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SUMMARY REPORT
SUSTAINABLECERTIFIED COCONUT OIL PRODUCTION (SCNO)
FOR THE PHILIPPINES AND INDONESIA
ABOUT SCNOThe Sustainable Certified Coconut Oil Production (SCNO) is a joint project by the private and public sector together with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) in the Southeast Asian countries Indonesia and Philippines. The project was financed by the private partners Cargill, BASF and Procter & Gamble and the German Federal Ministry for Economic Cooperation and Development (BMZ) and implemented by GIZ and the countries’ strong national partners. Over a period of 4 years (November 2015 – October 2019) and with a total volume of almost 4 million euros, the project paved the way to increase the income and economic self-sufficiency of smallholder coconut farmers in selected regions of the Philippines and Indonesia through supporting a sustainable certified coconut oil supply chain.
IN ASSOCIATION WITH
Private Partners
National Partners
DEP
ARTMENT OF AGRICULTUR
E
1 8 9 8
Public Partners
Implementing Local Partners
Sustainable Certified Coconut Oil (SCNO) Production Project in Indonesia and the Philippines
EXECUTIVE SUMMARY
SUSTAINABLE CERTIFIED COCONUT OIL PRODUCTION (SCNO)
MAKING A DIFFERENCE
THE JOURNEY
BECOMING AN ENTREPRENEURGUARANTEEING SUSTAINABILITY SUSTAINING IMPROVEMENT
DO’S AND DO BETTER’S
OUTLOOK
12
3
2
6
21
6
8
81216
19
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Market SituationThere is a considerable trade with coco-nut-based products around the world. Overall, the demand for coconut products is increasing. However, 80% of the coconuts produced in the Philippines are being processed into coconut oil, while the share is at about 20% in Indonesia.
The Philippines is the largest producer and ex-porter of coconut oil worldwide followed by Indonesia. Together, the two Southeast Asian countries contribute 70% to the world-wide trade with coconut oil.
The Producers The coconut sector contributes to the livelihood of about 5 million families in Indonesia and about 3.5 million coconut farmers in the Phil-ippines. Still, many live below the poverty line. These coconut farmers usually work on a weak resource base with limited access to financing and little technical knowledge. The majority lacks the know-how to improve the productivity of their farms. Often, smallholders do not have access to agricultural extension services or other support structures.
The Consumers Consumers of coconut-based products are in-creasingly concerned about the quality and sus-tainability of the agricultural production. They demand that the products they are buying are produced sustainably. Often, the environmental and socio-economic aspect are questioned.
These factors motivate the private sector to act. This is achieved through a commitment to help farmers secure their living while responding to the doubts of consumers by offering sustainably produced and certified products.
The Partnership To fulfil this vision, the companies partnered with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), co-funded by the Ger-man Federal Ministry for Economic Cooperation and Development (BMZ) under its develoPPP.de program. The project is jointly implemented by committed national partners, such as the Philip-pine Coconut Authority (PCA) together with the Agricultural Training Institute (ATI) and Bureau of Agriculture and Fisheries Standards (BAFS) for the Philippines.
Local field implementers from the Philippines include the National Coconut Research Center located at Visayas State University, VISCA Foun-dation for Agriculture and Rural Development (VIFARD), Notre Dame Business Resource Center (NDBRC) and Yayasan Sander Batuna in Indo-nesia.
70% of the total project costs were financed by the private sector partners while 30% are fi-nanced by BMZ.
The private sector is motivated to act.
Philippines 43%
Others 30%
Indonesia 27%
EXECUTIVE SUMMARY
5%FARMERS INCREASE THEIR INCOME BY
FARMERS ARE CERTIFIED ACCORDING TO INTERNATIONALLY RECOGNIZED STANDARDS
A MASS BALANCE OF CUSTODY FOR
CERTIFIED COCONUT OIL IS ESTABLISHED
THE TARGETS:THE PHILIPPINES AND INDONESIA
FARMERS INCREASE THEIR INCOME THROUGH CERTIFICATION BY 10%
Training smallholder farmers on farm business skills, Good Agricultural Practices (GAP) and on how to comply with an internationally recognized sustainability standard.
Supporting certification of their farms by introducing the Rainforest Alliance Sustainable Agriculture Standard.
Establishing a chain of custody for the coconut oil supply chain that supports higher income and economic self-reliance of coconut farmers, while creating a marketable product such as Rainforest Alliance certified coconut oil, that can be traded globally.
Inclusive Business provides direct market access for certified farmers by buying raw materials directly from smallholder producers.
The ApproachSustainable Certified Coconut Oil Production (SCNO) addresses the challenges
Copra is the dried meat of mature coconuts.
