PROCESSING OF HIGH VALUE COCONUT PRODUCTS AND SUITABLE MACHINERY FOR THEIR PRODUCTION

P. G. Pimcliiliewa

Abstract

Owing lo lardy growth in the production ofcoconut oil over the last three decades, it faces the threat of being edged out of the international market. Processing of high value products has often met with failure in many countries inoslly because of incoiiipalibillty with the available local resources. Experience indicates that (lie location of small scale processing units in rural areas where raw material availability, labour and other requirements are not in short supply will be more appropriate than in organizing large processing units in or around metropolitan areas.

While small producing countries in the Latin American and Caribbean benefit from the export of fresh nuts, the major producing countries have not tapped the existing potential. The prospects of producing and marketing of coconut based food products and beverages derived from the kernel, water and sap as well as shell based charcoal and coir products arc high. What is important is lo select processes appropriate lo local conditions and as such arc sustainable, |

1, Need for new strategies

The need to search for new strategies in research and development for coconut if it were to be competitive is obvious. Tbe threat of coconut being edged out of tbe international market is staring in its face.

Tbe following figures speak for it.

Table I. Relative Importance of Coconut Oil In Tbe World Production & Exports of Vegetable Oils (In I 000 Metric Tons)

Production - 1961-67 average Export - 1962 -66 average

Soyabean Oil 3519 Soyabean Oil 648 Ground Nut Oil 2376 Palm Oil 620 Coconut Oil 2163 Coconut Oil 472 Sunflower Seed Oi 2007 Ground Nut Oil 403 Olive Oil , 1373 Sunflower Seed Oil 356 Palm Oi! 1246 Cotton Seed Oil 237 Rape Seed Oil 1042 Palm kernel Oil 397

(Source: Tbe Coconut Industry of Asia, UN 1969 p.5,9)

295 Table 2. Relative Importance of Coconut Oil In Tbe World Production (Ond Exports of Vegetable Oils (In 1000 Metric Tons)

Production - 2001/02 average Export - 2001/02 average

Soyabean Oil 28410 Soyabean Oi! 8620 Palm Oil 24610 Palm Oil 17010 Sunflower Seed Oil 7660 Sunflower Seed Oil 2680 Rape Seed Oil 12760 Rape Seed Oil 2480 Cotton Seed Oil 3820 Coconut Oil 1770 Peanut Oil 4810 Palm kemel Oil 1330 Coconut Oil 3200 Olive Oil 2330 Palm kemel Oil 3030

(Source: USDA Agriculture Circular December 2001)

Within forty years, cocomit oi! bad dropped from tbe fourth place in world production to seventh and third to fifth in exports. What is more alarming is tbe percentage increase of tbe competing oils such as palm oil and soya oil during these years. Production of palm oil increased by 1100 percent during the last 30years.In tbe case of coconut oil increases during tbe Iast40 years of tbe last century was 50 percent. Palm kemel oil, which is its closest competitor, is likely to overtake coconut oil both in production ajid exports very soon.

Production increase in tbe case of competing vegetable oils was achieved tbrougb expansion of area as well as genetic improvement. It is a continuing process for other vegetable oil producers. For example Brazil 's soya bean exports has grown from 8.9 million tons three years ago to an estimated 17.5 million tons in tbe Oct 02/Sep03 year. Such a dramatic expansion has been fuelled by higher yields and 2.6 million more hectares, which led to more than 10 million additional tons being produced (USDA Nov. 2001 p.3). So it is imperative that, not to speak of competition, but at least for mere survival, coconut industry has to look for new strategies in production, processing and marketing.

2. Processing of high value coconut products

Now let me come to my topic that is Processing of High Value Coconut Products and Suitable Machinery for their production. We are quite familiar with tbe multilti purpose nature of coconut. There is hardly any part of tbe coconut tree, which is thrown away. Recently there was an article in one of tbe Sri Lankan newspapers about the use of tbe empties of young coconut. After drinking tbe water of the young coconut, what we do now is to throw away tbe empties, which sometimes tum out to be tbe breeding ground for mosquitoes. In this article, it was suggested that tbe empties could be used as flowerpots or even to raise plants in nursery beds. So much potential. But to what extent can we, and have we, tapped, exploited the potential in coconut? Whatever we have done has been more on an ad hoc basis.

