Addressing unsustainable practices in the coconut supply chain: ‘Farmers are trapped in a vicious cycle of poverty’

Coconuts grow in tropical climates, with more than 70% of global coconut oil production coming out of the Philippines and Indonesia. But unlike other foods grown in the tropics such as palm oil, coffee and cocoa, coconut trees are not associated with the same level of deforestation.

That is not to say that coconut production is free from unsustainable practices. Coconut plantations have been linked to biodiversity loss, and according to Gregory Bardies, executive director of the Sustainable Coconut Partnership, farmers are ‘trapped in a vicious cycle of poverty’.

The recently launched Partnership is on a mission to wipe out unsustainable practices in coconut production by establishing best practices, impact programmes, and harmonising industry requirements for supply chain partners.

An industry-led partnership for social and environmental sustainability

The Partnership was founded by food and beverage majors ranging from Barry Callebaut to Nestlé, Unilever, Ferrero, AAK and Upfield. Affiliate members include NGOs Earthworm Foundation, Kaleka and Proforest, as well as traceability tech company Satelligence.

Coconut is a versatile fruit, with food and beverage brands using its water, milk, oil and flesh in products ranging from chocolate​ to coconut water. More than 60m metric tons of coconut are estimated to be produced every year, much of which is for coconut oil.

Although the Partnership officially launched this year, the initiative was first discussed back in 2019 while Bardies was working in sustainability at Barry Callebaut. Beginning to investigate sustainable practices in coconut production, Bardies noted there was ‘very little’ public information about other companies’ methods. “There was also very little sustainable certified product,” ​he told FoodNavigator.

Conducting due diligence exercises revealed signs of an ‘impending crisis’ in coconut supply chains, particularly in social sustainability. Most coconut farmers are smallholders, and at an advanced age. The next generation wants to move off the farm for a perceived easier life, explained Bardies. “Because farmers are not rejuvenating their farms, they’re trapped in a vicious cycle of poverty. They’re amongst the poorest farmers, especially in Asia.”

Most of the world’s coconut oil from from the Philippines and Indonesia. GettyImages/Everyday better to do everything you love

And its not just about social sustainability. Potential environmental sustainability risks also exist, with research​ suggesting coconut production poses a threat to biodiversity, particularly to vertebrates, arthropods, molluscs, and plants. “Potential environmental risks are much, much less than for some of the other supply chains like palm oil. But nevertheless, they are things to consider and monitor.

“It’s absolutely worthwhile and valuable for the sustainability of the industry and the wellbeing of millions of people in the environment to advance on sustainability. That’s how it started.”

The Sustainable Coconut Partnership became a formal entity in 2021, with the platform officially launching earlier this year.

Deforestation: Why is there less in coconut than palm oil?

So why, if produced in a similar tropical climate to other foods linked to deforestation such as palm oil, cocoa and coffee, is associated deforestation significantly less for coconuts?

One reason coconut production is considered more sustainable lies in its farming structure, whereby the vast majority (up to 98%) is smallholder driven. Smallholder coconut farmers own between two and four hectares of land, meaning their approach to farming is less intensive and industrialised compared to some other supply chains, Bardies told this publication.

Another reason more directly linked to deforestation is that coconut trees are considered more productive over an extended period, suggested the executive director. Oil palms are productive for around 25 years, whereas coconut trees can be productive for more than 60 years, we were told.

“In palm oil…there is a constant need for more, more, more. In coconut, there is much less of this.”

That is not to say that demand for coconut is not growing, it is. Production is ‘barely keeping pace’, stressed Bardies. And not just for the food industry: coconut is used to produce soap, laundry detergent and cosmetics, as well as biodiesel. Coconut by-products – notably the husk – can also be used in other projects, for example to product charcoal or construction materials.

coconut cherrybeans

A vasty majority (98%) of coconut farming is driven by smallholders. GettyImages/cherrybeans

Bardies does not see greater biodiversity risk in coconut cultivation compared to other crops, and actually sees opportunity for more​ sustainable practices given cultivation practices. “In coconut production you can spread out the trees and grow forestry much more easily than in other supply chains…

“[As to] biodiversity, we cannot say there is zero risk. We are quantifying a number of those risks, but the common understanding is that [unsustainable nature of coconut production is mostly linked to] farmer poverty and social issues.”

Partnership upgrades charter with assurance scheme

In improving the sustainability of coconut production, the Partnership has set out three main impact areas: increasing smallholder farmers’ income; enhancing supply chain traceability; and preventing deforestation & climate change.

In 2020, the Partnership received more than 100 inputs from various stakeholders engaged directly or indirectly in coconut supply chains to develop an industry-wide Sustainable Coconut Charter. The ambition was to set a global benchmark for sustainable coconut origins.

The first charter set out principles and ambitions for sustainability programmes, explained Bardies. “It was a guidance for sustainability programmes. We were seeing that a number of sustainability programmes in coconut were targeting a little bit of traceability, maybe a little bit of environment, but not comprehensively addressing all the pain points and issues in the supply chain.” ​While the first charter sought to change that, it offered guidance only.

Upon realising there remained ‘holes in the racket’, the charter has been revised to be ‘much more comprehensive’. Unveiled this year, the charter now includes an assurance scheme.

“We are also looking at creating market transformation, which the first charter didn’t allow,” ​explained Bardies. Looking to supply chains, for example, the charter not only offers guidance for companies to act on the ground, but also for ways to act as a ‘responsible company’ to create enabling conditions for change.

Through these new principles and ambitions – covering guidance, chain of custody, traceability, reporting, and implementation – the Partnership aims to build out a new assurance system, which Bardies described as a ‘stepwise approach to existing certification schemes that aren’t showing any signs of picking up in the market’.

The decision came from consultations with stakeholders: 75% of those offering input consider it crucial the charter have a new, coconut specific assurance system.

The Partnership’s assurance system is designed to be more ‘inclusive’ than others on the market, which include certification, to encourage as many industry players to join as possible. The assurance system is designed to publicly recognise Members’ progress in sustainability.

As to whether the assurance system could also lead to eco-labelling opportunities to help better promote companies’ work in sustainability, the jury is still out. When coconut often makes up less than 5% of a finished food product, it will have to be decided whether communicating that it was responsibly sourced, on-pack, is worthwhile.