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BASELINE STUDY CONDUCTED
CERTIFICATION PREPARATIONS
TRAINING APPROACH "COCONUT FARMING AS A BUSINESS" DEVELOPED
EXTERNAL AUDIT CONDUCTED
CONTINUOUS IMPROVEMENT TRAINING FOR CERTIFIED FARMERS
IMPACT MEASUREMENT
Independent research institution (Kleffmann Group) commissioned
GIZ together with PCA, ATI and BAFS
Selection of farmers for certification: farmers are offered to be part of the certification program of Cargill “Enabling Certification Training” for farmers developed, internal management system for the certification by Cargill set up
Rainforest Alliance compliance verified by external auditor and start of premium payments to farmers
Further trainings on GAP and sustainability to further improve farms
Research institutions measures impact through a representative study
OVERALL APPROACH
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MAKING A DIFFERENCE
Results of the Sustainable Certified Coconut Oil Production (SCNO) Project
Increase in Income
COCONUT FARMERS CERTIFIED ON INTERNATIONALLY RECOGNIZED STANDARDS
Target 1,531Actual
COCONUT FARMERS INCREASED INCOME BY 5%
Target
Actual3,763
19,5
99
22,9
14
17%
28,8
41
47%without SCNO
with farmer business training (SCNO)
with farmer business training and certification (SCNO)
Where farmers sold their copra & buying price per kg.
Increase in Productivity
Farmers without SCNO
93%
0%Ave. selling price (PHP) per kg.(2018)
n/a17/kg.
83%
4%
Farmers with farmer business training (SCNO)
16/kg 21/kg.
14%
78%
Farmers with farmer business training and certification (SCNO)
16/kg 21/kg.
5,80
4
7,31
2
26%
6,51
4
12%
OVERALL IMPACT RESULTS: PHILIPPINES
selling to Traders
selling to Cargill
The overall target of the Sustainable Certified Coconut Oil Production (SCNO) project is to im-prove the lives of smallholder coconut farmers. By investing in their capacities through trainings the project helps them to significantly improve their farm management practices. This goes hand in hand with a maximized utilization of their farm, consequently a higher productivity which increases their income. Additionally, the sustainability premium incentivices farmers to grow their produce in respect for nature and people.
I save part of the premium so I have funds which I can use
for emergency. I also used part of it to send my two adopted
grandchildren to school.
Pedro Carreon, Koronadal, South Cotabato
“SUSTAINABILITY PREMIUM: Rainforest Alliance certified farmers receive a sustainability premium of 2 PHP (approx. 0,035 EUR) per kg of copra.
A mass balance chain of custody is set up. Rainforest Alliance certified coconut oil is being sold on the market.
Increase in Income due to Direct Selling to Cargill
Agricultural Income PHP/ha/year (2018)
October 2019
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BECOMING AN ENTREPRENEUR
TRAINING SET UPDuration: 7 days
Approach: workshop
Modules: Six half day trainings; seventh day fitted to the needs of the farmers, e.g. cross farm visit or additional training session.
AnalyzeWhere am I in the supply chain?
Before improvement can be done, the current situation must be analyzed. The coconut farmer must understand the supply chain for coconut oil and their role in it. They must grasp the market aspects they can influence and know how to do so. They must recognize the market factors they cannot influence and learn how to work with them.
01PlanWhat can I change?
Coconut farmers are enabled to analyze what limits their farm business. The tools provided, such as formulas for profit calculations, planning tools or diversification, are consciously used as aid in improving the performance. Through a case study approach, the theories are applied before the practical use on their own businesses.
02
Implement
The tools studied in the planning phase are put to use – a business plan is formulated. The farmers assess their own farm business by optimizing their management, and identifying their outputs and expenses. They search for market opportunities and learn how to position themselves so that profit is made. The coconut farmer develops a results-oriented and economic mindset.
What will I change?
03 04Evaluate
To know if the farm business was successful, the performance of the farm business plan must be evaluated regularly and adjusted to ensure profitability. The farmers rely on their skills but know that there is a support system they can fall back on. They realized: coconut farming is a business.
What has changed?
Key technologies and farm good practices are shared. Participating farmers are empowered with skills and sensitized on economic know-how to elevate their business mindset.HOW?THE
JOURNEY
MASTER TRAINER:A master trainer trains Agricultural Extension Workers and Coconut Development Officers that in the end implement the training for coconut farmers.
TRAININGS:Trainings were major tools in providing capacity-building for farmers. They were conducted in small classes in the community or village. The trainings were fitted to meet the demands of adult learning. Input is limited to maximum 20 minutes followed by learner-based activities, e.g. group work, lasting another 20 minutes. It is key to get participants engaged, that is why the trainings are conducted as dialogue and creation of individual experiences.
AGRICULTURAL EXTENSION WORKER (AEW)AEWs are personnel hired by each municipality to facilitate extension services to farmers within their boundaries.
COCONUT DEVELOPMENT OFFICER* (CDO)CDOs are personnel hired by Philippine Coconut Authority to facilitate extension services to coconut farmers.
*relevant for the Philippines
Tools to analyze businesses: profit calculations, risk analysis, qual-ity control
Farm planning: farm mapping, calculation of required quantities of seeds, seedlings and other input
Record keeping
Cost and performance accounting
Conducting simple market surveys
Money management
Creating a farm business plan
Evaluating Performance
Responsible decision making
WHAT MANAGEMENT SKILLS WERE ACQUIRED?
Farmers assess their coconut farms and identify options on how to improve their productivity. Measures are being implemented and their impacts evaluated.
