Prospects for the industry going forward
It has been almost a year since the staging of Guyana’s first Coconut Festival and there have been many queries on its outcome and possible repetition.
First, it should be noted that the Festival cost its organizers a tidy sum which was met largely by goodwill and significant assistance from the then Ministry of Tourism. A repetition of this this year is unlikely since the returns are not immediately visible. On the other hand, there has been a tide of interest generated in the Coconut Sector which shows that it achieved its main objective of “Awakening the Sleeping Giant.” This is evident in the growth and expansion of existing and potential Value Chains. Several large investors are now pursuing objectives to fulfil their market demands and this trend is in keeping with the Value Chain method of stimulating production in response to concrete demands. Pre-festival data showed the existence of about six active value chains, four of which were based in Region 2, one in Region 4, and one in Region 5. Of the six, three were engaged in production of bottled coconut water targeting both local and export markets; the remaining three were focusing on production of refined and Virgin Coconut Oil (VCO).
Post-festival saw a piqued interest by both local and foreign investors expanding the value chain number from six to fourteen (14). Of these, six remain active, five are in various stages of development and another three are speculative in nature. All this has resulted in stimulation of activity from the Production of raw materials (coconuts) to expanded contractual arrangements and requests from several investors and buyers.
Quantum leap
Consequently, there are significant areas which require urgent attention from Production to Marketing. These include:
A quantum leap in demand for planting material from tens and hundreds of thousands to millions. At a planting density rate varying from the traditional 60 trees per acre to 100 or more trees (depending on variety, pattern and purpose of cultivation) the demand for seedlings is currently projected at over 2.5 million over an estimated 5 year period. The current trend of requests is for dwarf varieties traditionally demanded for the growing water nut industry, but with an increasing interest in VCO this will have to include about 1.2 million or about half in oil bearing or dual purpose varieties;
The increasing interest by foreign investors has also spiked an increase in the demand for land mainly on the more fertile (but low lying) coastal and riverain belt. An exception to this perhaps is the Precision Group whose factory is located on the white sands at Marudi on the Linden-Soesdyke Highway;
The need for practical advisory services to determine economics of crop enterprise mixes based on technical and market feasibility studies especially for intercrops;
The need for practical training in agro-processing of both coconut products and products of inter-crops necessary to ensure economic sustainability in the early stages of production;
The need to establish quality control facilities with adequate capacity to meet the stringent standards demanded locally, regionally, and internationally;
The need for financial programmes with terms of credit and payback periods suitable to meet the needs of small and medium sized enterprises;
The need for training in skills of negotiating contractual agreements and in issues of Intellectual Property Rights as the need arises;
The need for a coconut development authority that oversees, guides, and addresses the needs of a sector growing into an industry.
NSP
A brief look at these issues will indicate the nature of the challenges facing the National Stakeholders Platform (NSP). It would be appropriate at this point then, to review the purpose and composition of the NSP measured against its mandate and in relation to these challenges.
Briefly, the NSP emerged from a broad-based Stakeholder meeting held at the Grand Coastal Hotel in May 2015. It consists of commercial producers of the primary product (coconuts); processors who add value in terms of bottled coconut water and production of various types of oil and other products; support agencies – both local semi-autonomous ones like NAREI, GMC, and GSA, as well as Regional ones like CARDI and IICA. The scope of the NSP has much room for expansion and as the industry grows so should its membership in keeping with its primary principle of maintaining a participatory approach to development of the industry.
With the increasing demand for planting materials, the task of filling this deficit is being addressed by both NAREI and CARDI whose current collective capacities aimed at producing tens of thousands are inadequate to meet the needs of the larger investors. Consequently, efforts have been made to source seed nuts from neighbouring Brazil, Suriname, and Mexico. There is a marked concern over sourcing material from countries found in a geographical zone demarking the presence of Lethal Yellowing Disease (LYD) and while it has been argued that seed nuts imported from that region have been deemed safe by experts, the consensus of the NSP - taken at a special meeting in March - is a preference to source extra large quantities from Brazil with the usual quarantine procedures being strictly adhered to. Importation is intended as an interim position until Guyana characterizes its current varieties, expands on a system of nursery development, and develops a capacity to establish bio-factories of plant tissue culture material capable of producing tens of thousands of plantlets from a single embryo. Mexico is foremost in this research and the head of its coconut research institute - who made a presentation at the Festival and visited the Pomeroon district - has been foremost in recommending a ninepoint programme of technical cooperation between Guyana and Mexico.
