Friday, September 23, 2022


(Cocos nucifera) in Malaysia are an important crop grown since long time ago. It is time for the local coconut industry to shine and having been overshadowed by oil palm for decades as claimed by industry observers. This is being driven by declining palm oil prices in long years ago and rising demand for coconut-derived products. But there are many challenges. For one, local coconuts cannot compete with imports in terms of price and scale. According to news reports earlier in this year 2020 in which the local coconut suppliers were calling for the government to regulate the import of coconuts. In their view whereby the influx of cheap coconuts from countries such as Indonesia and Thailand was currently hampering their businesses. The lack of competitiveness and perceived insufficient supply is due to many farmers choosing to plant the more lucrative oil palm instead of coconut trees. For me the coconuts are Malaysia’s fourth largest industrial crop behind oil palm, rubber and rice with most of the large plantations found in Sabah and Sarawak. According to a report by the Department of Agriculture Malaysia (DOA) that the country is among the top 10 coconut producers in the world although production fell between 2014 and 2016. Total acreage of coconut plantations had fallen from about 120,000ha in 2005 to 85,000ha recently. Meanwhile for the palm oil acreage and prices rose from 2006 to 2012 and recently from 2021 - 2022. Prices went on a general downward trend (except for a spike in 2017) due to oversupply and weak demand from top buying nations. From the report recently, prices were impacted by the EU’s decision to avoid palm oil due to concerns of forest clearing and environmental degradation directly linked to oil palm cultivation. This had serious consequences as the region was the world’s second largest importer of palm oil. The declining palm oil prices have caused smallholders to suffer a lot, especially those who only have 1ha to 2ha of land. This article in "Anim Agriculture Technology" I share hoe the potential of coconut product in the industry in Malaysia.

The local coconut industry has its fair share of players that is from the big listed companies and decades-old businesses to small and medium enterprises (SMEs) and even micro-businesses that sell coconut milk in wet markets. Linaco Sdn Bhd among big players ini producing coconut product located in Batu Pahat, Johore. This company processed more than 25 million local nuts and mostly are also imported from Indonesia. Their product are for domestic and export for more than 20 countries worldwide. They became interested in the business since they realised that the process of extracting coconut milk in wet markets was not very hygienic long time ago. They also found that there were ready solutions in the market to address this problem with modern mechanised equipment. The company as I visited many time come up with a custom-designed machine for the pasteurisation of coconut in which kills bacteria and eliminates contamination that can come from human hands. The traditional method requires a person to open a coconut than grate it using a machine and pack the grated coconut by hand an less hygienic.  The moment coconut goes into the machine for the milk to be extracted from the meat currently there is no human contact. It goes through pasteurisation and then it is chilled very quickly so the bacteria does not really multiply during that period. Nowadays those people in micro-business such as those who sell nasi lemak or cendol had to buy coconut milk from wet markets in the morning and store it throughout the day in which it risking spoilage. Fresh coconut milk is sensitive and once it is exposed or not stored well it will start to spoil four or five hours later. For cendol sellers whose business can be dependent on the weather and purchasing coconut milk ahead of time can lead to losses if they are unable to use it that day.

The Linaco factory that mechanises coconut milk production in Batu Pahat, Johor more than ten years ago. This innovation lengthens the storage time through pasteurisation as a method commonly used in many industries to sterilise food and extend shelf life. Recently they launched an app that enables their customers to order coconut milk on-the-go from 4am to 6pm, which will be delivered by a local rider. They serve a lot of small stalls, such as those that sell nasi lemak and cendol and also mamak restaurants. Cendol sellers find their product as handy because if it is a rainy day so that they can cancel their order. They do not have to bear the risk of wasting coconut milk. If they purchase it from the market in the morning and it rains in the afternoon, they cannot keep it overnight. Most of them do not even try to keep it refrigerated overnight because it will not be fresh. But when they deal with us, they find it very convenient because we deliver it whenever they need it. The stall operator just have to order three hours before Santan Product final delivery time. 

The market for coconut milk is huge. It is heavily used in delicacies in the Malay and Indian communities, Ling points out. Santanku does not see itself capturing the whole market either and since “some of them still prefer to buy coconut milk produced using the traditional method in wet markets”. Those sellers have their market and we have ours. We are targeting those who want convenience at no extra cost. According to the founders, they are the first in the market to offer an app-based delivery service. Now, the service is available in Kuala Lumpur, Selangor, Johor, Melaka and Penang. The app was their biggest success. It was not cheap to develop it but we took a risk and it is starting to pay off. Our aim is to cover the whole of Malaysia. If you have a restaurant anywhere in the country, as long as you need santan (coconut milk), we can reach out to you through the app. They hope that in six months, all their orders can be made via the app. Their customer base is huge at the moment and across Malaysia the company have about 1,500 customers. That is quite a large number considering that we have just started. The company will be expanding to Alor Setar in which every day, a fresh supply of coconut milk is delivered from its factory in Johor to all the other locations to be kept in cold storage. Company try to keep it as fresh as possible. But because of the way we produce the milk in which it can maintain its freshness for three to four days. Company have invested heavily in the technology to make sure our customers get a really good product. Santanku does not intend to compete with the big coconut manufacturers. Instead, Ling wants to focus on serving the micro, small and medium enterprises, particularly the stalls and mamak restaurants. The founders of the company are determined to provide a consistent supply of high-quality fresh coconut milk to these businesses at no extra cost. This means that regardless of the fluctuations in coconut prices in the market, the company will sell its products at the same price. Company target is to supply to the majority of people at no extra cost or lower if we can. But of course, we have our challenges too. Sometimes, we may have a season when the local coconuts are too expensive that company have to look for coconuts elsewhere. They also need to control the cost of raw materials to ensure that the price of the end product stays the same and the quality is not compromised, he adds. If everything can be sourced in Malaysia, why not? Company aim is to help local people and if the government has a big push for the coconut industry then company quite sure we will be able to see a big change in three to five years. With the government support coconut growers in adopting new technology in farming practices to bring costs down so that downstream players like him can source more coconuts from local farmers. Company also hopes that the government can educate those who have been producing coconut milk using traditional methods so they can improve the process. A lot of people still rely heavily on labour. This is where foreign labour is needed but when the government tightens its control of foreign labour the cause are  the cost will be passed on to the consumer. They need so much manpower because the technology and education are not there. Apart from fresh coconut milk many customers can buy kerisik and other coconut products via the app. Company are considering adding other products such as cili giling, upon requests from their customers. Company envisions being able to utilise this network to deliver local delicacies produced by micro-businesses throughout the country. Thanks...

M Anem,
(July 2022).

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