Challenges and best practices
In recent years, the wide usage of coconut in cosmetic, food and beverage, and pharmaceutical industries have driven rapid growth of the global coconut market. Philippines and Indonesia are the world’s largest producers of coconut oil (Goldstein Research, 2017), and production in Asia Pacific is growing at a rate of ~1.3 percent per year (GRO Intelligence, 2016). However, demand is outpacing supply; consumers and buyers both seek sustainably sourced coconut products.
There is tremendous market potential but also significant production challenges for sustainable coconut. Ninety-five percent of global coconut is harvested by smallholders, and 90 percent of global coconut production is in Asia-Pacific (Fair trade, 2015). Production challenges include senile (aging) trees, natural disaster, disaggregated and complex value chain structures, and producers' limited access to market, finance and technical know-how. Combined with falling commodity prices, these factors lead to stagnating yields, low income and low incentive to invest in coconut production, despite growing market demand.
To address production challenges that coconut buyers, processors and suppliers commonly share, in March 2019 USAID Green Invest Asia and Barry Callebaut co-organized in Kuala Lumpur an inaugural Sustainable Coconut and Coconut Oil Roundtable, where industry leaders agreed on broad areas of improvement for the coconut industry: farmers’ livelihoods and income; supply of productive coconut trees; farmers’ productivity; traceability; deforestation prevention, and; farmers’ access to technology.
The inaugural Sustainable Coconut and Coconut Oil Roundtable, co-organized by Barry Callebaut and the U.S. Agency for International Development (USAID), Green Invest Asia, brought together over 80 buyers, processors and other actors actively involved in coconut supply chains to collaboratively find solutions and share investment approaches in establishing cost-effective sustainable coconut and coconut oil value chains.
The event was attended by 49 companies representing over 40% of global coconut oil volumes and included some of the largest coconut product buyers. A panel of private sector partners and sustainability experts showcased five successful pre-competitive initiatives and pilot projects working to address sustainable sourcing, transparency and investment challenges in the Philippines and Indonesia.
Barry Callebaut presented a proposed pilot approach and a roadmap to achieve 100 percent sustainable coconut sourcing by 2025.
Participants identified priority challenges for pre-competitive collaboration by voting on the preliminary list created based on pre-roundtable conversations with participants, and results were provided on the same day.
Drawing on the panel’s key messages and investment models, participants outlined action points for a roadmap.
The forum agreed to meet annually and form a task force to consider the following actions:
Craft concept of a jointly-funded supply chain mapping task force to identify overlap and potential for industry collaboration and efficiencies
Identify partner(s) to organize continuous dialogues and facilitate coordination among industry players and stakeholders to create synergies at different levels, scale-up and share best practices.