By diligently recording the sales and expenses of our coconut
farm, I am able to make better decisions and plan labor more
efficiently. This helps me despite the plunging prices of copra.
Elson Liu, Jr., Sogod, Southern Leyte
“
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The acquired skills are put to
use. This is proven by comparing pre- and post-performance,
regardless of the region: I fertilize my
coconut farm properly and
more than once a year to
increase my productivity and income
I evaluate my farm
performance so I would know
what to adjust to
I save/set aside farm income for the next
cropping
I am keeping records of my
farm expenses, sales and profit
Southern Leyte, Philippines
Mindanao,Philippines
+147%
+392%
+87%
+137%
+46%
+161%
+168%
+161%
HARVESTS PER YEAR
THERE ARE
Take Aways
THE RESULTS FOR THE PHILIPPINES : WITH SCNO FARMER BUSINESS TRAINING
Before SCNO
After SCNO
Before SCNO
After SCNO
Before SCNO
After SCNO
Before SCNO
After SCNO
AVERAGE ANNUAL HARVEST OF COCONUT FARMERS
WITH FARMER BUSINESS TRAINING IS 12% HIGHER THAN OF COCONUT FARMERSWITHOUT SCNO INTERVENTIONS
ANNUAL AGRICULTURAL INCOME* OF COCONUT FARMERS
WITH FARMER BUSINESS TRAINING IS17% HIGHER THAN OF COCONUT FARMERSWITHOUT SCNO INTERVENTIONS
₱ 22,914(APPROX. € 403)
TO
6,504NUTS PER HECTARE
TONUTS PER HECTARE
(APPROX. € 345)
*covers also intercrops
COCONUT FARMING AS A BUSINESS: PROJECT RESULTS
No. of Farmers 2,790
Farmers Sex Disaggregation M - 1,301F - 1,489
No. of Trainings 101
Training hours 2,424
Training hours farmers’ attended 66,960
No. of Trainers 31
No. of Farmers 973
Farmers Sex Disaggregation M - 550F - 423
No. of Trainings 39
Training hours 934
Training hours farmers’ attended 23,352
No. of Trainers 11
Southern Leyte
Sarangani
South Cotabato
FOR SOUTHERN LEYTE
FOR SOUTH COTABATO AND SARANGANI
*RESULTS FOR INDO
NESIA WERE NOT YET AVAILABLE AT DATE O
F PRINTING*
Coconut Farming as a Business is a training developed for the Sustainable Certified Coconut Oil Production (SCNO). National Partners together with GIZ take over major parts in designing the curriculum. In the case of the Philippines, the Philippine Coconut Authority (PCA), Agricultural Training Institute (ATI), and Bureau of Agricultural and Fisheries Standards (BAFS) were greatly involved.
Communication is key, especially in the Philippines where the language landscape is marked by numerous di-alects. Conducting trainings in the lo-cal tongue is to be considered to ease the learning of coconut farmers.
The involvement of national partners helped give the farmers a better un-derstanding of the impact that farm management practices have. They felt comfortable enough to open up and share concerns that then could be ad-dressed.
The training on coconut farming as a business highlights relevant topics in a simple and easy-to-follow way. Through adult learning approaches constant interest of the farmers and
consistent participation in training was ensured. Monitoring the impact of the trainings stand in close correlation with changes implemented in produc-ers’ farm management practices.
Through trainings conducted in tan-dem by Coconut Development Offi-cers and Agricultural Extension Work-ers with firsthand experience, the approaches were fitted to farmers’ needs.
After realizing that coconut farming is a business and seeing the increase of the farms output, many farmers were interested to further pursue training. The involvement of the private sector made farmers reflect on their interest in getting their production Rainforest Alliance Certified™.
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GUARANTEEINGSUSTAINABILITYWorldwide, consumers are increasingly con-scious and aware of quality and sustainability. Is-sues are the safety of food due to the use of pes-ticides as well as environmental concerns such as the expansion of agriculture at the expense of existing forests and wildlife. Many companies re-spond to this demand by offering sustainably produced goods. Consumers can identify these products through certification.
After empowering coconut farmers to be entre-preneurs, Cargill, BASF and P&G take the Sustain-able Certified Coconut Oil Production (SCNO) project to the next level. Cargill guides the farm-ers to adopt the “Guide of Sustainable Agricultur-al Standards” focusing on environmental, finan-cial and social impact of agricultural production. Following these guidelines the coconut farms qualify to be Rainforest Alliance Certified™. This certification adds value to their product, meets the demands of the consumers and enables farmers to increase their income.
How to achieve “Rainforest Alli-ance Certified™?”The farmers were trained on the requirements of the standard. After that, their farms were evalu-ated. Qualified farmers can then signify their in-terest to Cargill to become part of the program through a letter of intent. Once approved by Cargill as so called “group administrator” a com-mitment contract will be forged and farmers start implementing the sustainability standard. Cargill’s field inspectors will regularly check for compliance. They will monitor the adherance to the Rainforest Alliance standard’s criteria before the external audit is commissioned by Cargill and then being implemented by a neutral third party.
As group administrator Cargill takes on the re-
FARMERS ARE RAINFOREST ALLIANCE CERTIFIED*
Sustainability is a path and process over time.
