Inclusive Growth through the Coco Chemical Industry: From Coconuts to High-Value Products

ABSTRACT

The Philippines can only reduce poverty by addressing the root of poverty and the coconut sector is among the poorest. At the same time, the coconut sector offers the greatest potential to attain the goal of inclusive growth by providing the jobs and spurring agricultural and industrial development that are sustainable. To achieve this, the coconut industry should diversify horizontally by effective intercropping and integrate vertically by improving upstream raw material production and downstream high-value products. At the center of these efforts of vertical integration and horizontal diversification is the coconut fanner. Measures to redress the social, economic, and political injustices, which the coconut farmers have suffered, should be prioritized. The copra-based industry should be phased out and replaced with technology that can effect the full value recovery of the coconut. The shift away from copra towards integrated processing will enable full processing of the coconut and higher quality of product. However, this will require larger investments in processing centers, which should be strategically located for cheaper transport of coconuts from the farm, as well as transport to downstream factories. The costs of transport and logistics have to be considered. Value adding processes for fatty acids and methyl esters should be promoted to raise earnings from the coconut. The strategy for the Philippine coconut industry must be comprehensive and must consider measures at various levels: the coconut farmer, the local level, the oil mills and processors, the cocochemical industry, government intervention and support, and S&T initiatives. A number of coconut federations and industry groups have proposed that the Coco Levy Funds be used for the benefit of the coconut fanners and the revitalization of the coconut sector.

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