Village-level coconut processing to create more livelihoods and raise farmers’ incomes

(Part II)

This column is the continuation to the preceding article (August 27, 2017) advocating for the promotion of villagelevel coconut processing plants. It is the fourth of a series on strategic directions to modernize the coconut sector to increase its productivity, improve its competitiveness with the other vegetable oils in the world market, create more employment in the countryside and raise incomes of coconut farmers.

The first strategic direction is raising the primary productivity of the coconut palm itself by the gradual replacement of our current stand of unselected, open-pollinated coconut palms with high-yielding selections, particularly F1 hybrids. Our national average productivity is 43 nuts per tree per hectare, equivalent to 0.75 ton copra per hectare per year. On the other hand, the 12 dwarf x tall F1 hybrids developed by our plant breeders in the Philippine Coconut Authority (PCA) with proper fertilization and care are capable of producing 4-6 tons copra per hectare per year.

The second strategic direction is exploiting to the full the productivity of lands devoted to coconuts by intercropping. At a standard planting distance of 10 meters between palms, there is still so much sunlight filtering through the canopy to sustain short-duration crops like sweet corn, legumes, vegetables, even ornamentals. Or high-value small perennials like bananas, coffee, cacao, papaya, black pepper, abaca and various tropical fruits. Forage crops (grasses and legumes) may also be grown to support ruminants like beef cattle, dairy cattle, dairy buffaloes, sheep and goats.

Of the 3.2 million hectares planted to coconut only 30 percent are estimated to be intercropped. Thus nationwide, we have 2.0 million hectares of idle, underutilized crops lands waiting to be planted to intercrops capable of creating more employment and raising the incomes of coconut farmers who are among the most impoverished 2–4 times.

The third strategic direction is full conversion of all parts of the coconut fruit — not only the meat but also the coconut water, the husks and the shells into other useful products. Coconut meat is 30 percent by weight of the fruit, the rest are essentially thrown away.

Moreover, instead of the coconut meat being dried and directly converted to copra and thence to coconut oil and copra meal (used as livestock feed), there are a few other products with greater value like virgin coconut oil, desiccated coconut, coconut milk and coconut meal/flour that can be derived from the coconut if the nuts were processed “wet.”

Actually, most of the husks and practically all the coconut water are left in the field since the whole nut is too bulky to transport from the farms to the native copra-making “tapahans” or to the distant large coconut oil mills.

Thus, in order to make viable the full utilization of all parts of coconut, integrated village-level processing centers that will utilize the water, husks and shells and the fresh coconut meat need to be established and dispersed in the country side closer to the farms.

A few enterprising, pioneering individuals are leading the way, setting up small- to medium-scale enterprises (SMEs) that produce high value products like virgin coconut oil, coconut milk, coconut water, coconut sugar, coconut meal/flour, activated charcoal, geotextile and coconut peat for local consumption and for export. As a matter of fact, over the years, PCA itself has identified promoting these other coconut by-products among its priorities. Emerging coconut products as a priority revenue stream

for export and investment What is needed now is a dedicated national effort to promote the commercialization of these other, emerging higher-valued coconut by-products (apart from the mainstream coconut oil, desiccated coconut and copra meal products).

As recommended in the Technical Report commissioned by the United States Agency for International Development (USAID) (EMERGE May 2016) for the Board of Investments (BOI), there ought to be a business development unit composed of industry stakeholders, including representatives of farmers group, under the umbrella of the BOI Export Development Council (EDC). The first task of this business development unit is to articulate a road map to guide industry and relevant public agencies in developing the emerging coconut products subsector.

Among the key-to-do initiatives are: 1) conduct of investment forums to introduce available technologies, 2) strengthening of PCA and research and development institutions focused on emerging coconut products, 3) for PCA, the Bureau of Food and Drugs (BFAD) and the Food and Development Center (FDC) to formulate and enforce product standards, 4) provision of credit and technical assistance to farmers groups and individual entrepreneurs in setting up and managing SMEs, and 5) aggressive export promotion of these emerging Philippine coconut products.

In addition to encouraging and assisting pioneering farmers groups and individual entrepreneurs engaged in the production of virgin coconut oil, coconut sugar, coconut water, coconut shell charcoal and activated carbon, and coir products, in stand-alone businesses, the Department of Trade and Industry (DTI) and PCA should jointly lead in the demonstration of the financial and technical feasibility of the 5000-nuts-inputs-per day SME model described in the above-cited Technical Report.

This integrated village-level coconut processing facility will produce at least nine products, as follows:

•From coconut meat — 1,600 kilograms skim milk; 260 liters VCO; 350 kilograms protein isolate; 253 kilograms coconut methyl ester (CME biodiesel) and 32 kilograms glycerin

•From coconut water — 360 kilograms vinegar; 1,170 kilograms distilled water

•From coconut shell — 117 kilograms activated carbon

•From coconut husks —1,000 square meters geotextiles; 200 kilograms organic plant media.

This model integrated coconut processing plant will require an investment of R20 million, generate a gross revenue of R52 million per year and provide employment for at least 200 people. The yearly net income is R9.6 million which by the proponents’ calculation increases the value of the raw coconut fruit three times.

This detailed technical report, complete with technical feasibility annexes, was prepared by an expert panel team of Filipino scientists and entrepreneurs composed of S.L Endaya, P.M. Villegas, T.M Espino, I.A. Tallada and R.R. Mecias. They are still around and most ready to help.

Village-level coconut processing hubs owned and operated by farmers themselves because of their prospects for additional employment and greater value added are ideal and most appropriate investments for the Coconut Levy Funds (CLF).

The most likely constraints will be the availability of professional management, robust financial controls, engineering support and market connections, which requisites small farmers and cooperatives for now are not in any position to access, hire and compensate.

This is where the “corporatives” business model being championed by Land Bank of the Philippines (LBP) President, Alex Buenaventura, should find ready application.

The LBP can provide the professional and corporate expertise, financial controls and marketing linkages until such time the coconut farmers are ready to manage and operate the enterprises themselves.

***** Dr. Emil Q. Javier is a Member of the National Academy of Science and Technology (NAST) and also Chair of the Coalition for Agriculture Modernization in the Philippines (CAMP). For any feedback, email eqjavier@ yahoo.com.