Coconut Handbook

UNLEASHING THE COCONUT POTENTIAL IN KENYA

ABBREVIATIONS ABD

Agricultural Business Development

ASL

Above Sea Level

ASPS

Agricultural Sector Program Support

BDS

Business Development Services

CBO

Community Based Organisations

CSR

Corporate Social Responsibility

DANIDA

Danish International Development Agency

FAO

Food and Agriculture Organization

FBO

Faith Based Organisations

GDP

Gross Domestic Product

ISO

International Organization for Standardization

KARI

Kenya Agricultural Research Institute

KCDA

Kenya Coconut Development Authority

KEBS

Kenya Bureau of Standards

KEPHIS

Kenya Plant Health Inspectorate Services

KIRDI

Kenya Industrial Research and Development Institute

KRA

Kenya Revenue Authority

KES

Kenya Shillings

NACADA

National Authority for Campaign against Alcohol and Drug Abuse

NGO

Non-governmental Organisation

ROSCA

Rotating Savings and Credit Association

SACCO

Savings and Credit Cooperative Society

VCO

Virgin Coconut Oil

Introduction The origins of the coconut palm scientifically known as Cocos nucifera can be traced to Malaysia, Indonesia, Thailand, Vietnam and Philippines. It has since spread to most tropical and subtropical areas through ocean currents and explorers and is currently found in over 50 countries mainly in Africa, America and Asia. In Kenya it is almost exclusively found in the coastal regions even though other regions are known to have varying potential for suitability of coconut farming.

The coconut palm (Cocos nucifera) is mostly found in the Kenyan coastal region due to the availability of its specific agro-climatic requirements and the adoption of subsistence agricultural practices that support coconut growing. However, it is highly adaptable to a variety of environments of up to 600m (ASL) but limited in terms of commercial orientation in Kenya. Climatic conditions are a crucial factor to be considered when establishing plantations in new regions that have previously not had coconut because its productivity is highly dependent on agro ecological and climatic conditions. The agronomic assessments conducted to identify other areas outside the coast that have potential to support coconut production were classified as moderately suitable and marginally suitable. The moderately suitable area is approximately 5,737.73 hectares and spans mainly from the Western Kenya regions of Butere Mumias, Bungoma, Kakamega, Kericho, Kisumu, Nandi, Suba and Vihiga while the marginally suitable area is approximately 157,636.446 hectares spread in various districts of the former Eastern, Central, Rift valley, Nyanza and Western provinces. These counties (Kwale, Mombasa, Kilifi, Taita Taveta, Tana River and Lamu) cover about 14% of the country‟s total landmass and host about 3.3 million people or 8% of the country‟s population (Gok, 2010). Two of these counties (Tana River and Lamu) are classified as arid and three as semi-arid. The primary policy challenge in coastal region is to ensure food and nutrition security in a sustainable manner in environments that are prone to drought, where people‟s access to and control over critical livelihood resources such as land is insecure, and where climate change increases unpredictability.

The total number of coconut trees in the country stands at 9,907,115 on a total land size of 436,634 acres ( 176,699 Ha) which represents just a quarter of the land potentially available for coconut growing. Kwale County holds the highest number of coconut trees with 4,714,157 trees followed closely by Kilifi County with 4,192,983 trees. Other counties barely account for a tenth of the total coconut tree population with 395 coconut trees are being planted on annual basis.

Coconut farmers in Kenya generally lag behind in husbandry and agronomic practices, adoption of new farming technologies and consequently production. The crop‟s potential is generally unexploited not necessarily due to lack of attention by the farmers but mostly as a result of limited support by the

agencies that ought to provide technical information on good agricultural practices especially at the production level. Poor yields are partly due to farmers‟ lack of technical know-how on crucial agronomic practices and limited adoption of technologies as demonstrated in this study. Coconut farming in Kenya is also faced by the challenges of less than adequate rainfall, insect pests and lack of clean quality seedlings.

