Sunday Times 2
Expanding global coconut demand and the need for increasing local coconut production
View(s):Dr. Parakrama Waidyanatha
The sudden increase in coconut prices in the local market is the ‘talk of the town’ these days! What was about Rs 80-100 a nut a few weeks ago in the open market has shot up to Rs 170 and above! There appears to be a decline of about 25% in the national production this year due to the drought last year, the coconut yield being heavily dependent on the previous year’s rainfall. The growing demand for coconuts in the processing sector has also aggravated the consumer nut price.
As reported by Mordor Intelligence, of our three major plantation crops, the global tea market was USD 24.4 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 4.9% during the next decade, whereas the global rubber market was USD 16.5 billion and is projected to grow at a CAGR of only 3.06%. The global coconut products market, on the other hand, in 2023 was USD 20.2 billion and is forecast to grow at the highest rate of 8.4% CAGR. Even the palm oil market, which was valued at USD 70.4 billion last year, is growing slower than the coconut, being only 5.1%.
The new cash crop: production should be increased to meet both the domestic and export market demand
Kernel products
The growing awareness about the health benefits of coconut, especially in developed countries, is expected to expand the demand for coconut kernel products as people become more and more conscious of the food they consume.
The global demand for processed coconut kernel products is predicted to grow at a CAGR of 10%, of which the highest demand is for coconut milk. This market now stands at about USD 2.2 billion and is expected to treble in the next decade at a CAGR of 17%. Coconut milk contains short-chain fatty acids proven to have health benefits. Coconut milk powder is also in great demand and used largely for similar purposes as coconut milk. The market size was USD 2.5 billion in 2023 and is forecast to expand over the next decade at more than 7.3% CAGR.
Similarly, the coconut oil and desiccated coconut (DC) demands are predicted to double in the next decade at a CAGR of 7% and 16%, respectively. As for coconut milk, the growing consumer demand for natural and unprocessed foods is expanding the DC market globally. Its richness in dietary fibre, healthy fats, and essential nutrients are key to its demand. It is marketed in many European countries and the US as a superfood, appealing to health-conscious consumers.
Coconut oil was the world’s number one vegetable oil in the past, but with the disruption of supplies to the West from the Asian countries during the Second World War, soya oil was substituted for coconut oil, and with the resumption of supplies after the war, the soya oil lobby instituted a massive anti-coconut oil campaign on the basis of the lipid hypothesis. The hypothesis is that saturated fats and dietary cholesterol elevate blood serum cholesterol, increasing the risk of cardiovascular diseases. The campaign had been so successful that it was said that the Americans feared coconut oil more than ghosts! However, over the past few decades, with the realisation of its health benefits, the market has expanded substantially.
Coconut oil is now widely used in beverage, cosmetic, personal care, and pharmaceutical industries. It is a functional food. The medium-chain fatty acids (lauric and capric) and monoglycerides found primarily in coconut oil, as in mother’s milk, have healing properties.
The USD 2.7 billion virgin coconut oil (VCO) market is projected to double over the next eight years at a CAGR of 8.3%. It is the purest form of coconut oil, containing natural vitamin E, and its rich flavour and mild aroma have expanded its use in the food industry. Also, its extensive use for cosmetic and therapeutic purposes has drawn many pharmaceutical companies to invest in the product. VCO is healthier than conventional coconut oil, and its use in HIV/AIDS and anti-cancer therapy is significantly expanding.
The global market of coconut water, which now stands at USD 2.84 billion, is forecast to grow at 10.8% CAGR over the next five years. Consumers conscious of fitness and health seek coconut water because of its low fat and sugar content. It is widely marketed as a dehydrator, diuretic, and digestive soother.
Coconut is called the ‘Tree of Life’ as virtually nothing of the tree is discarded. Apart from the kernel, the husks and shells of the nuts are used in various ways, but there is little information on the global markets of the products.
Husks for energy generation
Ten coconut husks (about one kilogram) on combustion have been shown to generate as much as 5 kWh of energy, the equivalent of one litre of petrol. If 20% of the local production of coconut husks is combusted, assuming a heat-to-energy conversion of 30%, an energy yield equivalent to 0.3 billion litres of petrol or about 150,000 GWh could be generated, which is equivalent to the total national power requirement. Already India is on this technology, and the government should provide the necessary resources to the Coconut Research Institute to undertake the development of this technology.
Increase production
The critical limitation to the expansion of the processing industries is the shortage of nuts, as 75 to 80% of the production is used for household consumption. The national coconut production has been fluctuating between 2,700 million and 3,000 million nuts a year, essentially depending on the rainfall. A marginal increase in production has been shown over the last several years, largely due to the expansion of the coconut cover. However, the national coconut productivity has been virtually stagnant over the past several decades, with a per-tree yield of only about 40-45 nuts a year, whereas the research yields of hybrid cultivars, bred over the last 50 years, are more than double! Regrettably, the current coconut cover has only about 5% of them!
Several matters need to be addressed in increasing coconut production in the short term. Firstly, fertiliser use should be increased, as only 25% of the total coconut cover receives any fertiliser now. Correct application has been shown to increase crop productivity by 25 to 50%. At the same time, irrigation of the crop during dry weather, where possible, through on-farm water harvesting or other means, should be promoted. Replanting with high-yielding cultivars of old and unproductive coconuts is critically needed. However, the Coconut Research Institute’s seed gardens have the potential to produce only about 25% of the national seed nut requirement of about 1.5 million of the high-yielding cultivars to meet the requisite annual national replanting and under-planting rates. Thus the seed gardens should be expanded as a matter of high priority.
Further, the coconut cultivation should be expanded. However, such expansion in the dry areas is limited, but there is the potential for expansion of coconut into the upper catchments of fallow paddy fields in the catena in the wet zone, in raised beds as done under the ‘Sojan’ system in Indonesia. There are some 140,000 acres of such paddy fields. Even much of the other paddy land in the wet zone can be used for the purpose, as it is uneconomical to grow paddy in them. Moreover, coconut can be intercropped with tea as a shade tree in the mid and low countries of the wet zone, as already done in some areas.
Given the huge potential of the industry, the new government must address the issues at stake as a matter of high priority.
(The writer is an agriculture specialist and was a local and international consultant.)