
172,934
2012
176,548
2015
179,858
168,000
170,000
172,000
174,000
176,000
178,000
180,000
182,000
1 2 3 4 5
ABACA AREAS (in hectarage) by Years
(2011-2015)
(Source: PhilFIDA Presentation, Abaca Summit 2016)
1.9% Change
2015/2014

AREA PLANTED TO ABACA (HA.) by Region, 2011-2015
CAR
775 (0.2%)
C. Luzon
809
So. Tag-alog
2,880
Bicol
52,493
W. Visayas
8,927
C. Visayas
3,045 (0.9%)
E. Visayas
46,680
Z. Peninsula
3,117
N. Mindanao
3,323
Davao Region
21,204
Soccsksargen
6,327
CARAGA
23,373
ARMM
6,906

ABACA FIBER PRODUCTION (in MT )
by Years (2011-2015)
2.0% Change
2015/2014
2011
73,274
2012
64,806
2013
55,958
2014
66,004
2015
67,329
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000

CAR
-
C. Luzon
55 (11%)
So. Tag-alog
147 Bicol
25,134 (9.9%)
W. Visayas
1,933
C. Visayas
592
E. Visayas
8,418 (18.9%)
Z. Peninsula
636 (0.9%)
N. Mindanao
4,171
Davao Region
11,255
Soccsksargen
1,423 (11.6%)
CARAGA
6,785
ARMM
6,779
FIBER PRODUCTION (in metric tons) by REGION, 2011-2015

Export Earnings From Fibers and Manufactures 2011-2015
(FOB US$ ‘000)
3.1% Change
2015/2014

Export Earnings From Fibers and Manufactures 2011-2015 (FOB US$ ‘000)
% Change
(2015/2014)
Manufacturer
Pulp 104,141 75,003 60,689 71,086 79,437 11.7
Cordage 16,958 16,265 10,179 12,726 11,437 (10.1)
Fabrics 989 1,273 1,431 1,844 867 (53.0)
Fibercrafts 4,597 10,739 5,251 11,585 3,791 (67.3)
Subtotal 126,685 103,280 77,550 97,241 95,532 (1.8)
Raw Fiber 13,429 5,463 4,445 14,093 19,261 36.7
TOTAL 140,114 108,743 81,995 111,334 114,793 3.1
Annual Growth (22.4) (24.6) 35.8 3.1
2015Type of Product 2011 2012 2013 2014

% Change
(2015/2014)
United Kingdom 3,579 2,477 1,936 4,108 5,818 41.6
Japan 3,867 1,296 961 3,625 4,847 33.7
China 2,093 406 78 825 412 (50.1)
Indonesia - 83 76 84 25 (69.8)
India 90 56 34 125 134 7.3
Spain - - - 478 480 0.4
Others 163 138 260 518 295 (43.1)
TOTAL 9,792 4,456 3,345 9,763 12,010 23.0
2015Destination 2011 2012 2013 2014
Export of Abaca Fibers, by Major Country of Destination 2011-2015 (MT)

% Change
(2015/2014)
Unites States 2,837 1,414 915 1,437 1,217 (15.3)
Germany 9,000 6,001 6,816 7,755 8,631 11.3
France 1,945 1,222 1,754 1,241 1,438 15.9
United Kingdom 7,797 5,992 3,505 4,751 6,385 34.4
Japan 4,003 3,179 3,255 3,522 2,871 (18.5)
China 2,265 1,686 968 1,406 1,365 (2.9)
Others 1,926 2,031 405 804 294 (63.5)
TOTAL 29,773 21,525 17,618 20,916 22,200 6.1
% Change (27.7) (18.2) 18.7 6.1
2015Destination 2011 2012 2013 2014
Export of Abaca Pulp, by Destination 2011-2015 (MT)