HECTARES OF LAND ARE RAINFOREST ALLIANCE CERTIFIED*
sponsibility to ensure all smallholder farms of an organization abide by the Sustainable Agri-cultural Standards. Cargill provides the mem-bers with technical knowledge, good practice examples as well as plans that the individuals are to follow. The aim is to help prevent fur-ther deforestation and to protect biodiversity and natural ecosystems in and around certi-fied farms while ensuring fair labor conditions
Cargill’s Internal Management SystemTo monitor the group of smallholder farms Cargill developed an Internal Inspection Plan. The farm lands of the individual members are documented including all crops and intercrops, biodiverse areas and natural resources. Changes in landscape are directly reported to Cargill to be updated in the mapping. The documentation serves as base to trace, on what level the coconut farmer complies with the standards of the Rainforest Alliance. It further is used to monitor the production chain of copra. Before harvest, the farm informs the group administrator Cargill of the harvest schedule. Cargill inspects the area of harvest and calculates and records the expected output. The coconut farmer records the actual volume of harvested and dried nuts and copra sold and reports to the group administrator. Through these measures non-compliance can be tracked and sanctions are applied as need be.
*in Indonesia and the Philippines
TRAINING SET UPDuration: 2 days
Approach: workshop
Modules: Five
THEJOURNEY
01 02
03 04
The Rainforest AllianceThe Rainforest Alliance is an international, non-profit, environmental and sustainable development organization. They work to conserve biodiversity and ensure sustainable livelihoods by transforming land use practices and consumer behavior. They follow the Guide of Sustainable Agricultural Standards. Products and productions following these standards ultimately receive the Rainforest Alliance Certified™ certification.
The Role of CargillThe Rainforest Alliance certifies smallholder farms through group certification. A group administrator is put in charge of the organization. The group administrator is responsible that the body upholds the sustainable agricultural standards as conducted by the Rainforest Alliance. All members have a voice and participate in decision makings.
In the Sustainable Certified Coconut Oil Production (SCNO) project Cargill functions as group administrator. The key role is to assist and facilitate the certification process of the Rainforest Alliance.
Guide of Sustainable Agricultural Standards applicable to coconut farms
Improved sustainability of the farms
BENEFITS OF ALIGNING ACTIONS TO THE RAINFOREST ALLIANCE
Increased income
Improved environmental awareness
Healthier environment for farm and farmer
Value added products
Effective Planning and Management lead to
enhanced productivity and profitability
Development of a plan to conserve biodiversity. It includes the restoration,
protection and increase of native vegetation and aquatic
ecosystems.
Development of a plan to conserve natural resources.
This includes the conservation of soil and water through
responsible pest and waste management.
Improve Livelihood and Human Wellbeing includes
ensuring minimum wage, monitoring and prohibiting
child labor and ensuring occupational health
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time they created a market. A Rain-forest Alliance Certified™ product is of high interest to Cargill and its custom-ers. To ensure that the value added produce finds its way to them, Cargill pays a premium price for copra com-ing from certified farms.
In some cases where coconut farms are far from Cargill, consolidators are organized. Consolidators collect the copra from certified farmers and sell it on their behalf to Cargill. Farmers share for hauling expenses and the consolidator gets ¼ of the premium selling price per kg.
Farmer’s ViewThe Rainforest Alliance Certified™ cer-tification comes with many privileges. Farmers receive training and men-torship that entrusts them with skills they can apply in the future. They are aware that there is a support system provided by Cargill that they can rely on and consult with if they are unsure of actions.
The adjustments made according to the Rainforest Alliance guidelines increased productivity as well as in-come.
Cargill, BASF and P&G did not only create a better product, at the same
I earned additional income from a premium which is a big help to our family to sustain our everyday lives - more food on the plate and education for our children.
Natividad Beligolo, Maasim, Sarangani Province
“77%
53%
31%
17%
Premium
Direct delivery to Cargill
Productivity
Resecada*
Take AwaysSustainability premium as key driver for coconut farmers’ complianceBehavior change of the farmers is by choice. The biggest motivation to adhere to sustainabil-ity criteria, is the sustainability premium, which they receive from Cargill for Rainforest Alliance Certified™ products. Coconut farmers strive to comply with criteria set in the Sustainable Agri-culture Standard.
Farm Documentation as critical role of Cargill as Group AdministratorThe support system for the farmers plays a crit-ical role. Cargill, as Group Administrator, is as-sisting farmers in the challenging task of farm documentation.
Established systems and processes of Cargill, being the Group Administrator, allow the track-ing of the progress of the farmers.
Support services and tools to enable Rainforest Alliance Certification Simple tools allowed coconut farmers to change farm management practices. A Rainfor-est Alliance assessment checklist allow farmers to reflect immediately on their compliance.
Trainers need to be conversant about the co-conut industry and agricultural and environ-mental issues to be able to explain the need to adjust to the requirements of the sustainability standards.
Additional support services to complement Cargill’s effortsFor the future, the role of the Coconut Develop-ment Officers and Agricultural Extension Work-ers should be emphasized by aligning needs of farmers to the potential support services avail-able by their offices and institutions.