The commercialization of coconut and coconut products has become important in Kenya due to the exceptional role this crop is expected to play in increasing the sociaeconomics of the livelihoods at the coastal region and other production areas. This role is in line with the country‟s Vision 2030 and the second Medium Term Plan (2013-2017) which includes the Agri-Business Development Programme. It is envisioned that the commercialization of coconut production and processing will contribute towards, job creation, especially for the youth and greater food security.

The subsector is mainly constrained by lack of a clear legal and institutional framework, very low national research priority, poor funding situation, uncoordinated market actors, absence of value addition, and general lack of prioritization. Currently Coconut contributes 1.5% of the agricultural GDP or 0.4% of the national GDP (KES 12.6 billion) and has the potential to contribute KES 25 billion annually

The coconut tree is recognized as an industrial crop in Kenya contributing over 1.5% of the agricultural GDP and 0.4% of the national GDP. The sub-sector is estimated to support over 100,194 farmers and provides income to many actors in the chain including seedling farmers, harvesters, de-huskers, wine tappers, traders, transporters and processors among others. Although coconut is not one of the priority value chains of Agricultural Sector Development Strategy (ASDS)

The coconut palm has multiple uses both as a cash and food crop noting that all parts of a coconut are commercially exploitable. In addition, it creates numerous employment opportunities across the value chain. The roots can be used for dye and medicinal purposes, the stem/trunk for timber used for fuel, construction and furniture. Coconut inflorescence is used to produce toddy which when fermented is used as an alcoholic drink. The fruit is used as food and is also processed into many products such as copra, copra oil, virgin coconut oil, desiccated coconut, coconut milk, coconut cream and many more.

Six interrelated coconut value chains that require different interventions at different stages. These are: 1) whole coconut; 2) desiccated coconut, coconut water and related products; 3) coconut by-products; 4) coconut oil; 5) coconut (palm) wine and related products; and 6) coconut wood and leaves value

chains.

The total number of coconut trees in the country stand at 9,907,115 (2013 coconut survey report). The trees are however concentrated in two counties. Kwale County has the highest population with 4,714,157 trees followed closely by Kilifi with 4,192,983 trees. Other counties barely account for a tenth of the total population.

The value chain approach involves a consideration of all players involved from product conception to consumption. According to Barnes, (2004) value chain is an alliance of enterprises collaborating vertically to achieve a more rewarding position in the market. As in any system, the sum of the parts is greater than the whole due to synergy. A value chain comprises of chain actors (involved in formation, transformation and distribution of the product) and service providers and supporters who facilitate the chain. Major value chain activities include input supply, production, transportation, processing and marketing as well as eventual consumption.

The coconut value chain is complicated by the multiplicity of product value chains involved. In the Kenyan case there is a general lack of industry statistics necessary for analysis. Despite being a key cash crop in the coastal region the coconut hardly features in national statistics. This report‟s approach considers generic agricultural value chain with broad categories of key players namely; input suppliers, farmers, processors, traders and chain facilitators.

Value of Coconut Products The coconut tree has many products both at the farm level and at the processing level. From the root to the leaves there is no part of a coconut tree which cannot be commercially exploited. The main products produced at the farm level include mature nuts, immature nuts, palm wine, coconut thatch, brooms and coco wood. Some by-products of the nuts namely fibre and husks are also commercially exploited by some farmers.

Some of the semi-processed products produced include desiccated coconut, copra, copra oil and coco timber. These are processed both by farmers and in established factories. These products can be further processed to yield other consumer products. As the South Seas proverb goes… “He who plants a coconut tree, plants food and drink, vessels and clothing, a habitation for himself and a heritage for his children” Fully processed coconut products in the Kenyan coconut industry include the following:

Virgin coconut oil (VCO), Coconut milk (cream and light), Bottled palm wine, Coconut vinegar, Brooms, Shell charcoal, Coco-wood Furniture, Makuti, Coco-peat, Coir fibre and ropes, Door mats, Body lotion and cream, Soap, Lamp shades and Artefacts.9

Desiccated coconut, coconut water and related products value chain This value chain consists of two key lines of products: fresh immature nut harvested for its tender coconut water, and fresh mature coconut for desiccated, coconut cream, milk, powder, flakes and other related products (Figure 6.4). All these are products are used as traditional fresh foods and drinks in the local market.

