BASF, Cargill, P&G, and GIZ collaborate to drive production of sustainable coconut oil in the Philippines and Indonesia

Coconut Oil amp 30050(Image source: PaulReis123/Commons)BASF, Cargill, Procter & Gamble (P&G), and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH have joined together in a development partnership under the develoPPP.de programme by the German Federal Ministry for Economic Cooperation and Development (BMZ)

The partnership will help establish a sustainable certified and transparent supply chain of coconut oil in the Philippines and Indonesia.

By working with the smallholder farmers and teaching them better practices, the main goal of the development partnership is to increase their incomes and economic self-sufficiency by improving the productivity of their farms. This will be achieved through trainings on Good Agricultural Practices (GAP), intercropping and enhanced farm management skills, and the strengthening of farmer groups. Around 3,000 smallholder farmers in the Philippines and 300 in Indonesia will benefit from the program. Out of this group, around 800 smallholder farmers will receive additional training on the Sustainable Agriculture Network (SAN) standards in order to apply for Rainforest Alliance certification. The partnership is also working on establishing a chain of custody for certified material to help increase transparency along the supply chain.

Targeted regions are Southern Mindanao and Southern Leyte in the Philippines and Amurang in North Sulawesi, a province of Indonesia. The Philippines and Indonesia are the world’s two largest producers of coconuts and exporters of coconut-based products. The majority of the coconut farmers are smallholders and tenants cultivating less than four hectares of land who are seldom organized in functioning farmer groups and cooperatives. This gives rise to a number of challenges: Little or no economies of scale, lack of financing and training resources, and a rigid supply chain, which increase the farmers’ dependence on middlemen and perpetuates inefficient and unsustainable agricultural practices.

Cargill, which owns and operates copra-buying stations and crushing plants, is providing training to smallholder farmers and setting up the structures for certification. The crude and refined oil produced by Cargill is then further processed by BASF and P&G for ingredients in the home and personal care and in the nutrition and health markets. Together, the private partners bring in the understanding of and experience in the coconut oil market mechanisms and trends. GIZ contributes to the project with its expertise in capacity building on farmers’ level as well as in implementing GAP and sustainability standards. GIZ also steers the project and manages its implementation on the ground, working closely with government agencies including Philippine Coconut Authority (PCA) and the Agricultural Training Institute (ATI) in the Philippines.

The project builds on a preceding development partnership – “Nucleus of Change” – implemented in General Santos in the Philippines by Cargill, BASF and GIZ from 2011 to 2015. During this partnership over 1,000 smallholder farmers were trained and the first 300 coconut smallholder farmers became the world’s first Rainforest Alliance Certified TM coconut farms. 

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