TOKYO—For 50 years and for free, a holding company based in the United Kingdom will be able to plant coconut trees on 400,000 hectares of land in the Philippines, Reuters reported. The total area is as large as Abra or Masbate province.

In an announcement in Tokyo coinciding with the visit to Japan of President Macapagal-Arroyo, the Pacific Bio-Fields Holdings Plc. said the project would make alternative auto fuel which it plans to sell to Japanese users in five years.

Bio-Energy president Salacnib Baterina denied there was any agreement on free land use but said his company and Pacific Bio-Fields had reached an understanding to reforest idle lands in northern Luzon with coconut trees.

Bio-Energy NL is Pacific’s Philippine counterpart that manages land use and regeneration.

Speaking on the phone from Tokyo, Baterina said the two sides agreed 60 percent of the coconut ethyl mester (CME), an essential component of biodiesel, to be produced would be used in the Philippines and 40 percent would go to the Japanese market.

Pacific Bio-Fields, which aims to list on the London Stock Exchange’s Alternative Investment Market later this year, said on Thursday the agreement allows it “to use exclusively public land on the northern main island of Luzon for free over the next 50 years,” according to the Reuters report.

“It is the first time the Philippines’ government has allowed any local or foreign company to use land for a coconut oil-made biodiesel project,” Yuji Taniguchi, head of the holding company with its main operations in Japan and the Philippines, told a group of reporters.

The Philippine Coconut Authority welcomed news of investments in coconut plantations for biodiesel use.

PCA Director Jesus Arranza said in a phone interview: “It is time for us to shift the use of coconut oil from food to higher value products, like biodiesel.”

He would not comment on specific investments but said local players would benefit since foreign investors have to partner with local stakeholders.

Farmers concerned

But the farmers group Alyansa Sa Mga Maglulubi sa Mindanaw had reservations.

The group’s cocofarm development coordinator, Miguel Musngi, said: “Initially there is an economic benefit, but (to allocate) such a huge tract of land for foreign investment raises concern about the welfare of small farmers.”

Musngi added: “The first order of business is to make the transaction transparent and distribute land to farmers, especially with the CARP (Comprehensive Agrarian Reform Program) extended.”

The size of the area where the coconut trees are to be planted—400,000 hectares—is equivalent to 4,000 sq km.

Based on data from the National Statistical Coordination Board, Philippine provinces with around 4,000 sq km land area are Masbate (4,100 sq km) and Abra (4,165 sq km). Bohol is slightly larger, at 4,800 sq km.

Exclusive use

Pacific Bio-Fields says in its website that the Philippine government has allocated to the company “on an exclusive basis” 400,000 hectares of currently unused public lands in Northern Luzon for planting.

Necessary permits have been agreed with the Philippine Department of Environment and Natural Resources, the website says.

In the Philippines, the world’s biggest coconut oil exporter, local biodiesel producers have increasingly been using coconut oil as feedstock now that a 2-percent mixture of plant-origin fuel in diesel for auto use is mandatory.

Coconut and coconut oil production have been centered in the southern part of the Philippines. Coconut oil is traditionally used in food and cosmetics.

The Pacific Bio-Fields website describes the company as “a leading coconut biodiesel developer based in Japan and the Philippines.”

“It develops coconut plantations and biodiesel plants in the Philippines in conjunction with the Philippine Coconut Authority and the Philippines Department of Energy and Natural Resources,” the website says.

Pacific says that coconut biodiesel “is considered the highest-quality alternative diesel fuel and represents a very clean alternative fuel.”

Pacific Bio-Fields Holdings Inc. was established in 2008 “to create a large-scale plantation and production facility for the production of coconut methyl ester biodiesel from coconuts,” the website says.

Inquirer report

The project was reported by the Inquirer in an article as early as Jan. 24, 2008. The article said that Pacific Bio-Fields had already started a $600-million coconut plantation project in northern Luzon.

It said Pacific Bio-Fields had teamed up with Philippine firm BioEnergy Northern Luzon Inc. to develop—at the time—about 600,000 hectares of ‘public and non-disposable’ timberland and forest land into coconut plantations.

Groundbreaking in Ilocos

The Inquirer story also said that planting activities had started following the project’s groundbreaking in Caunayan village in the town of Pagudpud in Ilocos Norte province.

The plantation forms part of a bigger project that also involves the establishment of coconut methyl ester (CME), an essential component of biodiesel, according to the Inquirer article.

Baterina said at the time that the coconut plantation would be the biggest in the country.

Baterina said the project would be beneficial to the residents of the area, considering the jobs it would create and the environment protection programs the company would implement.

Entire output to Japan

The article quoted a Pacific Biofields official as saying that the plan was to process the coconut produced in the plantation into CME and that the joint venture would put up a CME plant in Currimao, Ilocos Norte, which would process the coconuts.

The entire output of the plant will be shipped to Japan to supply the country’s growing demand for biofuels, both for fuel-dependent industries and manufacturing concerns.