Current Situation The importance of tender coconut water has greatly increased and soon will surpass its normal traditional demand. The coconut water has lately, albeit at a slow rate, found its way into formal markets at the coast and has the potential to grow into a big soft drinks industry. The water is currently being served in big tourist hotels as well as in local pubs and along the streets. To-date approximately 23.7 million nuts are used for the production of tender coconut water up from 18 million nuts in 2008.

Currently the prices of immature (green and tender) coconut are much higher than the prices of fresh mature coconut. This difference is occasioned by the relatively higher farm costs of harvesting immature coconuts. Supply of the immature coconuts is limited due to the high demand. Further, the need for convenient drinking places and increased demand in urban centres and non-coconut growing counties is creating a local “niche” market for processed and packaged coconut water. However, since the tender coconut water is highly perishable, its quality quickly deteriorates with time. Thus there is need for investments in pasteurization5 and refrigeration as the market expands. At the moment no pasteurization of tender coconut water is being in the country. There is also no well packaged or refrigerated water for export.

Local production of the confectionery products has stagnated at about 9.2 tonnes annually. Kentaste, located in Kaloleni is one of the local processors of desiccated coconut, coconut milk, Coconut water flavour is very sensitive to heat, so ordinary pasteurization may not be applied without changing the quality. Cream and coconut shell powder. House of Manji, one of the largest confectionery factories in the country, uses coconut products in most of its products such as assorted delicious cream biscuits and chocolate coated biscuits. The company imports nearly 15 tonnes of desiccated coconut per month from Far East. These are used in its Nairobi

and Kampala plants.

Most of the processed products of this value chain are imported. For instance, the country in 2012 imported 85,100 kg of desiccated coconut against exports amounting to 9,177 kg. The volumes of imports and exports of coconut milk were 22,522 kg and 25 kg respectively (KCDA, 2013).

The current production of coconut water, flour, shredded, powder, milk, cream and desiccated coconut products from fresh coconut will be scaled up from small production to medium and large production. Most of the current home based processors, mainly dealing with simple coconut products such as coconut milk, coconut water, coconut charcoal, shells and coconut cream, and medium scale processors of products such as coconut milk, desiccated coconut, flour and powder will be capacitated to form small cottage industries by 2016. This industrial process will involve medium and large scale processing of these coconut products using highly hygienic methods that promote quality. To support processing of coconut water, milk, coconut charcoal, shells and coconut cream, desiccated coconut, flour, powder, etc., production of nuts will have to increase by a higher rate than that of producing processed products. The expected increase in processed coconut will eventually create higher producer prices which will in turn acts as an incentive for increased coconut production.

Table 6.2: Quantities (Kg) of Processed Products Expected to be Produced (2014-2018)

Coconut

processed

products

2014

2015

2016

2017

2018

1,617

2,021

4,042

6,063

8,084

539

673

1,347

2,020

2,693

4,510

5,638

11,276

16,914

22,552

1,741

2,176

4,352

6,527

8,703

17,020

21,275

42,550

63,825

85,100

6,688

8,360

16,721

25,081

33,441

Coconut cream

Coconut cream powder

Coconut milk

Coconut milk powder

Desiccated coconut

Nata-de-coco

Source: Own Estimation Figures of 2018 are the current import volumes (see KCDA, 2013) Processing Processing of coconut milk, coconut water, coconut charcoal, shells, coconut cream, coconut milk, desiccated coconut, flour and powder will be scaled up to produce amounts indicated in Table 6.2. Coconut de-huskers, de-shelling and sterilizers, dryers, coolers, boilers, grading and packaging machines, etc. have to be accessed by processors. As most of these machineries have to be imported, public-private partnerships will be crucial in capacitating the processors.