HARVESTS PER YEAR
THERE ARE
THE RESULTS FOR THE PHILIPPINES: WITH SCNO FARMER BUSINESS TRAINING ANDCERTIFICATION
AVERAGE ANNUAL HARVEST OF COCONUT FARMERS
WITH FARMER BUSINESS TRAINING AND CERTIFICATION IS 26% HIGHER THAN OF
COCONUT FARMERSWITHOUT SCNO INTERVENTIONS
ANNUAL AGRICULTURAL INCOME* OF COCONUT FARMERS
WITH FARMER BUSINESS TRAINING AND CERTIFICATION IS47% HIGHER THAN OF
COCONUT FARMERSWITHOUT SCNO INTERVENTIONS
7,312NUTS PER HECTARE
TONUTS PER HECTARE
*covers also intercrops
₱ 28,841 TO(APPROX. € 345)
(APPROX. € 507)
*RESULTS FOR INDO
NESIA WERE NOT YET AVAILABLE AT DATE O
F PRINTING*
Contributor to Increased Income
*RESECADA: net weight deducted based on Moisture Content (MC) of the delivered copra.
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SUSTAININGIMPROVEMENT
SHORT TERM GOALSTypically, coconut farms do not utilize the entire land (av-erage of 25% utili-zation). Through an improvement of land usage higher produc-tivity, efficiency and economic benefit is achieved.
Higher quality of copra leads to high-er selling price. Through analyzing and optimizing the moisture content of copra, farmers increase their price per kilo. They not only learn the prop-er drying techniques for better copra pro-duction, but also how to calculate the income effects of a better dried copra*.
*lower moisture level means higher buying
price of Cargill
The economic us-age of a coconut palm is 60 years av-erage. Through in-formation on how to receive or raise coconut seedlings and education on the ideal planting cycle and method of coconut palms, economic efficien-cy is optimized. Farmers further are aware about con-tinuous support through dedicated coconut develop-ment officers.
Nourished soil accel-erates crop growth. A harvest increase in number of nuts as well as in weight of copra are the results. If the soil is nurtured with organic matter, the water holding capacity of the soil rises. To achieve this, farmers are trained on what fertilizers to use and how to use them.
The farmers are in-troduced to the con-cept of predator and prey and how they can benefit from this cycle. They are knowledgeable of their pests’ natural enemies and their habitats. This way they are motivated to uphold and in-crease biodiversity such as use alterna-tive pest manage-ment measures.
Enhance yield from coconut palms
SOLUTIONSINTERCROPPING. The challenge is to identify the most profitable crops based on viability, avail-ability, market size, agronomic sustainability and financial at-tractiveness. This is accomplished through conducting market studies and implementing the results.
UNDERSTANDING COMPETITORS AND MARKET DEVELOPMENT. Different market players are analyzed and findings summarized.
TAKE AWAYSSUSTAINABILITY IS A JOURNEY. Revisiting the learnings of an en-trepreneurial mindset and guide-lines of Sustainable Agricultural Standards reinforce new habits.
Coconut farmers are encour-aged to discuss their insights and thoughts openly share what they are aiming to change regarding their farm business. Through cross-farm visits farmers are in-spired by one another’s examples and realize the potentials of their lands. Within a few months, farm-ers will be able to see their fulfilled short term goals. But they aim higher and set long term goals for diversification and improvement of their farms.
Maximize utilization of farm landLONG TERM GOALS
Rainforest Alliance certified learning sites in the Philippines
Collado Integrated FarmElson Liu, Jr.4 hectare coconut farm integrated with fruit trees
Key Highlights:• Coconut with various fruit trees• Accounting systems to track expenses
and revenues• Marketing of produce through various
platforms
Morales Eco-FarmJoy Lavenia Morales6.8 hectare coconut farm integrated with rice and cacao
Key Highlights:• Good Agricultural Practices from
coconut production to processing
Yana Integrated FarmAlejandro Balde, Sr.7 hectare coconut farm integrated with cacao and fruit trees - macopa, rambu-tan, durian, mangosteen
Key Highlights:• Integrated coconut farm with cacao
(Good Agricultural Practices and financing)
CHALLENGESFLUCTUATING COPRA PRICES is a problem for farmers. The price of copra is based on the price of inter-nationally traded coconut oil. Coun-tries governments cannot interfere in price setting, therefore the market faces validity in copra prices.
PALM KERNEL OIL IS THE BIGGEST COMPETITOR of coconut oil. The in-creasing offer and demand of palm kernel oil negatively influences the price of coconut oil.
To allow good practices on farm business and management practices to be shared to the members of the local communities, selected Rainforest Alliance certified coconut farmers were showcased:
SOUTHERN LEYTE
TRAINING SET UPDuration: 2 days
Approach: inter-farm visits, training
Modules: Three
THEJOURNEY
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DO'S AND DOBETTER'S
Communication is key. Language barriers greatly affect the effectivity of trainings – especially in the coun-tryside where even basic education in the English language is absent. Con-ducting trainings in the local tongue is to be considered to ease the learning process of coconut farmers.
National partners as catalysts. The involvement of national partners helped a lot especially in providing a responsive training materials on coco-nut farming as business.
