·        Today i make this article for my agriculture presentation

 Upheaval in the coconut oil industry

While coconut oil has been losing market share to palm oil in recent years, the strong growth in global vegetable oil consumption has made it possible for coconut oil to still sustain positive growth, albeit at around 2.5% per years. This is primarily from the industrial use market with food use all but stagnant, with growth of less than 1% per year. A major question for the entire coconut industry is whether or not the loss of market share to palm oil will accelerate in the coming years. If so, it is likely that the current stagnation of coconut oil in the edible oil segment could turn in to an outright decline. This would most likely be triggered by a collapse in coconut oil use by consumers in producing countries, especially India and Sri Lanka. Already, the domestic coconut oil industry is in crisis in both countries. Sri Lanka has introduced protectionist tariffs to restrict imports of palm oil to support the domestic coconut oil industry – at the expensive of the export industry and local consumers. Such measures appear to be unsustainable over the medium term. In India, Kerala’s coconut farmers are protesting at the collapse in coconut prices. The planned response of the Philippines oil industry to the competition is to attempt to dramatically increase the yield of coconuts at the farm level. If successful, this plan would greatly increase nut supply, lower nuts prices and allow the oil millers to produce more oil at lower cost. For the millers this would help address their over capacity problems, and raise their competitiveness. The benefit to the farmers is unclear. Either a collapse in domestic coconut oil consumption in producing countries or a surge in yields in a major producer like the Philippines would result in a significant shift in the balance of supply and demand for nuts in the entire coconut industry, equivalent to up to 20% of annual world coconut production. Changes on this scale would have far reaching consequence. Nut prices would fall, but initially unevenly between countries. Production would shift to lower cost producers and coconut farmers worldwide would see lower income and there could be an accelerated reduction in coconut production in badly affected areas. These changes would be slow and painful and the exact impact is hard to determine. What is clear is that the current crisis is set to continue.

·         Low productivity and farmer income

The relatively low productivity at farm level, combined with low farm gate

prices in several major producing countries, especially the Philippines and

India, is a major long term weakness of the industry.

In the Philippines, coconut farmers are regarded as being among the poorest

with few alternatives. In other producing countries, such as Malaysia and

Thailand, the low income from coconuts has driven farmers to switch to other

more profitable crops and an overall decline in the local coconut industry. 

·         Missed opportunities from not using the entire nut

Globally, the coconut industry makes very poor use of anything other than

coconut kernel meat. Millions of tonnes of potentially valuable material, from

husks, shells or water, are thrown away every year.

At the same time, the value achieved per nut is low and coconut farmers

struggle to make an acceptable living. This is especially true at the moment

with the crisis in the coconut oil markets.

Efficient use of the entire nut in a local coconut industry could triple, or more,

the value created compared to simple DC or oil supply chains. While market

limitation mean that this is not possible for the entire global industry, those

local industries that succeed in making the transition to an efficient industry

will create a sustainable competitive advantage for themselves and deliver

significant benefit to their business and farmers alike.

·         Dealing with cocopith

The most successful industries in the future will be those that have integrated

kernel processing in tandem with good use of husks and shells.

Proper use of cocopith within a local industry is therefore not only necessary

to avoid major environmental pollution but is a necessary part of developing

an internationally competitive coconut industry. Vietnam, India and Thailand

have the greatest opportunities in the immediate future to benefit from this.

·         Coconut areas reduce

  The coconut areas is continually reduced.  It dropped from 213,214.0 hectars in 1985 to 151,044.7 hectares in 2001.  The principal reasons for the low and drop in hectarages is the low profitability. Many smallholders have changed over from coconut to oil palm mainly because of the poor return.