Marketing channels and distribution Local, regional and export markets will be targeted for the sale of these products. Local markets will include those at the Coast region, Rift valley, Eastern, Western, Nairobi and North Eastern regions. Te expand the markets, export trade shows of these coconut products will be held in important trading blocks such as USA and Canada, European Union and Sub-Saharan Africa, among others. Market surveys will be done to provide market information on emerging markets. Sellers and consumers will be informed on the availability of the products through market promotion campaigns.

Value chain enablement Research on the nutritional contents and other aspects of the processed products will be done in order to advise consumers accordingly. Higher yielding coconut varieties will also be introduced to farmers in order to sustain increased production of processed milk, powder cream and other products. Educational workshops to create awareness on nutritional value of processed products and availability of the same in the market will be done. Standards of these coconut products will be developed and awareness created among consumers and retailers in local, regional and international markets.

Value chain support Credit services will be provided to ensure that actors have adequate funds to exploit coconut potential. Other support services will include training of actors on production skills, processing and packaging of the processed coconut products. These services will be availed to farmers by KCDA among other institutions.

4.2.3 Mature Nuts Production of mature nuts is done nearly by all farmers except those whose trees are yet to start production. The mature nuts have both domestic and industrial uses. At the domestic level they are a key ingredient in preparation of various dishes whereby the inner flesh is utilised. At industrial level

various products can be generated both from the flesh as well as the shell and the husks. During 2012 it is estimated that a total of 246,416,329 pieces of mature coconuts were produced

There is a need for farmers to be mobilised into associations or cooperatives to ensure they sell directly to processors thus bypassing the traders and middlemen. This would improve their bargaining capacity resulting in higher prices. It should be noted that the percentage consumed at farm level may also include semi-processing. The sales to consumers include direct sales at farm gate and also taking to market.

In assessing the products it is important to look at an often neglected aspect of the value chain which is the supply of inputs. The main input in coconut farming is seedlings. In the past, farmers had a lot of challenges in accessing seedlings. Consequently KCDA initiated a project to supply quality seedlings to farmers during the 2011/2012 season. This resulted in production of 251,798 with a market value of 12,589,900 based on an average value of KES 50 per seedling. However the nursery operators under the project were compensated at a rate of KES 30 per seedlings. On average, research indicated that a total of 325,395 trees are being planted on annual basis. This would translate to a value of KES 16,269,730 at an average of KES 50 per seedling. However some of the seedlings planted are not transplanted due to lack of market.

Kwale County accounted for 45.26% of the total production while Kilifi County accounted for 47.5%. On its part, Mombasa accounted for 2.82% while Lamu accounted for 2.79%. On the other hand Taita Taveta accounted for 1.16% whereas Tana River accounted for 0.46% of the total output.

Despite Kilifi having more trees in the productive age bracket it contributes nearly the same as Kwale County. This can be explained by wine tapping which is more prevalent in Kilifi than in Kwale. Most of the tapped trees do not yield nuts.

Marketing Channels for Mature Nuts Out of the total nuts produced 10.13% were consumed at the farm level, 60.9% were sold to traders, 23.22% were sold directly to consumers while 4.96% were sold to processors. A paltry 0.79% was sold through cooperatives.

There is a need for farmers to be mobilised into associations or cooperatives to ensure they sell directly to processors thus bypassing the traders and middlemen. This would improve their bargaining capacity resulting in higher prices. It should be noted that the percentage consumed at farm level may also

include semi-processing. The sales to consumers include direct sales at farm gate and also taking to market.

c) Estimated Value of Mature Nuts Produced in 2012 The estimated value of mature nuts produced stands at KES 2.7 billion. Kwale County contributed 45.6% of this value followed by Kilifi at 43.5%. Mombasa County accounted for 5.1% while Lamu accounted for 3.8%. Taita Taveta and Tana River counties accounted for 1.5% and 0.5% respectively.

