Emerging Markets / December 20, 2016

Opportunities and Challenges in the Coconut Market

Coconuts are an extremely versatile and varied agricultural product that is found throughout the coastal regions of the tropical latitudes. Though originally an Asian crop from the Indian Ocean region, today the coconut palm tree grows in the Americas and Africa as well. For many years, coconuts flew under the radar within many markets, particularly those of foods and consumer goods. However, over the last ten years coconut based consumer goods, such as coconut water and oils, have become a business worth over US$2 billion worldwide. Nevertheless, this upcoming industry is not without challenges. Currently, coconut production is highly atomized in many regions of the world, meaning that most coconut farms are small and disconnected, which adds difficulties to the processing and distribution lines. Similarly, processing plants need to be diversified in order to take full advantage of the coconut as a whole, marketing everything from the meat and the water to the husk fibers and the shell. This article explores the status of coconut markets worldwide.

Opportunities and Challenges in the Coconut Market

The largest producers of coconuts worldwide are Indonesia with more than 18 million metric tons annually, the Philippines with more than 15 million, India with more than 11 million, and Brazil with almost 3 million metric tons annually. Nevertheless, other regions of the world are also key coconut producers, such as the Caribbean and Africa. However, as the aggregate demand for coconuts rises and investment into this industry increases, an unexpected threat looms over the palm trees. A dangerous plant illness known as lethal yellowing disease can reduce production and even kill an entire coconut tree plantation in a matter of weeks. This disease originated in the Caribbean region, but the planthopper insect that spread the illness has propagated to other regions where coconut production takes place, particularly Africa.

The lethal yellowing disease that affects coconut palm trees causes both the leaves and the nuts to turn yellow and fall until the tree eventually withers. The impact of the disease has been particularly stark in the coconut farms and palm tree plantations throughout the Caribbean, including island nations as well as the state of Florida, and Africa. However, coconut growers can take some steps to minimize the chances of their crops becoming infected and being lost. Some specific measures include the implementation of agroforestry practices and the avoidance of monoculture as well as regular maintenance of the farm operation. Plantations and farming operations that are devoted exclusively to coconut palm tree cultivation throughout a large expense of land are more likely to become infected. Meanwhile, operations that integrate a variety of crops and alternate between different types of plants maintain a more diverse ecosystem, which is less susceptible to the lethal yellowing disease. Similarly, if the disease were to attain palm trees in a farm that practices agroforestry the chances of containing and eradicating the illness before it spreads are substantially higher.

Finally, major companies and scientific institutions within the coconut palm tree industry should lead a concerted effort to research this phenomenon in order to better deal with the challenges that it presents. Currently, only minimal investments have been devoted to addressing the issue of palm tree illnesses and significant progress can be achieved if a modest amount of capital is devoted to this cause.

(Read more about Coconuts: A Versatile Niche Product)

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