For nearly two centuries coconut in the form of copra was tbe raw material which fed tbe oil crushing industry of tbe west. In 1966 three years before the establishment of APCC tbe export volume of copra from tbe Asian and Far Eastern countries accounted for 1,170,000 m t, as against 434,000 mt of coconut oil. Gradually it dawned on tbe producers tbe need to crush copra in their own countries, so much so that some of tbe countries even imposed a ban on export of copra. In 2000 only about 162,000m tons of copra was exported from APCC countries.

296 Crushing copra in the producing countries was the first major step taken by them in value addition which provided them with two export products, coconut oil and copra meal. These two remain even today the two, biggest export items in volume from tbe producing countries. But even this move from copra to coconut oil was not without problems. One glaring drawback was tbe excess crushing capacities as against tbe supply availabilities. Tbe Philippines, the biggest producer of copra has nearly five million-ton capacities, while her production is only about 2 million tons of copra and uses only less than 40% capacity. In Sri Lanka even as far back as 1967 "The mills were operating at 45.4 percent of their capacity and the local production was not adequate for tbe full utilization of installed capacity." (Coconut Industry of Asia p.37) But strangely in late seventies it installed two modem crushing plants with a combined capacity of 60 mt a day. This was in spite of tbe country not recording even a marginal increase in production during tbe intervening years. Subsequent years saw most of these mills being dismantled and sold for scrap! Moreover, Solomon Islands reported that one of its crushing plants has tbe capacity of 24,000 mt per year although her annual production of copra is around 20,000 mt. Some of them have been commissioned without taking into consideration the supply availability, cost of production and logistical problems, Tbe situation in Solomon Islands was summed up at a COCOTECH Meeting in following words "One of tbe constraints to development of factory industries in small Pacific countries is tbe scarcity of qualified and experienced engineering personnel at all levels. Second constraint is tbe shortage of contractors capable of carrying out major repairs. Another problem is tbe escalating fuel costs." (COCOTECH Report 1991 p, 590),

Tbe move from copra to coconut oil did not improve tlie prospects of the coconut industry or tbe producers. Tbe increasing supplies of substitutes, both natural and synthetics continued to affect the industry so much so that in 1986 tbe price of coconut oil dropped to $240 a ton in tbe intemational market. ^

In this background, tiie coconut industry had to look for other means for its survival. And product diversification and thereby value addition came to be identified as one way of achieving it. Realizing the multi product nature of tbe coconut tree and the potential it holds in turning out many processed products, countries tumed their attention to product diversification. However, when we look back we seem to have achieved very much less than we expected.

2:1 Progress?

In spite of our enthusiasm, encouragement and interest, in product diversification, in the last few decades tbe coconut industry has not made any significant advance. Compare the Table below indicating tbe export of coconut products for tbe year 1986 with that of 1996-2000.

Table 3. APCC: Exports of Coconut Products - 1986 (In Metric Tons)

Counlry Copra Cocomit Copra Desiccated Coir Shell Act, Oil Meal Coconut Products Charcoal Carbon India 1,000* • 24,030 Indonesia 5,511 380.498 303 1,430 Malaysia 41,220 49,039 7,000* Papua New Guinea 92,968 41,109 19.575 Philippines 136,045 1,237,878 817,641 67,613 27,202 12,123 Solomon Islands 31,756 Sri Lanka 9,753 85,347 40,080 60,819 85,656 27,731 4,741 Thailand 5,917 5,621 Vanuatu 40,612 Western Samoa 3,350 13.798 6,152 F.S. Micronesia 1,500* Palau 5,000* 2,500* Total 7,204 1,437,682 1,273,363 135,735 115,307 56,363 16,864 • Estimate

