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Key Lessons To Introduce VCO Into The Domestic Pacific Island Countries Markets

April 2021

The Banaban (Rabi Island) Case Study

With shared economic benefits of a net worth of +$25.5M, small scale VCO operators have the opportunity to work together to meet market needs IMAGE: Femina

The challenge remains for small scale Virgin Coconut Oil (VCO) operators to ensure that quality production is maintained through its production processors for a quality VCO.

The Manager of the Pacific Island Farmers Organisation Network, Lavinia Kaumaitotoya says the success of the Banaban VCO has been consistent quality VCO that has helped them grow their market and overcome their “tyranny isolation”.

“Lessons learnt from the value chain mapping can be adopted to other small scale operators with probable assistance through the Coconut Industry Development for the Pacific program to conduct learning exchange with the Banaban VCO factory operations to arrive at the quality that the market will purchase.”

Lavinia Kaumaitotoya said another challenge to the small scale VCO operators is to scale up production to meet the domestic market requirement.

“It can be argued that this approach will be helping the Banaban VCO competitors however the overall objective is to collectively tap into the domestic retail market to displace imported vegetable oils currently being imported into Fiji which is a far larger market that Banaban VCO or other cottage industry VCO will only achieve if they worked together.”

“A tentative figure of 1,700 tonnes of VCO is needed if the market will capture 10% of current imported vegetable oil market per annum, this represents 1.7m liters of VCO requiring 107m coconuts for production.”

“At the time the overview study was conducted, the last Agriculture Census with a specific notation on coconut census in Fiji was unknown at the time and whether Fiji has the base to cover this production otherwise the opportunity exists for an extensive replanting program to achieve this target and more.”

Partnering of Small Scale VCO Operators and Formation of Farmer Organisations

With shared economic benefits of a net worth of +$25.5M, small scale VCO operators have the opportunity to work together to meet market needs.

“No one small scale VCO operator can achieve this alone, partnerships and sharing will need to be forged for the greater economic good of the domestic market in the Pacific Island Countries,” says Lavinia Kaumaitotoya, the Manager of the Pacific Island Farmers Organisation Network.

“The market is huge and there is a share of the pie for everyone; the challenge will be to work together and share key success factors with each other, exchange learnings with Banaban VCO to ensure quality is prominent, labelling and packaging materials, group negotiated rates for purchase of key ingredients, standard bottling that will withstand the handling and shelf life, collective promotional and advertising campaigns to buy, cook and eat local, and shared resources are some of the collective benefits to be gained from such a partnership.”

Lavinia Kaumaitotoya said the emphasis on quality cannot be compromised and that capacity building, exchange learnings, and promotional awareness will need to be invested into such an initiative.

“The impact to produce 1.7m liters for small scale VCO operators to achieve this is huge, but this is the real fact that Fiji and Pacific Island countries have 80% of their agriculture made up of small holder farmers who live in villagers and remote community islands.”

“Clustering and grouping them into Farmer organisations to organizing them to produce for this market will be logistically a huge task that can be achieved by breaking them down in their communities, provinces and sectors.”

The Manager of the Pacific Island Farmers Organisation Network, Lavinia Kaumaitotoya said the challenge in producing VCO will be consistency in its production levels while maintaining quality and cohesion in the market due to the way a large number of farmers small scale VCO operators currently operate.

“The tangible target to replace 10% of current imported vegetable oils of 1.7m litres of VCO, will be a big jump in local production, the last recorded national statistic for VCO is taken from Bureau of Statistics 2017 figures of 26.2 tonnes of exported VCO. Prior to that, 2016 recoreded an export figure of 4.3 tonnes of VCO therefore Fiji is capable of producing this figure domestically.”

“A private sector initiative to grow the sector is possible with partnerships, the provision of capacity building and exchange learnings, key learnings and success factor sharing, with focused targeting in partnership with retailers and all parties can be achieved to meet the production needs.”

“If this happens, then 10% is only the starting point, to increase and substitute this segment of imported vegetable oils, is worth the landed net worth of $20M.”

Championing Coconut Oil as a Domestic Cooking Oil

It is common throughout the Pacific Islands that coconut oil is generally regarded as an inferior cooking oil preferred instead to imported oils because of the stigma associated with the domestic home-made coconut oils largely used only for skin and health care.

Over the last decade VCO has transformed itself from a niche export product that today could readily command prices up to 5-times that of crude coconut oil on global markets to a commodity that secures a reasonable price premium, providing quality standards are met.

“The greater attention needs to be given to selling edible coconut oil on local markets but a combination of measures need to take place to achieve increased domestic sales.”

The Manager of the Pacific Island Farmers Organisation Network, Lavinia Kaumaitotoya said there needs to be more emphasis on domestic markets for edible coconut oil and that a significant reduction in the price of VCO is made available to the local market.

“In many Pacific Island countries, coconut oil generally has a prevailing “inferior” product image and a concerted effort needs to be made to reverse this image of VCO.”

“A reform of the local regulatory requirements for the sale of vegetable oils is also crucial, our overview market report found coconut to be superior in terms of health and nutritional considerations than mainstream cooking oil sold currently in supermarkets.”

“Coconut oils is a high lauric acid vegetable oil and in recent years the health value of lauric oils has been recognized  and promoted; the chemical composition of lauric acid is neutral in terms of cholesterol and it is now widely accepted that the consumption of coconut oil as a source of dietary fat does not pose any additional risks for coronary artery disease when consumed in realistic amounts and as part of a healthy diet.”

“VCO can be a good viable option as a domestic cooking oil given the many interventions needed to push it through, and as more consumers become aware of this, its taste, nutritional  and health benefits, more will use it domestically.”

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