company which operates one of the largest desiccation factories. The manager and director are American citizens. In addition to this company,
the second large st company is a desiccation factory without an oil mill but
with a substantial cutting capacity. These two companies have a good
relationship with each other. The smallest factory of the two is owned by JAKA investments, a part of the economic empire of former Minister of Defense, Mr. Juan Ponche Enrile (discussed in Chapter three). These longestablished factories found themselves threatened to a certain degree by two new factories introduced in the area in 1991.
The two new factories are owned by a family with Chinese ancestors.
The Chinese Filipinos have a reputation of being very "profit-oriented
businessmen" (quotation from one of the municipal officIals). They
received, according to the management in other factories, the machinery very cheap from the government. The machinery had been confiscated from Mr. Cojuangco, the cousin of the ex-president Marcos and an affiliate of Mr. Enrile. The Chinese did not talk to the researchers or to others who do
not belong to their family-dan about their production. According to the
management in the other factories, the Chinese are stock-piling coconuts and copraby overpaying the coconuts they buy (in order to speculate in the
prices later), hire only labourers belonging to a minority religious seceo said to have strong anti-trade union traditions. It is also said they speculate
in the anti-monopoly policy set up by President Aquino. According to
official policy this is a strategy to cn.sh the power and monopolies of the Marcos dan and affiliates. The owners of the two biggest factories does not like this policy. One manager stated:
Two Chinese factories have been established in Candelaria after 1986. The Philippine Coconut Authority has not done anything to stop them. This is
betrayal. 21
This claimed betrayal towards established factory owners was not as serious as first believed. During the field work, it was known that the authorities, dominated by local politicians and the PCA, resisted giving the Chinese
factories the required governmental permits for production. It was also obvious that the new factories did not benefit from the loyalty of local
governmental employees, as the more established factories did. The coconutmonopoly thus seems to have won the first round in what supposedly
should be an anti-monopoly strategy of the authorities. In other words, there
seem to be very strong unofficial power mechanisms within the official bodies which work against competition in the coconut industry. The en-trance of new owners is constrained by these unofficial power mechanisms.
The management of the more established factories saw several obstades to future production, briefly referred to as the government policy, and the inefficiency of landowners, tenants and farm workers. Among the obstades mentioned was the land reform programme of the government, since it
20 I l' . Kr g esia ni sto.
21 Interview, lune 1991, Candelaria.
made landowners cut the trees instead of producing sufficient raw materials.
The solution for the coconut industry should, according to the manager of a large factory in Candelaria, be to continue the vertical integration policy of Marcos (see Chapter three). He suggested:
The best way of doing coconut business is like they have done in the south, at Twin River Company. They have created the company into a stockholding company, and have a vertical inter-linkage with all parts of production. They own the factory, the plantation, the stores, the bank, the fertilizer company, the airplanes needed. Everything. The Luisita stockholding company of Aquino is another example. We should do the same, and link up with the Sorriano-farnly.22
Twin River Company is based in Southern Mindanao, in the south of the Philippines. The production of coconuts is controlled by the company, who owns a huge coconut plantation. The coconut producers in Mindanao,
however, are as poor as they are in Cande1aria, although the investments for
increased productivity are definitely higher in Mindanao.
The technology used in the manufacture of coconuts is the same now as
"ever before": no major change has taken place since the beginning of the
century, although the quality of the machinery has be en improved both in
the coconut mills as well as in the factories for desiccation.
In the coconut oil factories, the workers are men. They pour the copra
into the machines that extract the oiL. In Candelaria they use the traditional
method of mechanical extraction of coconut oiL. This technology uses
copra, wherein aflatoxin can develop. In the processing of copra, 6 per cent vaporizes in to the air, 61 per cent turns to oil and 33 per cent becomes copra meal, which can be used as feed for animals. The price for copra meal fluctuates between 1.80 and 3.60 pesos per kilo. The average is about 2.50 pesos per kilo (fieldwork, interview June 1991). The actual procedure of coconut extraction is illustrated in Figure 4.1. Half of the value of the machinery (the gear-box) is imported from the US. The rest of the equip-ment is Philippine made (Fieldwork, Candelaria August 1991). There is a wet method to extract the oil in the oil mills. The wet method uses fresh coconuts and the problem of aflatoxin can thus be avoided. This method extracts 2-3 per cent more oil from the coconut than the coconut oil mills in Candelaria do. No one is investing in this method in Candelaria. It would have been an investment that would benefit both productivity and quality22 Interview. The Sorriano-family is known for being one of the biggest dynasties in the
country .
but from a lack of real competition these investments do not seem to be planned.