297 Table 4. APCC; Exports of coconut products, 1996-2000

1996 1997 1998 1999 2000

EXPORTS (MT) Copra 230,282 178,353 180,954 175,925 162,920 Coconut Oil 1,303,820 1,822,619 1,674,745 942,960 1,980,157 Copra Meal 805,572 '966'2i2 '860^246 449,541 '977^410 Desiccated Coconut 181,525 194,808 159,999 183,024 201,341 Coco Chemicals 1 28,864 33,260 28,987 22,537 23,532 Coir and Coir Products 102,283 104^810 112^337 110,002 117,394 Shell Charcoal 66,861 70,904 50,261 49,518 59,044 Activated Carbon 60,046 68,102 65,807 72,984 74,948

EXPORT VALUE 1,570,968 1,798,188 1,547,149 1,222,782 1,436,075 (USS '000)

1 Consisting of methyl ester, fatty acid and fatty alcohol from tbe Philippines Source: Statistical Yearbook APCC 2001

The table indicates that even after 15 years coconut oil and copra meal continue to be tbe two major export products. While cocochemicals is tbe only addition the export volume of desiccated coconut and activated carbon has substantially increased.

2:2 Coco chemicals

Although there would have been some export items like coconut cream tbe only significant addition is coco - chemicals which certainly is a value added product and tbe only one which would have had an impact in tbe international trade. Now about diversifying to coco• chemicals bow many countries can do this? I recall in 1982 a private company from Malaysia visited Sri Lanka and conducted negotiations with tbe biggest copra crushing plant in tbe country, which was under state management to set up a joint venture to produce coco-chemicals. It wanted an assurance from Sri Lanka to deliver at an agreed price 25,000 tons ofcoconut oil annually But Sri Lanka could not assure this volume. This was of course for a small size plant and tbe venture was given up. As it is, to set up plants for diversifying into coco-chemicals tbe country should be able to provide at least this volume regularly. How many countries can provide this? Only the Philippines and Indonesia. And already they have set up their plants.

However, we have been advocating these ideas for some time and even as recently including in our own publications. In one it was mentioned:

"To mitigate tbe impact of tbe debilitating low prices of nuts and copra it may be proper lo consider tbe following:

1. Increase domestic consumption. 2. Process low priced crude coconut oil into methyl ester. Use the latter as substitute to diesel fuel that runs motor vehicles. 3. Oleo chemical plants should now use more crude coconut oil as raw material. This is now tbe opportune time to increase the production of coconut oil based chemicals." (COCOMUNITY 3 U* October 2000)

298 2:3 Cocodiesel

I have dealt above on tbe impracticability of diversifying into production of coco• chemicals except by tbe two big producers who are already there. Coming lo tbe second proposal it is still more difficult even for tbe big producers. It is true that technically, using vegetable oils as an altemative to diesel has been proved possible and even welcome due to its many advantages as nontoxic biodegradable and free of carcinogenic qualities. But when it comes to economics there are many factors to reckon with. At tbe last COCOTECH meeting tbe paper presented on tbe Thailand experience bad the following to say "Production cost of bio diesel depends mainly on two factors; they are raw material cost and tbe processing technology .As for tbe raw material issue tbe bio diesel production in various countries try to overcome it by using oil with an excess of production capacity product surpluses and declining prices." (Proceedings of COCOTECH Meeting 2001 p i 15). I doubt whether coconut oil qualifies for those. Ibarra Cruz who did a study for APCC on energy values bad liiis to say on tbe economics of substituting coconut oil for diesel. "It is obvious that if tbe plants were to set up in Manila where diesel oil is cheaper and coconut oil more expensive and manpower costs are liigber tbe economics may not be favorable" (Cruz: Energy Values of Coconut, p.6 APCC 1995)

2:4 Activated carbon

In product diversification tbe only product, which has made some significant impact, is activated carbon. Compared with 1986, three new countries have joined in production and export of activated carbon. Indonesia, Malaysia and Thailand. Again this is a capital-intensive exercise. A study done in 1995 by APCC calculated tbe cost of setting up and running an activated carbon processing unit at around $1,000,000. So where do we go from here. Does it mean that coconut has no future in product diversification? Value addition? Certainly not. Its potential is more than ever. There are new avenues, new paths which coconut industry can tread now. Only thing is we have to take into consideration tbe limitations we have in embarking on a program of product diversification.

