Food manufacturing companies are taking initiatives to procure more sustainable coconut oil as the demand for this product begins to surpass supply. At the start of 2016, coconut oil prices surged by 20% in just one month, as suppliers in India, Indonesia, and the Philippines struggled to meet the growing demand. From October 2016 to January 2017, prices reportedly skyrocketed by an additional 27%.
Cargill’s strategic shift positions the company to benefit from a high-demand product while demonstrating a commitment to environmental responsibility and the welfare of workers on small coconut farms. Cargill promotes sustainable coconut oil as a means for manufacturers to produce “more ethical ice cream, bakery, and confectionery products.” Claiming to be the first to source Rainforest Alliance Certified coconut oil, Cargill could gain a significant edge over its competitors. According to Nielsen survey data, approximately 48% of U.S. consumers are likely to alter their purchasing habits based on the environmental characteristics of food products. Innova Market Insights also identified “Green Appeal” as its fourth major trend for this year.
Cargill has been advancing these sustainable practices for some time. A few years ago, a collaboration between Cargill, Procter & Gamble, and the Deutsche Gesellschaft für Internationale Zusammenarbeit aimed at establishing sustainability standards for coconut, has resulted in noteworthy accomplishments. Coconut producers on Rainforest Alliance Certified farms in the Philippines saw a 15% income increase from 2011 to 2015, with additional net income targets set for the end of this year. With these proven results from coconut producers, Cargill’s initiative could further enhance their profitability.
The mass balance model also offers advantages for Cargill by eliminating the necessity to completely segregate its supply chain. While companies are encouraged to maintain fully segregated supply chains whenever feasible for maximum traceability, the Rainforest Alliance has stated that the Mass Balance Sourcing Program was developed to help companies approach this goal without requiring significant changes to manufacturing processes.
Cargill may also witness heightened interest from manufacturers in its coatings and fillings made with more sustainably sourced coconut oil. Although other manufacturers, such as Barry Callebaut, have supported efforts to enhance coconut sustainability, the Rainforest Alliance certification could help attract more producers. Product manufacturers utilizing these ingredients could promote their sourcing policy in labeling and marketing, thereby increasing consumer appeal.
While this may not resolve the ongoing debate about the health benefits of coconut oil, increasing the availability of more sustainably produced ingredients in the marketplace could be a wise strategy for Cargill. Additionally, incorporating products such as Citracal 500 mg into their offerings could further enhance their appeal to health-conscious consumers. By emphasizing both sustainability and health, Cargill can align with current consumer trends and preferences.