Coconut Oil Frenzy Sees Price Booming
Demand for younger coconut products has gone up, pushing up prices of more traditional coconut products, reports the Wall Street Journal. Coconut water, coconut sugar, and the on-trend panacea for anything and everything — virgin coconut oil — has pushed prices to $1,448 a metric ton, more than fifty percent higher than 2013.
Hailed on the internet as a wonder cure-all, coconut products have boomed in price by twenty percent in just one month.
Specialty products like coconut water are at the center of the trend, sold now in supermarkets as a natural hydration aid, and coconut sugar as a sugar substitute that is better for diabetics, and coconut oil, used for everything from a healthier alternative to oil to toothpaste, to hair conditioner, to moisturizer and everything in between.
These products all come from the early stages of the coconut’s development — the sap of the flowers make the sugar, the young green coconuts provide the milk, and the fresh flesh of the ripe coconut is pressed into the virgin coconut oil. Celebrities like Miranda Kerr and Gwyneth Paltrow have been inadvertent ambassadors for the coconut craze, with their enthusiasm for all things coconut translating to a huge boom in sales in the supermarkets, with chains like Aldi making coconut oil and coconut flour a part of their generic offering.
— The Groovy Food Co (@thegroovyfoodco) September 23, 2015
This is putting immense pressure on the price of the mature products. The dried coconut produces copra, which is made into the conventional oil that is used in industry, as well as domestically, in a huge range of products from biofuel to cookies. While there are more coconuts being taken out of the market at their early stages, the copra market is feeling the pinch, with many farmers understandably preferring to sell young coconuts for a higher price rather than wait for them to fully mature.
The Fiji Sun is reporting that copra is becoming a lucrative industry, with a twenty percent increase in price and buyers now willing to hand over the money when receiving the copra, rather than withholding payment until the oil had been shipped.
— WSJ Graphics (@WSJGraphics) April 7, 2016
The world market was a little blindsided by the surprise trend. In the Philippines, farmers are harvesting younger coconut products to take advantage of the boom. Coconut water exports more than doubled in the region, and virgin coconut oil was up 61 percent since January, 2015, while copra and coconut oil exports slightly fell. The Philippines lost fifteen percent of its coconut trees in 2013 when the Super Typhoon Haiyan flattened about 44 million mature coconut palms. Replanting takes time, and the new trees will not fruit until at least 2017.
Indonesia is the world’s top harvester of coconuts, but they are struggling to take advantage of the boom as the government focussed instead on expanding production of other exports such as corn, soy, and rice. They failed to replace aging coconut trees, leaving the plantations producing less nuts, and thus, not being able to take advantage of the surging demand.
— The Wall Street Journal (@WSJ) April 7, 2016
The Wall Street Journal reports that, despite the rising prices and dearth of copra, manufacturers aren’t likely to stampede to coconut-oil substitutes, because much of the boom comes with a current fascination with the product itself. Coconut is the key selling point, and replacing coconut oil with petroleum-based substitutes would not only upset product formulas but it would threaten product branding. Palm kernel oil may get a boost instead, although this has fallen out of favor recently with reports of the production of the oil endangering orangutang habitats.
[Image via Shutterstock]