3. Potential Areas Let us start from tbe basics. We all know that coconut is a small bolder crop rural based and ownersiiip mostly in tbe bands of tbe poor who lack capital as well as technology This applies equally to tbe coconut producing countries. Accordingly tbe processes and technologies we advocate should fit into their backgrounds.

3:1 Small expeilers

A case in point is crushing copra ,We have seen tbe impracticability and futility in going in for highly mechanized processes with limited supplies. However, it is necessary that copra has to be crushed. Sri Lanka processors had resolved this problem by going in for what they call baby expeilers which has a crushing capacity of about one ton of copra a day. Today they account for about 40% of the coconut oil production in tbe country. It has provided employment for tbe rural people, avoid transporting copra long distance and assured satisfactory farm gate prices to producers In Solomon Islands "Eight mills have been established. Seven now in operation. One mill has a crushing capacity of 24,000 m tons per year, the others are small cottage industry scale units with capacities between 400-600 m tons per unit. The small units have proved to be very robust and profitable"(Report of APCC Sessionl999 pll9). Apart from meeting tbe vegetable oil needs of the local community this could also lead to value addition by way of initiating different type of commercial activities such as using oil for medicinal purposes, soap making or for toiletry uses.

299 3:2 Fresh nuts

As the fanners and countries are concerned with value addition export of fresh coconut is an area -which should deserve enhanced attention. Tliere is no complicated technology involved except the selection of a certain size or quality nuts and prepare them to with stand tlic sea transport Recent figures indicate an increase in export volume of fresh nuts. But again it is limited to few countries in spite of the enhanced profit margin. According to the figures available from .Sri Lanka in 2000 while a fresh mit in the locai market fetched between Rs.7-10 the fob price of a fresh nut averaged Rs. 17. It is surprised why export of nuts remains low from this part of the world. It is equally surprising to note that of the total volume of fresh nuts that reach the intemational market only 40 % are from the APCC countries. The bulk comes from Latin American and Caribbean countries. Tor the years 1996-1999 the volume of fresh nuts exported from APCC countries was 229 million compared to 285 million from Latin America and Caribbean which are very small producers.

Not only fresh nuts but also a number of processed products are exported from these countries. Among them are grated coconut in syrup, coconut pudding and coconut cream from the Dominican Republic, coconut soda and pina colada from Puerto Rico, and coconut liquor from Jamaica. They are good examples as to how even with limited supplies small producing countries can venture successfully into value addition. One could say that they have US market close to them. Bui it would not have opened just like that. It would have been the result of market promotion perhaps through niche markets.

3:3 Food products

It is not that we are not aware of the existence of these products or the technology. In 1996 AI'CC published its Cocomit Food Processing Technology Document containing 19 processes from India, Philippines and Indonesia which include among others the following

• Nata de Coco Production—(Philippine and Indonesian versions) • Sweetened Dehydrated Dried Young Coconut • Dehydrated Edible Coconut Meat • Coconut Yoghurt • Young Coconut in Syrup • Coconut Water Vinegar • Coconut Skim Milk Beverage • Cultured coconut Skim Milk Blend • Coconut White Cheese Production • Moulded Coconut Sugar from Fresh Coconut Sap • Granulated Coconut Sugar from Fresh Coconut Sap • Production of Non Carbonated Coconut Water Beverage • Partially defatted Cocomit Powder

They are all village scale or home based industries and are of low capital investment. It may not be possible to do all in ail the countries Where there is no tradition of tree climbers to pluck cocomit. making moulded or granulated coconut sugar will be unthinkable.

