On 19th July, Grow Asia conducted a webinar to discuss learnings from the first comprehensive South East Asia study of the Palm and Coconut sugar sector. The report commissioned by Grow Asia and written by Ananda Partners matches the latest global market trends and data with an in-depth analysis of the value chains in Indonesia, The Philippines, and Cambodia.
Palm and Coconut Sugar have been produced and consumed in Southeast Asia for centuries. Until recently, cultivation has been small scale and the market highly localized. However, as the global economy grows and health concerns arise around cane sugar, coconut and palm sugar demand is growing across Asia and throughout the world. Unique growing production conditions that inhibit mechanization and scaled harvesting have kept palm and coconut sugar as a small holder farmer crop. The acceleration in global demand presents an opportunity for significant growth of the sector, and as a result, increased prosperity along the value chain, including the small holder farmers.
We caught up with webinar host Justin Stokes, Co-founder and Managing Partner of Ananda Partners and panellists Clement Jaloux, Procurement Manager, Supplier Development South East Asia at Unilever and Theo Smits, Founder and CTO of The Wild Bunch to understand the need for the study, economic opportunities and potential challenges in the sector.
Why is there a need for this study now?
Justin Stokes, Co-founder and Managing Partner of Ananda Partners: Palm and Coconut Sugar have been produced and consumed in Southeast Asia for centuries. Until recently, cultivation has been small scale and the market highly localized. However, as the global economy grows, and health concerns arise around cane sugar, coconut and palm sugar demand is growing across Asia and throughout the world. This presents a significant opportunity for smallholder farmers across Southeast Asia. Unique growing production conditions that inhibit mechanization and scaled harvesting have kept palm and coconut sugar as a small holder farmer crop. The acceleration in global demand presents an opportunity for significant growth of the sector, and as a result, increased prosperity along the value chain, including the small holder farmers. Grow Asia completed the first comprehensive Southeast Asia wide study of the Palm and Coconut sugar sector, matching the latest global market trends and data with an in-depth analysis of the value chains in Indonesia, The Philippines, and Cambodia including: plant varieties, production methodologies, distribution organizations, market channels and market trends. A comprehensive study such as this achieves a number of objectives for farmers and other market players across the industry including:
spotlighting the opportunities for industry growth to focus government and agriculture institution on supporting the sector
consolidating important baseline information for industry players and potential investors
identifying emerging best practices in production and processing
identifying binding constraints to growth of the sector in infrastructure, regulations, and market access
cross-fertilizing knowledge and practice across market
What do you see as the biggest economic opportunities for the coconut and palm sugar sector?
Clement Jaloux, Procurement Manager, Supplier Development South East Asia at Unilever: Whether it is for the food industry or for export retail markets, nowadays coconut and palm sugar offer interesting business opportunities. The global demand is increasingly looking for regular volume availability and consistent quality. To fulfill the market's long term demand, the coconut and palm sugar community need to tackle the several issues that are facing the supply chain stakeholders.
Technology and cooking process improvements should ease the hard work done by small holder farmers and their families. Financial and micro credit institutions may be able to support SME’s and farmer cooperatives that aim to scale their business. Coconut and palm sugar business requires important cash flow and financial capacities particularly during the first years. Governments and Cooperation agencies have a role to play in recognizing coconut and palm sugar as an alternative income for farmers and should support programs such as tree plantations, custom incentives to ease the trade and allocate budget to develop Public-Private Partnership for this crop.
Grow Asia being a multi-stakeholder partnership platform has a key role to play to support all coconut and palm sugar stakeholder to catch the business opportunities. Grow Asia is ingeniously starting to connect all stakeholders together to transparently support learnings and the sharing of experiences which in turn helps all of us to tackle the issues we are facing to achieve business growth.
What are potential challenges for improving the coconut and palm sugar sector and how can producers circumvent them?
Theo Smits, Founder and CTO of The Wild Bunch: Through my experience, stability of quality and delivery reliability are the two important issues. To improve quality is a big challenge, as it is important to know what makes the quality poor and it is crucial not to put the quality issues on places where it cannot be controlled. In certain situations, the farmers or producers don’t want to improve but are forced to do it.
Delivery reliability is not in the cultural mindset, but western companies work with producers to ensure that delivery is reliable and that stock is available, to prevent potential cash flow problems.
The producers live from day to day and will not wait on their money for prolonged periods of time, so cash flow management is important. Additionally, managing the legal issues in the country of production is necessary to keep in view. If you combine the legal situation with regulations of countries which import the sugar, this does not easily match, and additional regulations have to be taken care of.
Another challenge is the price of the sugar. We have to compete with affordable white sugar worldwide, which can be difficult.
The potential production of palm sugar is huge and could easily replace the world’s white sugar market, but because of the costly price, this may be a tall order. Finding effective ways of production should be the primary focus, while managing the welfare and income of local producers.
Grow Asia is interested in hearing from businesses with experience of developing palm and coconut sugar which would like support doing so. Please contact info@growasia.org to share your perspectives or any feedback on the South East Asia study of the Palm and Coconut sugar sector.