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A future in coconuts?

By Lesley John, ACCA Caribbean Thursday, September 22 2016

Palm trees and coconuts are synonymous with the Caribbean. But despite the world’s familiarity with coconuts being found here, there’s a threat on the horizon to this emblematic plant.

The United Nations Food and Agriculture Organization (FAO) recently reported that the Caribbean is running out of them.

Across the Caribbean, the total number of coconut plantations has shrunk by about 17 per cent since 1994, according to the FAO. This isn’t great timing at all as demand for this unique fruit, nut and seed has skyrocketed across the globe. There has been an increase in popularity of coconut based drinks, food and beauty products that are continuing to attract an ever growing consumer base.

There have been many challenges to the Caribbean’s coconut production. From storms and droughts to the Lethal Yellowing disease spread by insects, entire farms have been wiped out. The search to find coconut varieties that are resistant to this disease and others is still on-going. On top of this, coconut growers have failed to invest in new trees, or fertilizers to improve their yields.

Twenty years ago the demand for coconuts was nothing like it is today. In fact, most health professionals warned against the derivable coconut oil for its effect on cholesterol, but this advice has since changed from negative to positive. Today coconut water is one of the most demanded derivable from the plant. The product itself has long been a popular and low-cost refreshment across the Caribbean with vendors from the beaches to the streets regularly cracking open coconuts with machetes for consumers to sip. Datamonitor Consumer’s latest research on the global coconut water market has uncovered that global coconut water consumption reached 3.9bn litres in 2015, with the US dominating the market share. According to the research, the global coconut water market demand in the UK is quickly catching up with the US, and the market for Japan has the potential to be worth almost $500m by 2019 as coconut water directly appeals to growing demands for wellness products.

It’s clear to see profitability of producing coconuts. Earlier this year small farmers, processors, researchers and technicians came together in Jamaica to discuss nursery and seedling management, varietal selection, hybridisation and tissue-culture production of coconuts. The forum was financed by the European Union (EU) implemented jointly by the Caribbean Agricultural Research and Development Institute and International Trade Centre with the aim to revive and create sustainable coconut production in nine CARIFORUM countries.

With demand growing worldwide, exporters are buying all the coconuts they can as their sale has increasingly become more lucrative. But domestic production is losing out as a result of the shortage. Grocery shelves have been filling up with thinned-out or even fake versions. Trinidad and Tobago’s Health Ministry in May confiscated bottles labelled as coconut water from stores as they contained only water and chemicals.

With better farming education and harvesting of coconuts, the Caribbean can cash in on its production better. But the Caribbean is still a relatively small player in coconut production.

No countries in the region are actually in the top 10 of the world’s coconut producers, of which the top three are Indonesia, the Philippines and India. Other countries have been stepping up their production to meet demand as farmers worldwide have increased the amount of land planted with coconuts by 14 per cent since 1994 according to the UN.

But there are downsides to producing what the world loves.

For example, many consumers in Bolivia, one of the biggest producers of quinoa were priced out when the protein-rich crop surged in popularity in the US.

The Caribbean must be careful of becoming too export driven as this is largely sensitive to external forces. Natural disasters, political turmoil and even terrorism threats are just a few things that can disrupt the supply chain.

The Caribbean’s coconut production is a part of global economy. Ramping up production depends on the reliability of that supply chain now and in the near future. An important point to note is that it is the land in the region itself that is increasing in value; the crops and livestock on it are, in investment terms, almost incidental.

Ultimately The Caribbean is not able to meet the growing global demand for coconut products, especially water - a situation not likely to be resolved any time soon. But accountants can assist in improving production as their influence can target investment in the areas that are needed to improve yields, such as water costs etc. With food security rising up the agenda, todays accountants are coming under pressure to develop specialised agricultural knowledge to help production efficiency. It’s certainly an interesting area of finance to influence and support.



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