Another post festival initiative came out of Brazil, through their main agricultural research institute EMBRAPA, requesting a joint programme of experiments involving producers of coconut residues from both processed green and dry nuts. A concept note was submitted and well received with a view to identifying funding.
On the issue of demand for products a significant development is emerging with the establishment of the Precision Group’s US$8M factory for its enterprise “Only Coconuts” introduced to the public at its Festival booth and indicating a range of products including various grades of coconut oil and coconut charcoal among others. Located at Marudi, the initial demand for operational feasibility is 100,000 dry nuts per day. Its principals are currently engaging both large and small farmers across the country to garner supplies. This kind of investment is also open to vertical integration for contractual supplies and should do well in stimulating village economies in its supply chain.
A similar demand for water nuts is on the upsurge as beverage giant SM Jaleel has been meeting with processing stakeholders to satisfy its huge demand for packaged raw coconut water. With a stated presence in 63 countries around the world their initial demand in January was for 250,000 litres per month with a projected expansion to 1,000,000 litres per month. This preference for unadulterated bottled coconut water has given rise for stringent evaluation of processing facilities and adherence to internationally accepted standards. The demand for the raw product (as compared to pasteurized water or water with additives) has required major capital investments as several processors must now re-design and rebuild their facilities to meet the demand of international markets. One option offered by some investors is to provide capital for infrastructural development in return for contractual supplies at a mutually agreed exfactory price. In a situation like this there is need for: compiling a protocol of engagement (as requested by one local Bank to guide its prospective foreign clients);
training in lean factory operations as initiated by the International Trade Centre (ITC) under its responsibility for Component 2 of the current coconut project across the Caribbean;
a systematic approach to financing for development of value chain components of production with vertical linkages;
consensus on criteria and standards for testing the wholesomeness of unadulterated, bottled coconut water and Virgin Coconut Oil across the Caribbean.
Scrutiny
Item 4 in particular is under increasing scrutiny as authorities in countries supplying coconut water and those in countries purchasing the product need to arrive at a consensus on objectively verifiable standards and methods of testing so that processors do not suffer unnecessary delays in due process. To this end a special Regional conference is being planned for the near future.
It is worth noting also that, in its training programme for Lean Factory Operations to improve and upgrade processing facilities, the ITC is engaging clients at the micro to small level. These include a group of creative entrepreneurs in Linden, Region 10, engaged in making soaps and oils for both therapeutic and cosmetic uses as well as women entrepreneurs, and one entrepreneur who uses coconut products for medicinal purposes. These initiatives require a coherent approach to developing them to their full potential and that returns us to the need for an authority to address issues ranging from improvements of farm infrastructure (including drainage and irrigation), land tenure procedures that can provide fixed collateral for capital investment, through profitability studies of cultivation sizes and patterns, to issues of processing, standards and regulatory controls, intellectual property rights for unique products developed by small holders, appropriate financing, and matters of policy affecting the growth of industry.
Fortunately, there is a renewed consensus among stakeholders – including the Government of Guyana through its Ministry of Agriculture – to form a Board. A summary of its proposed structure and function were presented in brief at the end of the Festival. It was further developed, circulated and discussed among NSP members but they were asked to reconsider registering as an Association to avoid a duplication of efforts. However, an Association was subsequently found to be inappropriate to carry out the stated objectives and a summary of the Board proposal is now being reviewed for re-presentation to all categories of stakeholders before determining its official status. This should be the next major step in development of the NSP which would raise its level to that of counterparts within the Region and farther afield.