Farmers in the Philippines reach first milestone towards the production of sustainable coconut oil

Cargill, BASF and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) have been working together for over three years to promote sustainable coconut oil and improve the living conditions of coconut farmers in the Philippines.

Since the project started in September 2011, over 1,000 farmers on the southern Philippine island of Mindanao have been trained in good agricultural practices, such as the right use of fertilisers, intercropping and replanting. This education enables them to increase their yields in the long term. Furthermore, the farmers received access to a newly-developed drying technology for high-quality coconut flesh and training on the standards of the Sustainable Agricultural Network (SAN). 

As a result, 300 small farmers from the region now produce the world’s first Rainforest Alliance certified copra – the dried coconut flesh needed to process coconut oil – meeting the standards of the SAN. The recognised certification system helps them to improve social and environmental standards and increases their revenues as BASF and Cargill pay a premium for high quality and certified copra. Furthermore, these farmers were supported in forming legal producer entities. Their members can now access micro-credit facilities instead of having to rely on pre-financing by middlemen. It allows them to improve their profit margin by selling directly to the mill. Farmers who are participating in all of these joint activities are able to increase their income by at least 15%. 

Around 2,500 small farmers and their families received access to healthcare through the project: they were able to register at the PhilHealth, government health insurance. Thanks to information sharing seminars and a subsidised enrolment fee, they now receive free medical treatment.

The Philippines is one of the leading global producers of coconuts

“In our opinion, this pilot project was very successful in bringing together the strengths of public and private partners,” said Ulla Keppel, GIZ Project Manager DeveloPPP.de. “BASF and Cargill have brought their expertise and technology to bear. GIZ has managed the project and contributed with its experience in supporting the formation of farmers’ groups as well as implementing good agricultural practices and the sustainability standard.” 

“Our ability to feed the world depends on successful farmers at every level of production, including smallholders,” said Efren Barlisan, General Manager, Cargill Philippines. “Cargill works with millions of smallholder farmers worldwide to help them increase their agricultural productivity, yield and profitability to improve their livelihood in a sustainable manner. We are proud to be part of this initiative in which we introduced new technology, provided training and set up internal management system required for the production of high-quality certified copra.” 

“Together with our partners, we were able to show that it is possible to specifically promote the sustainable production of high-quality coconut oil and improve the living conditions of the coconut farmers. This success allows us to look to the future with optimism,” said Harald Sauthoff, Vice President Global Procurement Natural Oils and Oleochemicals at BASF.  

With production of over 15 billion coconuts per year, the Philippines is one of the leading global producers. Coconut palms are grown on an area covering 3.5 million hectares, about 26% of the country’s land use. The export earnings for coconut products were approximately 1.8 billion US dollars. Yet, coconut producing regions are among the least developed areas in the country and home to some of the largest numbers of Philippine’s rural poor. Worldwide, coconut oil is mainly used as an ingredient in food, while coconut oil derivatives are also used in the home and personal care industries.