% Change
(2015/2014)
United States 4,662 2,935 2,443 3,468 3,029 (12.7)
Canada 185 171 182 178 218 22.6
Germany 160 110 100 44 41 (6.8)
United Kingdom 109 134 80 226 202 (10.7)
Singapore 731 501 462 253 211 (16.6)
United Arab Emirates 177 90 150 196 70 (64.3)
Others 1,500 1,046 823 728 688 (5.6)
TOTAL 7,524 4,987 4,240 5,093 4,458 (12.5)
% Change (33.7) (15.0) 20.1 (12.5)
2015Destination 2011 2012 2013 2014
Export of Abaca Cordage, by Destination 2011-2015 (MT)

Exported Abaca Products from 2011-2015 (MT)
0
5,000
10,000
15,000
20,000
25,000
30,000
2011
2012
2013
2014
2015
9,792
4,456
3,345
9,763
12,010
29,773
21,525
17,618
20,916
22,200
7,524
4,987
4,240 5,093
4,458
Fiber (MT)
Pulp (MT)
Cordage (MT)

 The Philippines is the top
world producer and
supplier of abaca fibers
(about 85%);
 Five countries are
growing abaca: Costa
Rica, Ecuador,
Equatorial Guinea,
Indonesia & Philippines;

 Relatively low yield in major abaca
producing regions is expected to
persist considering that abaca is a
secondary crop and therefore,
received limited investment from the
farmers. A well-managed plantation
can yield 2,000 kgs/ha.
 Low yield due to traditional
management system of abaca
farmers
Fiber Production:

 Abaca fiber is an export
commodity and whether
processed or in raw form, its final
market is principally the
international community;
 Abaca is exported in the form of
raw fibers of various grades in
bales of 125kg;
 Exports of abaca fibers from
2015/2014 showed a 23%
change;
TRADE:

 Top 4 Abaca Fiber Importing
Countries (2011-2055):
United Kingdom 5,818 mt
Japan 4,847 mt
Spain 480 mt
China 412 mt
TRADE:

 Top 4 Abaca Pulp Importing
Countries (2011-2055):
Germany 8,631 mt
Japan 6,385 mt
Spain 2,871 mt
China 1,438 mt
TRADE:

 Top 3 Cordage Importing
Countries:
U. S. A 3,029 mt
Canada 218 mt
Singapore 211 mt
TRADE:

 The abaca fiber is used in 3
major industries namely:
 Cordage (including ropes & twines)
 Pulp & paper
 fibercrafts (handwoven & handicrafts)
 Bulk of abaca fibers produced
particularly in Eastern Visayas
are used as raw materials for
the big pulp mills.
LOCAL CONSUMPTION:

 Philippines has six (6) Pulp mills:
 Canlubang Pulp Manufacturing Corp.
 Albay Agro-Industrial Devt Corp.
 Isarog Pulp Co. Inc.
 Newtech Pulp Inc.
 Pulp Specialties Phils.
 Specialty Pulp Manufacturing inc.
 The estimated minimum fiber
consumption of these pulp mills
runs up to 43,218 mt. per annum.
LOCAL CONSUMPTION:

 There are 6 abaca cordage & rope
companies:
 Manila Cordage Company
 Oriental Rope Manufacturing Co. Inc
 Pacific Continental Co. Inc.
 Pacific Cordage Corp.
 Davao Rope Factory
 Interope Corp.
 Fiber requirement of about 10,000m.t.
LOCAL CONSUMPTION:

 The abaca industry will continue
making a stronghold in both the
domestic and international market.
 The present supply of quality fibers is
not sufficient to meet the growing
demand. Expansion of market for
abaca is foreseen with the following
encouraging developments:
PROSPECT & POTENTIALS

 Abaca is now used at 20/80 abaca-
cotton blend in 500 and 1,000 peso
circulation banknotes per approval by
the Monetary Board and by the Pres.
Memo dated May 10, 2000.
 The use of abaca pulp as raw material
for specialty papers will remain strong
and is expected to grow further as the
technology and formulations developed
and used by the specialty paper
manufacturers are principally abaca
based.

