In fact, between 40% and 60% of coconut producers live in extreme poverty. This imbalance is not just bad news for the people of the Philippines, Caribbean and other coconut producing regions, it also soon could be bad news for manufacturers and consumers because many farmers do not have the resources necessary to keep up with the demand – meaning a shortage could be looming in our future unless something changes quickly, according to Jessica Custer, a senior supply chain manager for Fair Trade USA.
She explained that once the challenges facing coconut suppliers came on Fair Trade USA’s radar, the nonprofit teamed in 2013 with Peter Paul Philippine Corporation to help improve the lives of coconut farmers and workers, protect the environment and work to ensure sufficient supply for the plethora of trendy coconut products hitting the market in the US.
“We thought this was an incredible opportunity to get brands at the end of the supply chain buying coconuts to partner across the supply chain with Fair Trade certified partners, like Peter Paul, to help support those farmers at the beginning of the supply chain,” she said.
With the support of early manufacturer partners, including Naked Coconut Water, Nutiva Virgin Coconut Oil and O’Coconut treats, Coco Libre Coconut Waters and others, Fair Trade USA is able to help farmers by offering a Community Development Premium between $40 and $90 per metric ton for each coconut sold.
These funds are invested in much-needed community projects, which Yona Amador from Peter Paul helps oversee at eight Fair Trade coconut farmer groups, or clusters, in the Philippines. She explained that as of October 2016 the program includes more than 4,000 farmers and covers about 29,000 hectares of coconut crop land, and one of the fund’s major projects is a coconut planting and replanting program.
“Most of the coconut trees in the Philippines are very old, so about 60 to 80 years old … and these trees have decreasing productivity as they grow,” which drains resources from already strapped farmers, and threatens a supply shortage as demand for coconuts continues to ramp up, she said.
Custer quantitated the threat when she noted that demand for coconut products worldwide is growing around 10% annually, whereas supply growth is stagnant at about 2% growth annually.
“So, at a certain point in time, we can imagine there will be a challenge or a bit of a crunch between all these new and exciting products and the demand for those and what is actually able to be supplied,” she said.
Angie Crone, a business development manager with Fair Trade USA also noted that pressure on the supply chain comes from an emerging coconut-based home and personal care product market.
Through the Fair Trade USA funded planting and replanting program though more than 400 farmers in the Philippines have replaced about 98,000 seednuts, and 316 farmers are receiving incentives to ensure 100% survival of the seednuts, which take about 5 or 6 years to mature to point of harvest.
Insuring a sustainable future
Beyond the planting and replanting program, Amador explained that the Fair Trade fund also allows farmers to establish feeding programs in their communities. She explained that many children of farmers and factory workers are severely malnourished and through the feeding program they are able to eat nutritious meals prepared by their parents and teachers. So far, almost 1,600 malnourished children have benefited from the program since 2014.
The Fair Trade fund also is used to create a scholarship program to pay for the education of farmers and factory workers’ children. For the current school year, it helped 170 high school and college students pay for their education.
The fund also goes towards a lending program, farmers’ insurance and contributes to a calamity fund for to help cover costs when storms, landslides, earthquakes, pests or drought strike.
Benefits for manufacturers
Fair Trade USA recognizes that participation in its program needs to be a two-way street that also offers benefits for manufacturers that sign on to source their coconuts from Fair Trade certified farms.
To this end, Crone noted that consumer awareness of the Fair Trade seal has jumped dramatically from 59% last year to 67% this year, which means more consumers recognize the added value of the seal on products and in many instances are more likely to support those brands that are Fair Trade.
Crone attributes this jump in awareness to several factors, including increased visibility of the label on store shelves thanks to the launch of more than 900 products with Fair Trade certification in 2016 compared to 550 in 2015.
“The second part,” she said, “is consumer education,” such as dedicated campaigns that tap social media influencers and offer consumers a dedicated landing page where they can learn more about an issue.
“I am pleased to say we will have a dedicated coconut campaign this summer to help drive awareness of some of these issues and also highlight the availability of different products that coconut is used in,” she said.
Custer added that partnering with Fair Trade farmers also can foster loyalty between suppliers and manufacturers, which is especially important during supply shortages.