There is significant disparity in price across counties. There is also a wide price range from a low of KES 3 to a high of KES 30. There is need for farmers to be assisted with market information on the value of produce to protect them from exploitation. The high price reported in Mombasa may however be attributed to proximity to a ready and large market in Mombasa town. Low price in areas of high supply and high price in areas of low supply point to a need for deepening inter-county trade.

a) Estimated Volume of Immature/Tender Nuts Produced in 2012

4.2.4 Immature/Tender Nuts

Tender coconut (7 to 8 months old maturity) is valued both for its sweet water, which is a refreshing drink and the delicious gelatinous meat (kernel), (Haseena, Bai and Padmanabhan, 2010). According to India Coconut Board tender coconut water is “the most nutritious wholesome beverage that nature has provided for the people of the tropics to fight the sultry heat.”11

In Kenya tender nuts commonly known as madafu are consumed mainly by the roadside where vendors have stalls/stands, hawking where vendors approach buyers mostly in vehicles and in tourist hotels where they are used as welcoming drink. The madafu are hardly sold in formal channels such as restaurants.

These marketing patterns are driven by two factors. First the tender coconuts are highly perishable with quality deteriorating within 24-36 hours of harvesting. According to Haseena, Bai and

Padmanabhan, (2010) it is seen that tender coconut cannot be stored for more than one week at room temperature due to shrinkage and discoloration of skin, fall of perianth and fungal attack on the soft perianth region.

The second factor influencing marketing of tender nuts is that they are bulky as they still contain husks which limit their transportation. Nonetheless processing technology exists to increase the shelf life of the product. The application of such technologies in Kenya is largely non-existent. Consumption is limited to the Coastal areas and in parts of Nairobi mainly inhabited by Kenyans of Asian descent mainly Westlands, Parklands and Ngara.

a) Estimated Volume of Immature/Tender Nuts Produced in 2012 It estimated that 24,775,202 pieces of immature coconuts were produced. These are distributed as follows:

Kwale county accounts for 55.27% of the total volume of tender coconuts produced. Kilifi County accounts for 26.55%, Mombasa follows with a contribution of 10.86% whereas Lamu contributes 5.01%. Tana River contributes 2.2% while Taita Taveta accounts for a paltry 0.1%. The interesting point is that Mombasa accounts for 11% whereas it only accounts for 3% when it comes to production of mature nuts. This can be attributed to large and easily accessible market in Mombasa town. This makes transportation easy in view of bulkiness as well as making consumption fast in view of perishability. The low contribution of Kilifi County while compared to Kwale can once again be attributed to wine tapping which is more common in Kilifi.

b) Marketing Channels of Immature Nuts The major outlet for immature nuts is through sales to traders who account for 45.22%. Residents‟ own consumption accounts for 25.82% while direct sales to consumers account for 28.66%.

The large percentage of sales to consumers and own consumption can be linked to earlier discussed issues of perishability and bulkiness. No sales to processors or cooperatives were recorded. This can be explained by the lack of value addition when it comes to processing and the high level of informality when it comes to trading of immature nuts.

c) Estimated Value of Immature Nuts Produced in 2012 The estimated value of immature nuts is KES 260,971,955. Kwale County accounted for 47.22% of this value while 30.25% is accounted for by Kilifi County. Mombasa County on the other hand accounts for

15.47% while Lamu accounts for 5.7% of the total value of tender nuts produced. At the tail end are Tana River and Taita Taveta accounting for only 1.25% and 0.1% respectively.

County

Pieces Produced

Average (KES)

Price

Value (KES)

Percent Contribution to Total Value

Kwale

13,693,355

9

123,240,195

47.22%

Kilifi

6,578,782

12

78,945,384

30.25%

Mombasa

2,691,404

15

40,371,060

15.47%

Lamu

1,240,351

12

14,884,212

5.70%

545,499

6

3,272,994

1.25%

25,811

10

258,110

0.10%

Tana River Taita Taveta Total

4,775,202

10.67

260,971,955

100.00%

With the average price of mature nuts at KES 13.7 and that of immature nuts at KES 10.67 the only advantage to the farmers in selling immature nuts is that they do not have to wait for the coconuts to fully mature. Prices are lowest in Tana River due to lack of established immature nuts trade. In Mombasa the prices are high due to proximity to a ready market. The overall price range is a low of KES 5 and a high of KES 30.

