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.
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.
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.