Offer meets demand. The Coconut Development Officers and Agricul-tural Extension Workers tandem pos-sessing firsthand experiences through trainings conducted made approach-es fitted to farmer’s needs.
Reflection to progress. After realiz-ing that coconut farming is a business and seeing the increase of the farms output, many farmers were interest-ed to further pursue training. The in-volvement of the private sector made farmers reflect on their interest in get-ting their production Rainforest Alli-ance Certified™.
Knowledge for improvement. Trainers need to create awareness about the coconut industry and agri-cultural and environmental issues to be able to explain the need to adjust to the market. Knowing the back-ground and aims of the Sustainable Agricultural Standards makes it easy for farmers to comply.
Using a support system. The sup-port system for the farmers played a critical role. Cargill, as a group admin-istrator, assisted the farmers in the challenging tasks of farm documen-tation.
Sustained approach. In the future, the role of the Coconut Develop-ment Officers/ Agricultural Extension Workers should be emphasized by conducting complementary activities (e.g. market linkage, linkage to inten-sify the trainings.).
Track record to success. Simple tools allowed the coconut farmers to change and track their improve-ments. Digitizing this might also be helpful in the future. A Rainforest Al-liance assessment checklist allows farmers to reflect immediately on their compliance. As last measure, following-through on farmers led to revision of current habits and a switch in mindset.
Personal benefit as motivation. Behavioral change of the farmers is by choice. The biggest motivation for them is the premium price they re-ceive from Cargill for Rainforest Alli-ance Certified™ products. Therefore, they strive to comply with the guide-lines of Sustainable Agricultural Stan-dards.
Sustainability is a journey. Revisit-ing the learnings of an entrepreneur-ial mindset and guidelines of Sustain-able Agricultural Standards reinforce new habits. Coconut farmers are en-couraged to discuss their insights and thoughts openly share what they are aiming to change regarding their farm business.
To see is to believe. Through cross-farm visits, farmers are inspired by one another’s examples and realize the potentials of their lands. Within a few months, farmers will be able to see their fulfilled short-term goals. But they aim higher and set long term goals for diversification and improve-ment of their farms.
Ease of comprehension. Relevant/easy to follow topics complemented with adult learning approach helped a lot in drawing attention and under-standing of coconut farmers.
Ambassadors of Good Practices.Rainforest Alliance certified coconut Farmers especially those with learn-ing sites established serve as ambas-sador to the members of the local communities. Good farm and busi-ness management practices are be-ing shared by the Rainforest Alliance certified coconut farmers to their member communities through these learning sites.
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OUTLOOKAccording to the Asian Development Bank (ADB), “agribusiness is a potent way for coun-tries to achieve almost all of their Sustainable Development Goals (SDGs).” It can help boost a country’s development with a crucial impact on all three sectors of the economy: agriculture, manufacturing, and services. It covers sub-sec-tors like manufacturing; manufacturing of farm machinery, manufacturing of fertilizers, food processing, packaging, etc. Also, services such as storage, transport, supermarkets, and restau-rants complete the food value chain.1
The sector’s relevance can further be seen in the employment opportunities it provides: In the Philippines, 10.9 million people were employed in the agriculture sector as of January 2018, accounting for more than one fourth of the na-tional employment.2 In Indonesia the share is even larger, the ratio is almost one third of the employment.3 Although a big share is working in the agricultural sector, only a fraction is con-tributing to the national GDP, in 2017, not even 10% in the Philippines4 and 13% in Indonesia5. For both archipelagos, the majority in the agri-cultural sector only earns daily minimum wage. In the Philippines, depending on the region, the daily minimum wage starts at 5.20 USD in 2019.6
Meanwhile, Indonesia and the Philippines are facing trends spurring the domestic demand:
1. Both countries are already representing the biggest markets in terms of population in ASEAN with a joint population of around 370 million people which makes more than half of the entire ASEAN region;
2. A dynamic population growth rate of 1.1% in Indonesia and 1.5% in the Philippines in 2017 increases the demand for food and ag-ricultural products even further;
3. An urbanization ratio in where majority lives in urban areas provides new challenges in food supply, storage and distribution. 7, 8
4. Increasing income will influence domestic demands. According to recent projections, in 2024, the GDP per capita of the Philip-pines9 will increase to around 4700 USD and in Indonesia10 even to 5700 USD transform-ing both countries to upper-middle income countries.11
In addition to local trends, deeper integration in international markets can be observed. As an example, the European Union’s development tool GSP+ grants duty-free export of more than 6200 Philippine products to the EU since 2014. Particularly, the trade of agricultural and food products has been benefiting from this advan-tage.12 Just in March 2019, Indonesia and Aus-tralia signed a free trade agreement which will foster trade relations even more.13