300 3:4 Shell charcoal

Advantages of resorting to processing of coconut on small scale apply to other products as well. In spite of low technology and supply availabilities production of shell charcoal is still limited and restricted to few countries, lliough tliere has been expansion of market and increased production it is only a fraction of the potential. While some countries find shortage of shell charcoal to produce activated carbon, coconut sliells are continuing to be the breeding ground for mosquitoes in some others. Activated carbon is definitely a value-added product but before we venture into it, it is necessary to go in for coconut shell charcoal production Again it does not call for high technology or big capital.

3:5 Coir

So it is with processing of coir. Recently Cocomunity reported how a coir-processing unit in Philippines is finding it difficult to run economically and comparing with India that the industry in the Philippines is 150 years behind. The fact is that in India coir processing is a cottage industry In the Philippines it is a big company, which is involved. I recall in Indonesia a major unit to process coir fiber was installed in Tasikmalaya, not a big coconut producing area. Very soon it was closed down due to the shortage of husk. Over the 15 years from 1986 to 2000,only three additional countries have emerged as coir exporters and that too in small volumes. Table 5. Exports in Fibre products (Metric Tons)

Countries 1996 1997 1998 1999 2000

India 44,660 46,223 51,139 50,697 56,046 Sri Lanka 52,402 51,973 54,106 50,787 52,430 Thailand 3,318 4,793 5,105 6,890 7,255 Vietnam 300 300 300 300 300 Indonesia 866 595 30 59 102 Malaysia 110 225 139 65 52

Although the potential is there to make geotextiles, rubberized mattresses and carpets, the primary process is to convert husks into coir manually or mechanically. Some countries have yet to embark on the primary process.

3:6 Timber

Another product, wliich attracted much attention, is coconut timber particularly after the research carried out on its value addition at the Samoanga Research Station in the Philippines. Unfortunately it also had negative repercussions. With the demand for coconut timber rising the farmers tended to fell even not so senile trees to earn quick money. This compelled Philippines to introduce legislation to restrict cutting down coconut trees.

4. Strategy^

As we all know coconut is a small holder crop. There is much scope and potential in processing of coconut products for value addition. However going by the past experiences while we were aware of the potential we do not seem to have exploited it. Where we had done it we do not seem to have had a clear thinking of how to sustain the various activities, and hence tlie problems that were encountered. Coconut is a small holder crop and there are limitations as well as certain advantages that go along witii it.

301 In this presentation I have tried to point out the limitations the countries faced in carrying out some of these activities. Accordingly it is necessary to plan out the strategies taking into account the resources available for each country, men material finances and technology.

In product diversification if it is to benefit the rural communities we have to stress more on rural small industries based on coconut. Naturally they will be small. Wliat Schumacher postulated twenty-five years ago in his famous book Sinall is Beautiful aptly fits into the coconut scenario even today. He said

(1) The work places have to be created in the areas where the people are living now and not primarily in metropolitan areas. (2) The work places must be on average cheap enough so that they can be created in large numbers without this calling for an unattainable level of capital formation and imports. (3) Production methods employed must be relatively simple so tliat the demands for high skills will be minimized. (4) The production should be mainly from local material.

Processing of coconut products on small scale and selective basis has to be encouraged. Where it is practical they could be collective and community based. However, one should be cautious about the limiting factors which stand in the way in promoting small-scale operations. For example, the difficulty in quality control and adhering to standards will be problems. Marketing also could pose problems. Accordingly in planning a new strategy one has to consider all these factors.

So let us start small. Select the processes, which suit the local conditions and as such are sustainable. The industry has to plan new strategy. It could be small but at the same time practical and profitable. In such cases, even if there is a loss it wont be unbearable!

And finally let me come to what is left from the topic. About the machinery. I am sorry 1 am not in a position to say this machinery is good for oil milling or that one for coir processing. But one thing I would like to say is that coconut industry need, by and large small-scale machinery, low cost with minimum technology to operate and repair. It may even be necessary to think of developing medium scale machinery for some sophisticated processes like activated carbon.

What is necessary is to identify the resources, skills and technologies available that could be harnessed to suit the local conditions. It will differ from country to country. I am glad that this COCOTECH meeting is concentrating on new strategies in R&D. In planning our new strategy let us take into consideration these parameters.

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