AAK has been sourcing coconuts from India and Sri Lanka since the 1930s. Nowadays, Indonesia, the Philippines, and India are the three biggest coconut producers with 70 percent of the global production. We source our coconut oil from the Philippines, Indonesia and India.
Coconuts as raw material
Coconut trees are often found along the shorelines of the tropics since they can tolerate saline and sandy soils, while other plants do not thrive under these conditions. This not only means that coconuts form an important source of income growing on soil with limited fertility, but also that they take on a huge importance in protecting the sandy shorelines from erosion from the sea with their elaborate root system.
Coconut-growing countries in Asia-Pacific rely on the sale of coconut products as export income. The majority of coconuts are produced by smallholder farmers. Progressing on responsible sourcing of coconut oil.
Responsible sourcing of coconut oil
In 2018, AAK has identified coconut oil as one of the key raw materials for responsible sourcing together with shea and palm oil. For coconut oil the major risks in the supply chains still had to be identified and no industry-wide sustainability standard exists. Therefore, AAK has teamed up with Proforest to conduct a risk assessment for our coconut supply chains.
The main finding was that the traditional coconut supply chain is long and complex because the growing areas are far away from the mills that extract the oil from the dried coconuts (copra). Middlemen connect the farmers with the mills and deliver important logistical services. We have identified three main areas that need attention in the coconut supply chains.
Based on Proforest’s recommendations from the supply chain risk assessment we have developed a coconut supply chain risk mitigation plan. The plan will be tested on a pilot scale in 2019 and brought to full scale in 2020.
The traditional coconut supply chain
The traditional coconut supply chain is long and complex because the growing areas are far away from the mills that extract the oil from the dried coconuts (copra). Middlemen connect the farmers with the mills and deliver important logistical services.
As stated in our Policy for Responsible Sourcing of Vegetable Oils, in AAK, we actively include smallholders in our supply chains. In order to simplify the supply chain for the farmers and to ensure traceability we have started a direct sourcing project in Indonesia. Here our partner mill collects the copra directly from the village level, as a means to ensure that a bigger share of the value goes to the farmers. We will continue to work with this project in 2019 and develop it even further.