Consortium working to extend sustainable coconut oil supply chain

Companies including BASF, Cargill, Procter & Gamble (P&G) and the German corporation for international cooperation (GIZ) have expanded a programme to produce sustainable coconut oil for a variety of industries. The companies have been working together since 2011 to produce Rainforest Alliance-certified coconut oil and enrich the lives of farmers in the Philippines and Indonesia.

Brought together by the develoPPP.de programme, run by the German Federal Ministry for Economic Cooperation and Development (BMZ), the companies train farmers in good agricultural practice, advanced farm management skills and form groups of farmers who can work together and potentially form cooperatives. So far, around 3300 smallholder farms are enrolled from across the Philippines and Indonesia, the two main coconut growing regions in the world.

Each company brings different expertise to ensure the entire supply chain is transparent and sustainable. Cargill owns and operates buying stations for raw coconut copra (dried coconut flesh), and crushing plants that press out the oil. The raw oils are sold on to BASF for further processing.

For the oleochemical industry, there is no renewable-based alternative to palm kernel oil, other than coconut oil

‘We want to ensure that our renewable-based products are made from sustainably sourced raw materials,’ says Birte Kattelmann-Jadgt, a spokeswoman for BASF. ‘One of our key renewable raw materials is coconut oil, so BASF is committed to increasing incomes of smallholder farmers and their economic self-sufficiency by improving the productivity of their farms and establishing a sustainable, certified and transparent supply chain of coconut oil.’

The development of sustainable coconut oil production could have wide ranging and important implications across a number of fields. In many instances, it is now possible to use coconut oil instead of palm oil in certain processes. This switch could help to slow the rapid expansion of oil palm plantations in Indonesia, helping prevent further deforestation and habitat loss. However, sustainable coconut oil is not necessarily the ‘miracle solution’.

‘It is important to distinguish between palm oil and palm kernel oil,’ says Kattelmann-Jagdt. ‘Palm oil – mainly used in food applications – is rich in C16 and C18 carbon chains, whereas palm kernel oil consists mainly of C12 and C14 chains, and thus is a key ingredient for producing oleochemicals like surfactants. For the oleochemical industry and its customers in the home and personal care industry, there is no renewable-based alternative to palm kernel oil, other than coconut oil. But oil palms produce higher yields per hectare than any other oil seed (including coconut) and have relatively low production costs when grown on plantations, which explains why palm oil is so popular.’

Despite the higher cost, BASF and its partner companies have not been deterred. ‘More and more consumers favour sustainably sourced products,’ says Kattelmann-Jagdt. ‘We want to demonstrate a model of socially and ecologically responsible sourcing for coconut oil as an important raw material for us. We hope to reach our main target to increase the income and economic self-sufficiency of smallholder coconut farmers. [The overall goal is to] empower people with low incomes to achieve a better quality of life and develop a business model that is attractive to all parties and therefore can be upheld as a long-term business relationship between farmers and buyers. The project can be the basis for a change of the coconut oil industry.’