References1ADB (2019): Scaling-up Investment in Agribusiness is Helping Transform Asia and the Pacific. Retrieved from https://www.adb.org/news/features/scaling-investment-agribusi-ness-helping-transform-asia-and-pacific 2PSA (2018): Labor and Employment Survey. Retrieved from https://psa.gov.ph/statistics/survey/labor-and-employment/la-bor-force-survey/title/Employment%20Rate%20in%20July%202018%20is%20Estimat-ed%20at%2094.6%20Percent 3World Bank (2019): Employment in agriculture. Retrieved from https://data.worldbank.org/indicator/SL.AGR.EMPL.ZS?most_recent_value_desc=true 4DTI (2019): Gross Domestic Product. Retrieved from https://www.dti.gov.ph/resources/statistics/gross-domestic-prod-uct-gdp 5Statista (2019): Share of Economic Sectors in the GDP in Indonesia. Retrieved from https://www.statista.com/statistics/319236/share-of-economic-sectors-in-the-gdp-in-indonesia/ 6DOLE (2019): Summary of current regional daily minimum wage rates.Retrieved from http://www.nwpc.dole.gov.ph/stats/summary-of-current-regional-dai-ly-minimum-wage-rates-by-region-non-agriculture-and-agriculture/
7World Bank (2019): Employment in agriculture. Retrieved from https://data.worldbank.org/indicator/SL.AGR.EMPL.ZS?most_recent_value_desc=true 8ASEAN secretariat (2018): ASEAN Key Figures. Retrieved from https://www.aseanstats.org/wp-content/uploads/2018/12/ASE-AN-Key-Figures-2018.pdf 9Statista (2019): GDP per capita in the Philippines. Retrieved from https://www.statista.com/statistics/578713/gross-domestic-prod-uct-gdp-per-capita-in-philippines/ 10Statista (2019): GDP per capita in Indonesia.Retrieved from https://www.statista.com/statistics/320149/gross-domestic-prod-uct-gdp-per-capita-in-indonesia/ 11World Bank (2019): New country classifications by income level: 2019-2020. Retrieved from http://blogs.worldbank.org/opendata/new-country-classifications-in-come-level-2019-2020 13Foreign Service Institute (2018): Does the Philippines Need the EU’s GSP+? Retrieved from http://www.fsi.gov.ph/does-the-philippines-need-the-eus-gsp/ 14Australian Government (2019): Indonesia-Australia Comprehensive Economic Partner-ship Agreement. Retrieved from https://dfat.gov.au/trade/agreements/not-yet-in-force/iacepa/pages/indonesia-australia-comprehensive-economic-partnership-agreement.aspx
Transforming Agriculture – develoPPP.de Opportunities in Indonesia and the Philippines
SUMMARY REPORT | Outlook22 SUMMARY REPORT | Outlook 23
EXECUTIVE SUMM
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OUTLO
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The economic integration through trade is an attractive development driver. However, in or-der to participate in sophisticated markets, ex-porters need to meet consumer expectations as well as strict requirements in various areas such as quality and safety. In case of the EU, this cov-ers technical standards as well as sanitary and phytosanitary measures.14 A recent study on European consumer expectations describes the following behavior: “Many people are becom-ing more aware of the impact of their consumer and eating habits on the environment, climate and animal welfare. Because it can no longer be denied: the climate crisis affects the production of food, while our diet is exacerbating this crisis. Sustainability also means less food waste, more ecological packaging solutions, and more circu-lar economy.”15
Countries most vulnerable to climate change such as Indonesia and the Philippines look at serious food security threats. With reference to a report from 2017 of the Food and Agriculture Organization of the UN (FAO), levels of anthro-pogenic emissions of greenhouse gases are now at an historic high since recent years. Agriculture is one of the biggest contributors to greenhouse gas emissions. 16 The report further concludes that “increases in the frequency and severity of extreme climate events, such as heat waves,
droughts, floods, tropical storms and wild fires”, will negatively impact agricultural production and cause food insecurity. 17
To keep up with the growing demand while fac-ing increasing quality and sustainability require-ments and at the same time providing meaning-ful income to farmers, a transformation of the agriculture sector is necessary. The FAO report highlights resource-use efficiency and gains in resource conservation as substantial success factors, as well as R&D and implementation of smart and sustainable production systems.18 The governments of Indonesia and the Philip-pines recognize the importance to improve land and labor productivity to ensure food security. Both countries have initiatives in place to pro-mote the strengthening of local staple food pro-duction and are eager on upgrading agricultural value chains.19, 20 In the Philippines, a new rice tariffication law was introduced with the aim to generate funds to ultimately modernize the rice production of the country.21 In Indonesia, the 2019 presidential campaign tackled economic inclusiveness through reforms in the agricultur-al sector.22
In the transformation of the agricultural sector, the Sustainable Certified Coconut Oil Produc-tion (SCNO) project proves that private compa-
nies play a vital role. Cargill, BASF and Procter & Gamble were spearheading the upgrade of their own value chain. This was not only an al-truistic urge. Growing consumer awareness for sustainability is a motivational force that drive a responsible business conduct. It creates a beautiful win-win effect for all stakeholders. For Cargill, SCNO meant creating economic self-suf-ficiency of small farm holders who are part of the company’s supply chain.
