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Value Chain Analysis of Virgin Coconut Oil (VCO) for Domestic Markets: the Banaban (Rabi Island) Case Study

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Value Chain Analysis of Virgin Coconut Oil (VCO) for Domestic Markets: the Banaban (Rabi Island) Case Study Value chain analysis of Virgin Coconut Oil (VCO) for domestic markets: The Banaban (Rabi Island) Case Study Date: April 2018 prepared by: Lavinia Kaumaitotoya, Mark Sheehy - Pacific Island Farmers Organisation Network Date: April 2018 Prepared By: Lavinia Kaumaitotoya, Mark Sheehy - Pacific Island Farmers Organisation Network Value chain analysis of Virgin Coconut Oil (VCO) for domestic markets: The Banaban (Rabi Island) Case Study Date: April 2018 Prepared By: Lavinia Kaumaitotoya, Mark Sheehy - Pacific Island Farmers Organisation Network Contents 1. Acronyms .............................................................................................................................................vi 2. Acknowledgements .............................................................................................................................. 1 3. Background to the Value Chain Analysis ................................................................................................ 2 4. Virgin Coconut oil for the domestic market ............................................................................................ 6 5. Case study – The Banaban Virgin Coconut Oil ......................................................................................... 9 5.1. The setting ............................................................................................................................................9 5.2. Background to Rabi VCO production ..................................................................................................11 5.3. Production – The Process ...................................................................................................................11 6. The domestic virgin coconut oil value chain map (Case study: Banaban VCO) ..........................................15 6.2. Step 1: Drawing the value chain map .................................................................................................16 6.3. Step 2: Putting facts and figures into the map ...................................................................................17 6.4. Step 3: Identifying what each actor contributes to the final product and the returns they receive. .19 6.5. Step 4: Assessing the Market..............................................................................................................24 6.6. Step 5: Assessing strengths and weaknesses along the chain and identifying ways to take advantage of strengths and minimize weaknesses ............................................................................27 6.7. Step 6: Developing a Plan to improve the Value Chain ......................................................................31 7. Recommendations for Banaban Virgin Coconut Oil ................................................................................32 7.1. Product Improvement and Development ...........................................................................................32 7.2. Improving access to the VCO factory ..................................................................................................33 7.3. Incentivising farmers to collect coconuts for VCO ..............................................................................33 7.4. Linking with public funded programs .................................................................................................34 7.5. Improving the facilities at the Banaban VCO factory ..........................................................................34 7.6. Exploring an increase in the direct sales pricing for VCO at Roadshows ............................................35 7.7. The transportation links .....................................................................................................................35 7.8. The Banaban brand ............................................................................................................................35 7.9. Marketing to promote better health ..................................................................................................36 iv CASE STUDY - RABI VCO 7.10. Improving access to finance .............................................................................................................36 7.11. Scaling up of existing facilities ..........................................................................................................36 8. Key Lessons Learnt...............................................................................................................................39 8.1. Overcome remoteness and isolation by producing high quality VCO ................................................39 8.2. Quality handmade VCO will sell despite increase of price .................................................................39 8.3. The importance of pulling the product through the value chain .......................................................40 8.4. The story behind the brand sells ........................................................................................................40 8.5. Health and Nutritional benefits can sell your VCO product ...............................................................41 9. Key Lessons to introduce Virgin Coconut Oil into the domestic PIC markets ............................................42 9.1. Quality and consistent quality for the market ....................................................................................42 9.2. Increasing production to meet the domestic need ............................................................................42 9.3. Partnering of small scale VCO operators to meet the market needs and formation of Farmer Organisations ............................................................................................................................42 9.4. Capacity building and exchange learning to meet production ...........................................................42 9.5. Championing coconut oil as a domestic cooking oil ...........................................................................43 CASE STUDY - RABI VCO v 1. Acronyms CIDP .............................................................................................. Coconut Industry Development Program PIC .......................................................................................................................... Pacific Island Countries PIFON...................................................................................... Pacific Island Farmers Organisation Network SPC .....................................................................................................Secretariat of the Pacific Community VCO ................................................................................................................................. Virgin Coconut Oil vi CASE STUDY - RABI VCO 2. Acknowledgements This study was conducted by the Pacific Island Farmers Organisation Networkled by Lavinia Kaumaitotoya and supported by Mark Sheehy. The value chain assessment wasdone with interviews conducted with the following persons: • Terikano Takesau, Manager, Banaban Virgin Coconut Oil • David Christopher, Executive Director, Rabi Island Council • Tikua Termata, Chairwomen, Ueen-roti Laselase Sector Club • Taramarawa Benson, Spokesmen, Eritabeta Village • Akineti Esene, Spokeswomen, Rakentai Farming Settlement • Rui Simon, Community Elder, Bani Farming Settlement • Mohammed Tasleem, transport provider, Savusavu • Tebuka Kareo, Womens Interest Officer, Rabi Council • Tama Taliu, MOA officer, Rabi • Nowdla , GM Namale Resort, Savusavu • Kitty Koyamaibole, Jean Michael Cousteau Resort, Savusavu • Pravin Changanlal, Proprietor, Chaganlal, Savusavu Location of Fiji Islands. Rabi Island is part of the Fiji Islands and is located next to Fiji’s second largest island of Vanua Levu CASE STUDY - RABI VCO 1 3. Background to the Value Chain Analysis The process ofidentifying coconut value chains for The PIFON coconut product market study detailed investigation. concluded that there needs to be more emphasis on domestic markets for edible coconut oil - be As part of the of the SPC/EU Coconut Industry it VCO or food grade crude copra oil (CNO). The Development of the Pacific (CIDP) Project an report notes that over the last decade VCO has overview study was conducted of the market transformed itself from a niche export product, for Pacific Island coconut products and the which could readily command prices up to 5-times ability of the industries to respond. The Pacific that of crude coconut oil on global markets, to Island Farmers Organization Network (PIFON) a commodity that secured a reasonable price was commissioned to undertake the study. See premium, provided quality standards are met. Andrew McGregor and Mark Sheehy (2017): An These export price premiums are now often not overview of the market for Pacific Island coconut sufficient to meet the additional cost of producing products and the ability of industries to respond VCO by small enterprises in PICs. Thus, given (https://lrd.spc.int/reportspublications/doc_ that the PICs are all large importers of vegetable download/2481-market-study). oil, greater attention needs to be given to selling edible coconut oil on local markets. The Overview Market Study identified four (4) priority coconut value chains (VCs) for detailed The PIFON Overview Market Study reports that: follow up investigation. These were: VCO as an oil is suitable for consumption without the need for further processing. There are
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