Farmer harvests coconuts on a plantation (Philippines/Indonesia)

Philippines / Indonesia Certified coconut oil – companies set up sustainable supply chain

East Asia
GIZ
Classic
Sustainable supply chains

BASF Personal Care and Nutrition GmbH, a subsidiary of the chemical group BASF, consumer goods group Proctor & Gamble International (P&G) and the agricultural group Cargill import coconut oil from the Philippines and Indonesia as a key raw material in the manufacture of food, cosmetics and cleaning products. In these two countries, which are among the world’s largest producers of coconut oil, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH worked with the three companies to establish a transparent supply chain for the first coconut oil on a mass balance basis, certified as sustainable by the international Rainforest Alliance. This meets the desire of many consumers for products based on socially, economically and ecologically sustainable raw materials. The product was implemented as part of develoPPP, a programme of the German Federal Ministry for Economic Cooperation and Development (BMZ).

Demand for coconut oil is growing worldwide. At the same time, yields in the Philippines and Indonesia are stagnating. Many of the trees there are too old and coconuts are grown mainly by smallholders who often lack the know-how and financial resources to modernise cultivation methods and increase yields sustainably. Their incomes are therefore low and many of them live in poverty.

However, the partner companies depend on having a reliable supply of high-quality raw materials. A certification system that is internationally recognised, such as that provided by the Rainforest Alliance, is crucial if they are to successfully position themselves in the market and meet the sustainability requirements of consumers regarding agricultural products.

At the same time, it is very much in the interest of farmers to increase yields – and therefore incomes – by adopting modern and sustainable methods of cultivation, and to receive a premium for their certified coconuts.

The project partners set up a transparent supply chain for coconut oil, certified by the Rainforest Alliance, in the Philippines and Indonesia. From 2015 to 2019, the project partners invested a total of EUR 3.8 million in measures including:

  • Training farmers in ‘Coconut Farming as a Business’, a new training concept which places a focus on business administration and good agricultural practices.
  • Helping farmers to introduce the Sustainable Agriculture Standard of the Rainforest Alliance and obtain certification.
  • Establishing direct market access for certified farmers by ensuring that Cargill purchases the certified raw materials directly from them. Cargill then extracts oil from the raw materials, before supplying it to BASF and P&G for further processing.
  • Establishing a Rainforest Alliance certified traceability system for coconut oil produced on a mass balance basis.

The private sector partners were responsible for implementing certification of their supply chain, introducing premiums for producers and cofinancing the project. Meanwhile, GIZ contributed its expertise by educating and training farmers in good agricultural practices, promoting sustainability standards and cooperating with local and state actors.

The partnership was a truly entrepreneurial and out-of-the-box approach for the development towards certified sustainable coconut oil production. The joint project has proven, that certified sustainable coconut oil production is possible and improves smallholder farmer’s lives. GIZ's development policy expertise helped us a lot to get farmers on this path.
Ina Boos, Project Manager SCNO, BASF
Farmer harvests cocoa beans on a plantation (Philippines/Indonesia)
To enable coconut farmers to diversify their income, they have been supported in the cultivation of mixed crops, as for example in the cultivation of cocoa. Photo: Romer Sarmiento/GIZ
Woman shows stored dried coconut meat and shells (Philippines/Indonesia)
The dried coconut meat from which coconut oil is pressed is called "copra" and has an oil content of about 62%. Photo: Romer Sarmiento/GIZ

The first coconut oil certified by the Rainforest Alliance was produced in Indonesia and the Philippines in 2018 with the support of the develoPPP project.

  • The project established a transparent certification system for the sustainable production of coconut oil with the Rainforest Alliance.
  • As a result of participation in training courses and certification, smallholder suppliers who improved their cultivation methods achieved a 47 per cent increase in income compared with farmers who did not participate in the programme.

On account of the great success of this initiative, a further coconut project involving seven multinational food and cosmetics companies was launched in 2021.

DEVELOPMENT SUCCESSES

Document

More than 1,500 small farms certified according to Rainforest Alliance standards

Graduation hat

More than 4,000 smallholders completed the training course on ‘Coconut Farming as a Business’

Stacked coins

Smallholders who took part in the certification programme increased their income by 47 percent

BUSINESS SUCCESSES

Box with quality stamp

For the first time, sustainably produced coconut oil certified by the Rainforest Alliance

Factory, people and truck in a circle

Reliable and sustainable supply chain for coconut oil

Woman working at a loom

develoPPP Classic

develoPPP Classic is aimed at medium-sized and large companies that want to invest sustainably in a developing or emerging country and expand their operational activities locally. Suitable projects receive technical and financial support of up to two million euros in public funding.

BASF logo

BASF SE

The global chemical company employs around 111,000 people at six Verbund sites and 232 production sites in 90 countries. BASF's portfolio comprises six segments: Chemicals, Materials, Industrial Solutions, Surface Technologies, Nutrition & Care and Agricultural Solutions. BASF generated sales of €78.6 billion in 2021.

P & G logo

Procter & Gamble International Operations S.A.

P&G is one of the world’s leading consumer goods companies. The portfolio is organized around 10 product categories and about 65 brands serving consumers with products in: Fabric and Home Care; Beauty Care; Baby, Fem and Family Care; Grooming and Health Care. Established over 184 years ago P&G has operations in approximately 70 countries worldwide.

Cargill logo

Cargill

Cargill provides food, agriculture, financial and industrial products and services to the world. Today, the company has 155,000 employees in 70 countries. In the Asia Pacific region, Cargill employs about 54,000 people. In the Philippines, the company has local offices and manufacturing facilities, including a coconut crush plant and buying stations.

GIZ Logo

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

GIZ is a federal enterprise operating in international cooperation for sustainable development and education work for over 50 years. GIZ supports economic development and employment and works with companies to develop strategies for sustainable business development.

BASF Logo
Ina Boos SCNO Project manager BASF Personal Care and Nutrition GmbH
Dr. Sian Morris
Dr. Sian Morris Senior Director Communications - Responsible Sourcing The Procter & Gamble Company
Farhana Asnap
Farhana Asnap Global Communication Manager Cargill
GIZ logo
Ulla Keppel develoPPP Team Leader Asia Pacific Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH