The coconut craze is growing – and it shows no signs of stopping. From beverages to skincare to car parts (and much more), coconut demand has skyrocketed over the past decade. Over 90% of coconut production comes from developing nations in Asia, with the Philippines being the world's largest exporter of high-value coconut products. Unfortunately, coconut farmers have been largely excluded from the benefits of the growth in global coconut demand.
This begs the question, how can we make the coconut industry more equitable?
Challenges for Coconut Farmers
Over 15 million Filipinos rely on coconut farming for their livelihoods, with 60% of those farmers living in poverty. With little choice but to process their coconuts into a very low value product called copra, many farmers remain stuck in a cycle of low-incomes and debt. Farmers produce copra by drying fresh coconuts over a fire. After drying, copra is sold from village to town-level traders who then sell to regional consolidators before the dried coconut meat reaches huge factories in industrialized regions for oil extraction.
In partnership with Fair Trade USA, CocoAsenso surveyed 150 copra producing farmers on the Island of Samar, we found average net incomes from copra production were $620 per year. With little disposable income, and no opportunities to produce higher value coconut products, farmers struggle to support their families. Facing this adversity, 43% of coconut farmers reported having to skip meals and 79% were in debt at the time of the survey.
Stuck with such low incomes, farmers usually have little cash left when it's time to harvest coconuts. As a result, most are forced to take out loans for coconut harvesting and copra processing. These loans almost always come from the people who later buy the farmer’s coconuts or copra. In our survey, 82% of farmers reported regularly taking loans from their buyers. Indebted farmers have little negotiating power when selling their products and can easily become victims to unfair treatment. In fact, 30% of farmers reported sometimes being treated dishonestly by buyers (e.g., rigged scales or lower-than-market prices), yet these farmers continue to do business with the same buyers because they need the loans.
Inefficient Supply Chains
Since farmers have such a high requirement for financial support, most buyers must first provide farmers with loans if they want to later purchase their production. This greatly limits the amount of product that any individual buyer can accumulate. As a result, most buyers can’t acquire enough product to economically sell directly to processors, which are often hundreds of kilometers away. This is especially challenging in a country of over 7000 islands.
Therefore, the coconuts or copra end up passing through a long chain of consolidators before finally reaching large processors. The great length and complexity of coconut supply chains decreases the amount of money that farmers receive and increases the costs for manufacturers and ultimately consumers.
Aging Coconut Trees
While growth in demand for coconut products has been growing by 10% per year, growth in production has lagged behind. The Asia-Pacific region has reported an overall increase in production of only 1.3% per year from 2000 to 2015, while in last 3 years the Philippines has actually seen a decline in production. This decline is largely due to the fact that many of the coconut trees in the Philippines were planted over 50 years ago and have passed their age of peak productivity. Today, the average coconut tree in the Philippines produces approximately half as many coconuts as it should. Farmers are hesitant to replant their coconut plantations because they can't afford the associated costs and they have little optimism about the future of coconut farming. In fact, 83% of the farmers we surveyed did not want their children to follow in their footsteps as coconut farmers.
Living in an island nation along the ring of fire, Filipinos are no strangers to natural disasters–-the country is hit by 20 typhoons each year. However, any Filipino will tell you that the challenges of coping with severe weather are becoming more severe. In fact, 5 of the 10 deadliest typhoons in Philippine history have occurred over the last decade. The most notable among these was Typhoon Haiyan (Yolanda), which ravished coconut farms in the Central Philippines (especially Samar and Leyte), leaving already vulnerable farmers desperate. As changes in our global climate continue to intensify, coconut farmers will become increasingly vulnerable if they are unable to diversify their production, replant their trees, and extract higher value from their coconuts.
How Does CocoAsenso Help Farmers?
Improving Equity through Decentralized Processing
CocoAsenso is decentralizing coconut processing to rural areas by building a network of community-level processing centers that give farmers access to improved processing technology and higher incomes. With CocoAsenso’s model, farmers sell whole coconuts to our processing facility (generating a 20% increase in income over copra). Farmers who sell us coconuts are able to nominate a member of their family to work part-time in our facility (generating an additional 65% increase in income).
Sourcing coconuts directly from farmers in rural areas enables CocoAsenso to access lower-cost coconuts, which allows us to pass savings on to our customers and remain competitive with large-scale processors.
Building Community Resilience
At CocoAsenso, coconut processing is only a starting point. By sourcing coconuts directly from local farmers who we employ in our production process, we are building deep relationships with the farmers in our partner communities. These relationships will enable CocoAsenso and farmers to co-create thriving coconut-farming communities. We envision our processing facilities evolving into farmer engagement hubs where we will provide access to technology/training for improved coconut production, opportunities to plant cash crops between their coconut trees, and financial services.
Do you know where your coconut products come from? Are you interested in working with a company that has the interests of farmers at its core? Let’s talk.