Sustainable certified coconut oil
Project title: Sustainable Certified Coconut Oil Production (SCNO) – Strengthening smallholder farmer groups and setting up a chain of custody
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Philippines and Indonesia
Partner: BASF Personal Care & Nutrition GmbH; Cargill BV Netherlands; P&G Chemicals
Lead executing agency: Philippine Coconut Authority (PCA)
Overall term: 2015 to 2018
Around the world there is strong demand for coconut oil for uses in culinary, cosmetics and soap products. The Philippines and Indonesia are the world’s largest exporters of coconuts and coconut-based products. The demand is growing more quickly than the supply, and consumers in industrialised countries increasingly favour sustainably sourced and certified products. Several big challenges undermine coconut oil production. Firstly, coconuts are mainly grown by poorly organised smallholder and tenant farmers, each cultivating less than four hectares of land, which impedes economies of scale. Secondly, a lack of know-how or means of financial support results in poor agricultural practices and ageing plantations. Consequently, yields are stagnating and coconut farmers’ incomes remain low. In addition, the complex structure of the supply chain, with numerous middlemen, means the costs of logistics and transportation are high.
A certified sustainable coconut oil supply chain that supports higher incomes and economic self-reliance among smallholder coconut farmers has been introduced in the Philippines (General Santos in Mindanao, and Southern Leyte) and Indonesia (Amurang, North Sulawesi).
To address the challenges, GIZ has joined forces with the private-sector stakeholders BASF, Procter & Gamble and Cargill. Together, they have formed a development partnership as part of the develoPPP.de programme of the German Federal Ministry for Economic Cooperation and Development (BMZ). In cooperation with national partners, including the Philippine Coconut Authority and the Agricultural Training Institute, the project aims to identify synergies and contribute to the positive development of the sector. In particular, it will work to strengthen local coconut farming communities. The private-sector partners will benefit from a more secure supply of certified coconut oil, while at the same time making the supply chain more sustainable and preparing themselves and their suppliers to meet the growing international demand for certified coconut oil.
The combined expertise and experience of the different partners should contribute to the success of the measure. Cargill, which runs copra collection stations and crushing plants, is assisting the farmers to set up a structure that enables them to secure certification for their produce according to the Sustainable Agriculture Network (SAN) of the Rainforest Alliance. The crude and refined oil produced by Cargill is then further processed by BASF and P&G as ingredients in their cosmetics, nutrition and health products. GIZ contributes expertise capacity building of the farmers, and for the uptake of good agricultural practices and the introduction of sustainability standards. As well as steering the project, GIZ is also managing its implementation on the ground and coordinating the contributions of other local governmental and non-governmental stakeholders. Together, the partners provide training for farmer groups on good agricultural practices, sustainability standards and better management practices to enhance farm productivity.
The project builds on an earlier partnership involving Cargill, BASF and GIZ, which developed good agricultural practices for coconut farming in line with the SAN standards. It also produced training materials and provided training to over 1,000 farmers, and enabled 300 smallholder farmers to become the first Rainforest Alliance certified coconut producers in the world. The current project focuses on the following areas:
- Training and support for smallholders in good agricultural practices, diversification and replanting
- Support for smallholders in implementing SAN/Rainforest Alliance standards and achieving Rainforest Alliance certification
- Establishing a chain of custody for the coconut oil supply chain
- Dissemination of results; monitoring and evaluation.
Using a training curriculum on Coconut Farming as a Business, which was jointly developed by the project partners, approximately 50 extension workers from the local government units and the main public-sector partner, the Philippine Coconut Authority, have benefited from a series of training measures for trainers. These address adult learning approaches, coconut management practices and financial and business aspects of coconut farming.
Over 500 Philippine farmers have so far received training on coconut farming as a business, at various levels. Ultimately 3,000 farmers will benefit from the training. Of these, 750 will subsequently take further training to secure international SAN certification.