A Partnership to Create Certified Sustainable Coconut Oil

(3BL/JustMeans) Coconut oil is growing in popularity. It is projected to have a compound annual growth rate (CAGR) of 9.75 percent. The wide range of health benefits associated with coconut oil is one of the main drivers of market growth. What is lacking in the coconut oil industry is sustainable certification.

A partnership between BASF, Cargill, Procter & Gamble (P&G), and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH will establish a sustainable certified supply chain of coconut oil in the Philippines and Indonesia, the two top producers of coconuts and exporters of coconut-based products, including coconut oil. Several regions of each country will be targeted, including Southern Mindanao and Southern Leyte in the Philippines and Amurang in North Sulawesi, a province of Indonesia.

Called the Sustainable Certified Coconut Oil (SCNO) project, the initiative is made possible through a public-private partnership. In addition to establishing a certified sustainable coconut oil supply chain, it aims to increase the incomes of smallholder coconut farmers in both countries. SCNO focuses on establishing a certified chain of custody for sustainable coconut oil.

There are about 3.4 million farmers and their families directly dependent on coconut farming in just the Philippines alone. Most of them are smallholders who have limited access to financing and training. They typically farm less than four hectares of land, about 9.8 acres. They tend to be on the margins of Philippine society, and coconut growing regions are the least developed areas with the largest number of rural poor. The farmers rarely organize in farmer groups and cooperatives, and are reliant on middlemen. They may have low crop yields because of poor agricultural practices.

SCNO aims to address the challenges facing coconut farmers in the Philippines and Indonesia. Smallholder farmers will be trained to comply with sustainability standards that are internationally recognized. Certification of their farms will help them receive a premium price for their coconuts. Farmers will be trained on enhanced farm management practices and farm-business skills by using Good Agricultural Practices (GAP), which are voluntary audits, and intercropping techniques.

SCNO has a goal of reaching over 3,000 farmers in the Philippines and 300 in Indonesia. About 800 smallholder farmers from the group will get training on the Sustainable Agriculture Network (SAN) standards so they can apply for Rainforest Alliance certification.

Cargill will provide training to the farmers and set up certification structures. Cargill owns and operates copra-buying stations and crushing plants. The crude and refined coconut oil Cargill produces is processed further by BASF and P&G to be used in ingredients in personal care products and nutrition and health markets. GIZ will contribute to SCNO with its expertise in capacity building on farmers’ levels and implementing GAP and sustainability standards. GIZ will oversee the project and manage its implementation, while working with government agencies.

Photo: Cargill