Coconut is a socially and economically important commodity in Indonesia, which has the largest coconut growing areas in the world ahead of the Philippines and India.
The palm is a major source of income for around 6.4m smallholders in the country and coconut derivatives like oil and sugar are used in various food, beverage and beauty products. This includes Unilever’s Bango sweet soy sauce brand, an everyday staple used by millions of Indonesian households.
The global market for coconut derivatives is projected to grow from US$11.6bn in 2020 to US$23.32bn in 2027 at a CAGR of 10.54%, according to figures from Fortune Business Insights. This is supported by growth in areas like plant-based nutrition, which often incorporates coconut fat, as well as healthy beverages like coconut water and milk.
Coconut productivity, however, is under pressure. Data from Statista shows between 2012 and 2021, coconut output fell by almost 12%. Forecasts shared by Unilever estimate that – without action to address the structural challenges facing the sector – overall tree productivity in Asia is on-track to decline by more than 80% by 2027.
So, what’s hitting coconut production?
According to the International Coconut Community, low productivity in Indonesia can be linked to the variety of coconut under cultivation, a high proportion of older trees in plantations, land conversion, climate change and outdated agronomical practices as well as the impact of pests and diseases. Farmer livelihoods are also a challenge in a sector marked by price instability and high logistical costs, particularly in isolated rural areas.
Unilever has identified another issue that it believes has a negative impact on the wellbeing of coconut farmers, most of whom are smallholders. Because coconut trees typically grow to around 30 metres in height, collecting the sap from which coconut sugar is made ‘requires a lot of work’ and can be dangerous.
This situation means ‘many of the plantations have been abandoned’, Unilever observed.
Small but mighty: Introducing the Genjah Kuning Bali
In the search for solutions, Unilever has initiated what it describes as an ‘industry-leading’ initiative in partnership with the Indonesian National Coconut Institute, with whom it has worked since 2015.
The company has supported the Institute’s work to breed a new variety of coconut that, it is hoped, will help boost the productivity of the Indonesian coconut industry. “The Indonesian Coconut Institute promote these coconut trees as a commercial variety. We worked with them to run plantation pilots and scale up our coconut suppliers, in collaboration with Indonesian farmers,” Clement Jaloux, Unilever’s Procurement Manager, Supplier Development South East Asia, explained.
The result is the Genjah Kuning Bali variety of coconut tree. Interestingly, Unilever and the Indonesian National Coconut Institute weren’t focused on developing seeds that produced high-yielding plants – they were looking at a different metric. “We focused on the height characteristic for these trees,” Jaloux told us.
By concentrating on height, Unilever believes it has developed a plant that will mean it is quicker and safer for smallholder farmers – especially women - to collect sap.
These ‘mini’ coconut trees grow to around ten metres tall so the sap can be collected without the need to climb. “From a safety perspective, short stem coconut trees reduce the risk of farmers falling, easing their work and incentivising younger farmers to continue working in their parents’ plantations,” FoodNavigator was told.
While individual Genjah Kuning Bali trees may produce less than other varieties due to their shorter stature, overall, their cultivation is expected to have a positive knock-on impact on productivity. Farmers will be able to collect more sap per day, thereby increasing their output and income, Unilever predicted. “Although each tree will have a smaller yield due to the nature of the size, this is compensated by a higher density per hectare,” Jaloux added.
Another big advantage is that the smaller variety reaches maturity faster. This removes a barrier to replanting ageing and unproductive trees because farmers will be able to start harvesting from the Genjah Kuning Bali trees sooner. “The smaller coconut trees are mature (start bearing fruit) after four years, while their taller counterparts mature after seven,” Jaloux elaborated.
Scaling up supplies
In 2017, Unilever established a 100-hectare pilot plantation, and since then the company has progressively scaled up the project in three growing regions: Lampung in South Sumatra, and Sukabumi and Pangandaran in West Java.
As of June 2022, Unilever had planted the equivalent of 3,300 hectares with Genjah Kuning Bali trees in collaboration with 3,600 smallholder farmers.
Planting is carried out on existing plantations, replacing either existing old coconut trees or other cash crops. The effort is expected to benefit around 5,000 Indonesian households by helping to boost smallholder incomes and resilience, Unilever predicted. “This is about rejuvenating coconut trees for all types of farmers. This innovation is extra income for an array of farmers, who grow them alongside their other taller trees. Some farmers are replacing old perennial crops (cocoa) while others are intercropping coconut trees with cash crops (banana, peanuts etc),” Jaloux said.
The initial batch of short-stemmed coconut trees have started producing sap and Unilever is now taking delivery of coconut sugar from these farms at its Bango factory. The output from these plantations will increase year-on-year and peak in 2026, Unilever revealed. From that point on, the company aims to get half of its coconut sugar supply from this new variety of tree.
Technology and training for sustainable coconut supply
Alongside its planting initiative, Unilever is also focused on delivering training and technology to help the Indonesian coconut sector thrive.
“Crop science like this is crucial for improving biodiversity and helping farmers adapt to climate change and build resilience. But innovations like these need to come hand in hand with training, services (such as access to finance and fertilisers) and community empowerment,” Jaloux stressed.
Last month, the group rolled out a new mobile app to support coconut farmers in the country, SmartFarm Plus.
Developed for Unilever’s field teams by agritech group Cropin, the platform is updated with information about plantations – such as maturity of trees and any productivity issues - when the field teams carry out farm visits. The app then gathers the data to provide location-specific advice that the Unilever teams feedback to the farmers. This also allows Unilever to track coconut sugar production forecasts, strengthening the resilience of its own supply chain.
Farmer training in areas like fertiliser distribution and other agricultural practices is also provided to equip smallholder farmers with the essential skills and knowledge. “We have developed training for 1,000 smallholder farmers to teach them good agriculture practices, from how to take care of the trees to climate resilience methods,” Jaloux noted.