 Republic Act No. 9242 – prescribing
the use of Philippine tropical fabrics for
uniform of public officials and
employees and for other purposes;
 Utilization of abaca for fabrics will
create an additional demand of 752
m.t. of abaca fiber per year for a 20%
abaca – 80% polyester blends.

 Global developments such as continued
growth of China’s economy necessitate
an additional requirement of abaca pulp:
GLOBAL SCENARIO
 20,000 m.t. abaca pulp per year to support
the requirement of its waste recycling
plants
 Needs 800 tons of abaca fiber for making
capacitor paper; shifted from sisal to
abaca
 Improving cigarette filter using abaca
 Use of abaca pulp in coffee bags

 New applications in the World market for
abaca fiber and abaca pulp:
GLOBAL SCENARIO
 Additional fiber requirements of abaca
fiber as substitute for fiber glass in the car
industry
 Additional requirement of abaca pulp for
the manufacture of surgical masks

 Shift of Spain from Ecuador to the
Phils. for its abaca fiber
requirements;
 Untapped markets for cigarette
papers and tea bags in China and
Eastern Europe;
GLOBAL SCENARIO

 Due to environmental degradation,
Japan is now replacing PVC with
natural fibers or materials free from
chlorine;
 Demand for 80 m.t. twines per
month by Japan for the vegetable
industry;
GLOBAL SCENARIO

 The use of abaca fibers in UK as
replacement for asbestos is a big
boost to the industry;
GLOBAL SCENARIO
 Growing demand to conserve forest
resources and protect the
environment from problems posed
by non-biodegradable materials
particularly plastics;

 The viability of abaca as substitute
material for coniferous wood pulp in
the paper market at a ratio of 2:1 pulp
to abaca would translate to 100M tons
of abaca pulp for consumption of the
wealthy nation in the West and
150,000t for our local needs with a
value of US$150M;
GLOBAL SCENARIO

 Product development and
improvement in the fibercraft sector,
veering away from the traditional
ones.
 Resulted to introduction of
innovative and world class abaca
products in the market to maintain
the country’s competitiveness in
the international markets.
GLOBAL SCENARIO

 Abaca fibers and dried outer
leafsheath which are previously left
to rot in the field are used in making
furniture and handicrafts. Moreover,
since the furniture out of abaca
involves a creative design for the
high end markets abroad, the
prospects will be substantial.

 In 2015, the fiber supply and demand have a
negative balance of about 20,000 mt
 The Philippines imported abaca from Ecuador
to fill up the deficiency in supplies of specific
grades, to meet buyers specification and for
testing purposes. For instance, SPMI imported
more than 2,000 mt. abaca fiber valued at
US$1.6M from Ecuador in 2015.
ABACA FIBER SUPPLY & DEMAND:

 Based on the requirements of pulp sector, 2%
growth rate for fiber export and fiber used for
cordage and fibercraft sectors pegged at
12,000 and 4,000 mt. respectively, there was a
need for 102,625 mt. of abaca fibers in 2017;
and 120,860 mt. in 2019.
ABACA FIBER SUPPLY & DEMAND:

CONSTRAINTS
ABTV
AMV
Lack of Investment in Abaca Fiber
Production Due to:
Pest and disease infestation
Lack of disease-free planting
materials

Agriculture Secretary Emmanuel Piñol said
“the Philippine Fiber Industry Development
Authority aims to cover 54,000 hectares of
land with an average production of four
metric tons to produce abaca in the next
five years”. (The Philippine Star) - April 11, 2018
- 12:00am)
Need for Abaca Rehabilitation and
Expansion

This requires 140,000,000 planting
materials.
In Eastern Visayas, there are 3
functional Tissue Culture
Laboratories with about 10,000
plantlets capacity per month
These will take 388 years to produce
The Need for ABACA Planting Materials :

