Connecting sustainable coconut oil to the world’s markets

June 11, 2018

In the chain that brings coconut oil from Indonesia into consumer products supported by industries and jobs around the world – Jelly Rembang is among the first links.

Like most of his peers in the region, his farm is just a few hectares of land, and he faces complex challenges in bringing his crops to market– expensive logistics, transportation, middlemen.

But thanks to investments by companies like Cargill, along with German development agency GIZ and other local and regional partners, he’s connected to world markets. And he’s getting the training and expertise he needs to produce sustainable crops that play an increasingly important role in fueling both his livelihood and a number of industries around the world that rely on coconut products.

“We learn to see our agricultural activities as a promising business opportunity,” he said.
The Philippines and Indonesia are the top two coconut oil producing nations in the world, driven by export markets. Farmers grow, harvest and dry coconuts, and sell dried kernels – copra – to companies like Cargill, which crush it to extract oil.

The oil goes into consumer products ranging from shampoo to lotion to cooking oil, creating jobs and opportunities across a broad range of industries. In Europe, one of the biggest markets for coconut oil exports, coconut oil production contributes to the 20,000 direct jobs counted by FEDOIL, the trade federation for vegetable oil and protein meal producers.

As is the case with many industries, consumers who buy coconut oil products are increasingly interested in knowing that the ingredients were sustainably sourced and produced.

“We see that there’s a demand for sustainable coconut oil,” said Alexandra Experton, sustainability leader for Cargill’s Asia Pacific region.

Cargill is among the first companies to implement coconut oil sustainability standards, working with farmers like Rembang to train them on the requirements and practices, and helping set up systems for certification.

“We are now more aware of the importance of maintaining natural ecosystems in our environment, because it is very important for sustainability,” Rembang said.

Those practices aren’t just good for the environment or consumer choice: certified sustainable coconut oil commands price premiums for farmers. Farmers who meet sustainability certification standards can boost their incomes by 10 percent.

It’s part of Cargill’s broader goal of improving livelihoods for smallholder farmers. Training also includes support on farm management, finances, education on the global coconut oil market –why prices might go up and down – and food safety training. To combat health risks that can come with sun-drying coconuts, for example, Cargill distributed dryers to farmers.

About 1,000 farmers received training in the first phase of the program, which ran from 2011 to 2015. A second phase is currently underway to train another 3,300 farmers.

“It’s helping these farmers operate their farms as businesses,” Experton said. “It improves their financial literacy, builds knowledge around best agronomic best practices and helps them understand the global market.”