Palm Oil Muscles In On Coconut Farmers In Southeast Asia

Lucio Tena, 64, has been growing coconuts on his 20-hectare (49-acre) farm in General Nakar, in the southeast Asian country of Philippines, for more than four decades. But the situation facing farmers like him today is the worst he’s experienced in his lifetime. “The price is dead low at present,” Tena said in a conversation last year, in the entryway of the three-room wooden home he shares with his wife. “It’s not enough to meet our daily needs.”

Tena is not alone. Coconut farmers are facing serious challenges across Southeast Asia, primarily due to low prices. Coconut oil, the most widely produced coconut byproduct, was selling for $836 a ton last November, less than half of what it was two years earlier.

In General Nakar, that means less than 15 Philippine pesos (30 U.S. cents) for a kilogram of copra, the dried kernel of the coconut from which coconut oil is made, or 7 pesos for a whole nut, the price Tena has been selling his coconuts.

“A lot of people in the Philippines depend on coconut farming as a livelihood,” he said. “We are all hoping for a better future, to lift ourselves from poverty.”

There are more than 3.5 million smallholder coconut farmers like Tena in the Philippines, the world’s top exporter of coconuts, and an additional 4 million in Indonesia, which ranks second. The two countries account for nearly 60% of global coconut production by land area. As in the rest of the world, these coconut farms are managed almost entirely by smallholders.

In both countries, farmers are struggling due to low prices, lack of assistance from governments, and competition from another product: palm oil. That edible oil has been heavily promoted and subsidised by the governments in Indonesia and Malaysia — which are together responsible for most of the world’s palm oil production — and, increasingly, in the Philippines. Palm oil has flooded Southeast Asian markets and, due to its lower price, has replaced coconut oil, the traditional choice, in kitchens across the region.

“Some coconut farmers are just letting the coconuts grow in their land instead of processing them,” said Jun Pascua, director of Pambansang Katipunan ng Makabayang Mambubukid (National Peasants Movement), a Philippine association that represents farmers. Others, he adds, are selling their land to oil palm growers, as the country aims to expand domestic production of the crop.

From coconut to palm oil

The situation in the Philippines today is similar to Indonesia a few decades ago. Today in Indonesia, palm oil is a key driver of the national economy as not only a top export, but the main cooking oil and, increasingly, part of the national transport fuel mix due to rising biofuels mandates. But not long ago, coconut oil was central.

“From the 1970s up to the 1980s, most of the people in Indonesia were consuming coconut oil as cooking oil,” said Amrizal Idroes, founder of the Indonesian Association for Coconut Product Manufacturers (IACPM), and who has been working in the coconut industry for nearly three decades.

Coconut oil has long been used across South Asian countries like India, and Southeast Asia, as a cooking oil. The coconut tree (Cocos nucifera), grown in both the Philippine and Indonesian archipelagos for centuries, produced not only oil, but also milk, water, sugar and a variety of other products, consumed almost entirely locally. Moreover, they grew alongside other tropical crops like bananas, cassava, coffee and cacao, part of a mixed-use landscape.

That started to change when the African oil palm (Elaeis guineensis), which was brought by Dutch colonialists, began to expand in the 1970s. Within decades, palm oil went from a niche product to the top Indonesian export, quickly overtaking coconut. It was desirable for several reasons: its industrial efficiency, massive yields, flavorless profile, and ease of transport and processing. It is now the most-consumed food oil in the world, with India among the top importers of palm oil.

“Coconut oil is less competitive compared to the cooking oil from palm,” Amrizal said. “Once the government began promoting palm oil, people began choosing it as the cheaper oil.”

This process may be repeating itself in the Philippines. Since 2010, palm oil imported from Indonesia or Malaysia has overtaken coconut oil as the top-selling oil in most grocery stores, according to data from the United Coconut Association of the Philippines. Like in Indonesia, the main reason is its low price — often half that of coconut oil.

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