Cost
Viability of Abaca Plantlets Production:
1 Hectare Nursery
I. Farm Establishment and Planting
No. Unit Price Total
Underbrushing and cutting of unnecessary
trees
10 MD 300.00 3,000.0
Piling and/or burning of debries 8 MD 300.00 2,400.0
Layouting and staking 8 MD 300.00 2,400.0
Hauling of Planting Materials 10,000 pcs 2.00 20,000.0
Distribution of Planting materials , digging
of holes and planting
100 MD 300.00 30,000.0
Fencing of the area 10 MD 300.00 3,000.0
Sub Total
60,800.0

Cost
1 Hectare Nursery
II. Inputs No. Unit Price Total
Abaca planting materials (10,000 TC
PM)
10,000 pcs 35.00 350,000.0
Stakes 10,000 pcs 1.00 10,000.0
Fertilizers 12 bag 1,500.00 18,000.0
Insecticides 6 li 600.00 3,600.0
Hog wire (3'x6m) 68 roll 515.00 35,020.0
Round timber 40 pcs 20.00 800.0
CW nails (u nails) 10 kg 100.00 1,000.0
Sub Total 418,420.00

Cost
1 Hectare Nursery
III. Maintenance Cost No. Unit Price Total
Underbrushing and ringweeding
and removal of dried leaves
264
MD
300.00 79,200.0
Desuckering
40
MD
300.00 12,000.0
Application of fertilizer and
insecticides
12
MD
300.00 3,600.0
Sub Total
94,800.0

Income
1 Hectare Nursery
I. Abaca Sales
No. Quantity Unit Price Total
Abaca Suckers 12 10000 10.00 1,200,000.0
Abaca Fiber 15000 0.35 90.00 472,500.0
1,672,500.0

Income Benefits 10 year projection
I. Abaca Sales Year 1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10
Abaca Suckers
600,000 1,200,000 1,200,000
1,200,00
0 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000
Abaca Fiber 472,500 472,500 472,500 472,500 472,500 472,500 472,500 472,500
Sub Total
-
600,000 1,672,500 1,672,500
1,672,50
0 1,672,500 1,672,500 1,672,500 1,672,500 1,672,500
Costs
I. Farm Establishment and Planting
Sub Total
60,800.00 0 0 0 0 0 0 0 0 0
II. Inputs
Sub Total 418,420.0
0 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600
II. Maintenance Cost
Sub Total
94,800 94,800 94,800 94,800 94,800 94,800 94,800 94,800 94,800 94,800
Grand Total (cost) 574,020 98,400 98,400 98,400 98,400 98,400 98,400 98,400 98,400 98,400
Net Benefit (574,020) 501,600 1,574,100 1,574,100
1,574,10
0 1,574,100 1,574,100 1,574,100 1,574,100 1,574,100
Incremental Net Benefit (72,420) 1,501,680 3,075,780
4,649,88
0 6,223,980 7,798,080 9,372,180 10,946,280 12,520,380
Financial Cash Flow analysis of abaca plantlets in 1 hectare nursery production.

NPV (r=22%) 16,061,585
IRR 22
Sum of discounted gross benefits 4,470,052
Sum of discounted gross costs 775,894
BCR 5.76
Discount rate 0.22
Financial Indicator

Financial Indicator
Ave. Annual income 1,398,000.00
Ave. Establishment & Maintenance Costs 145,962.00
Ave. Annual Net Income 1,252,038.00
Initial Fixed Capital Investment 574,020.00
ROI, % 218.12
Payback Period is 2 years, 11months and 21 days

Nursery at Sogod, Southern Leyte

We would like to acknowledge DA-BAR
for its Financial support to all Abaca
projects throughout the country

Abaca Financial Viability / Dr. Feliciano Sinon

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Abaca Financial Viability / Dr. Feliciano Sinon