Transformation however, needs strong partners from the public sphere acting as multiplier and providing technical support. For this, develoPPP.de offers a meaningful vehicle for close cooper-ation between private and public sector. In the Sustainable Certified Coconut Oil Production (SCNO) project, develoPPP.de made the joint effort measurable, long-lasting and a practice to
communicate. The project efforts resulted in an upgraded supply chain that:
• is directed at the consumers’ demand
• improved productivity by 26%, this means an annual increase from 66 to 75 nuts per tree
• increased annual profit of certified farmers by 47%
• 4,000 smallholder coconut farmers signifi-cantly improved their living conditions
The agriculture sector faces complex challenges while providing attractive opportunities in both archipelagos. develoPPP.de offers businesses a tool to meet demands of modern cooperation for a future-oriented economy.
References14EU Commission (2019): Economic Growth: Competitiveness.
Retrieved from https://ec.europa.eu/europeaid/sectors/economic-growth/private-sec-tor-development/competitiveness_en15GDI (2019): European Food Trends Report - Hacking Food: Redefining What We Eat.
Retrieved from https://www.gdi.ch/sites/default/files/documents/2019-09/gdi_stud-ie_eftr_2019_e_summary.pdf 16FAO (2017): The future of food and agriculture – Trends and challenges.
Retrieved from p.40 http://www.fao.org/3/a-i6583e.pdf
17FAO (2017): The future of food and agriculture – Trends and challenges.
Retrieved from p.43 http://www.fao.org/3/a-i6583e.pdf18FAO (2017): The future of food and agriculture – Trends and challenges.
Retrieved from p.136 http://www.fao.org/3/a-i6583e.pdf19DFA (2016): 10 Point Economic Agenda
Retrieved from https://romepe.dfa.gov.ph/99-trade-and-investment-in-the-philip-pines/578-the-presidents-10-point-economic-agenda 20Indonesian Center for Agriculture Socio Economic and Policy Studies (2018): An overview of Indonesia’s agricultural policies in 2018. Retrieved from http://ap.fftc.agnet.org/ap_db.php?id=903 21Business World (2019): Understanding rice tariffication.
Retrieved from https://www.bworldonline.com/understanding-rice-tariffication/ 22The Jakarta Post (2019): Here are Jokowi-Ma'ruf's nine 'missions' for 2019's presidential poll.
Retrieved from https://www.thejakartapost.com/news/2018/12/04/here-are-jokowi-marufs-nine-missions-for-2019s-presidential-poll.html
SUMMARY REPORT | Imprint24
IMPRINT
EDITORIAL TEAMCharlotte BandelowSophia Ann JäkelYves Aguilos
DESIGN & LAYOUTElenee Ventura
PRODUCED AND DESIGNED BY
8/F Döhle Haus Manila | 30-38 Sen. Gil Puyat AvenueBarangay San Isidro | Makati City 1234 | Metro ManilaTelephone +63 (0) 2 8519 8110 | Fax +63 (0) 2 5310 3656Email: [email protected] | Website: philippinen.ahk.de
The German-Philippine Chamber of Commerce and Industry is part of the worldwide AHK network.
PUBLISHED BY
October 2019
CONTACTMatthias Radek
Chief Advisor for Partnership Projects in AgricultureDeutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
+63 2 8651 [email protected]
www.giz.de/philippines
Bank of Makati Building, Ayala Avenue ExtensionMakati City, Philippines
“ SCNO revolutionized the coconut sector in both the Philippines and Indonesia, spearhead-ing the establishment of sustainable coconut supply chain, the first farm to fork project of its kind in the industry. Impacts on farmer livelihoods far surpassed expectations with notable yield improvements and increased incomes. Farmers who participated in the pro-gram now run their farms as a business maximizing benefits for their families, communi-ties and the supply chain. Marie Lavialle-Piot
Global Sustainability Lead Tropical Oils Cargill
“ SCNO project is a truly entrepreneurial and out-of-the-box approach for the development towards certified sustainable coconut oil production. The joint project has proven, that certified sustainable coconut oil production is possible and improves smallholder farmer’s lives. We are proud of the achievements we have made together with our partners over the last few years. Ina Boos
Project Manager SCNOBASF
“ SCNO is an outstanding public-private-partnership project. It can serve as great example on how public and private efforts can create tangible benefits for smallholder farmers, at the same time supporting a market-oriented business model, which has sustainability at its core. The initiative demonstrates how impressive results can be achieved through a strong collaboration, enhancing farming systems, alleviating poverty and ultimately con-tributing towards the achievement of the UN Sustainable Development Goals.
Matthias Radek Chief Advisor Development Partnerships in Agriculture
GIZ Philippines
“ SCNO is a source of excitement for PCA. Learnings and experiences (e.g. good working re-lationship of private sector and farmer) drawn from SCNO will become part of a bigger endeavour. We will include these to regular programs specifically extension development of PCA. Roel Rosales
AdministratorPhilippine Coconut Authority
At P&G, environmental sustainability is embedded in how we do business. We understand that as a global company, we have a responsibility to make the world better – through the products we create, and positive impact our Brands can have in communities worldwide. Our SCNO partnership delivered the targeted improvement for the smallholder coconut farmers in our supply chain. We look forward to continuing our participation in this pro-gram with an expanded partnership of public and private organizations.
Kuan-Chun Lee Environmental Stewardship & Sustainability
Procter & Gamble
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