4.2.5 Palm Wine/Toddy Coconut Toddy/Sap Coconut toddy or sap is the sweet, oyster white and translucent liquid oozing from the unopened coconut inflorescence when cut. When sweet toddy or fresh sap undergoes spontaneous fermentation it produces a common alcoholic drink called `fermented toddy'. The toddy becomes stale when the fermentation exceeds 24 hours. Normally, the toddy is consumed within 12 hours after the sap is collected. The nutritional value of toddy for thiamine and riboflavin resides mainly in the yeast-free fluid portion. Toddy also contains small amounts of protein, fat and other nutrients. Fermented toddy, on distillation, yields a strong alcoholic drink known as Mnazi. The range of recovery is 15-18 per cent of the original toddy. Normally, sweet toddy is allowed to undergo fermentation in loosely covered wooden or plastic container for 3-5 days before it is distilled. The coconut sap is a natural sweetener obtained by concentrating fresh coconut sap to a thick consistency through careful boiling in open containers or vessels where it is allowed to cool and form

sugar crystals.

This is an alcoholic drink made by the fermentation of the sap from a coconut palm. It is white and sweet with a characteristic flavour. It is between 4 and 6% alcohol and has a shelf life of about 24 hours. Toddy is harvested by cutting off a slice of tissue from the tip of the spathe (the newly emerged but not yet open sheath of the flower).The sap (or toddy) provides drink (sweet and rich in vitamins when fresh; alcoholic after fermentation) and sugar, (Foale, 2003).

Normally, the toddy is consumed within 12 hours after the sap is collected. The nutritional value of toddy thiamine and riboflavin reside mainly in the yeast-free fluid portion. Toddy also contains small amounts of protein, fat and other nutrients, (Gachanja, Musinga, Ngigi, Onyango and Bett, 2010).

In Kenya coconut wine is mainly consumed at the coast in drinking bars locally known as mangwes. Consumption is limited outside the Coast due to the short shelf life. Some limited processing and packaging is being done thus enabling it to be sold beyond the coastal region.

a) Estimated Volume of Palm Wine Produced in 2012 It is estimated that a total of 153,311,377 litres of palm wine were produced in 2012. This is shown in the figure below;

Sources: Coconut Survey 2013

The leading county in production of palm wine is Kilifi contributing 76% to total production. It is followed by Kwale County contributing 20%. Taita Taveta accounts for 2.7%, Mombasa accounts for 1.27% while Lamu and Tana River account for 0.37% and 0.11% respectively. Counties inhabited largely by Muslims produce less due to religious beliefs which prohibit alcohol consumption. This explains why despite Kwale and Kilifi having nearly the same number of trees Kilifi produces more than thrice what Kwale produces. b) Marketing Channels for Palm Wine

Findings indicate that 82.6% of the wine is sold through traders. Out of the balance 13.73 % is sold

directly to consumers, 3.05% to processors and 0.62% is consumed at the farm level.

This is one product whereby the market is dominated by one channel which points to poor market development. There is need to develop the market by diversifying the channel through value addition. Packaging and prolonging the shelf-life should be immediate priorities. Distillation of the palm wine to produce other high value alcoholic drinks should be promoted. Direct sales to consumers may point to unlicensed operations.

c) Estimated Value of Palm Wine Produced in 2012 The estimated value of the palm wine is KES 7.2 billion. Kilifi County earns most of this money accounting for 72.2% of the entire value. Kwale County follows with 23.08% while Taita Taveta accounts for 2.64% and Mombasa 1.54%. Lamu and Tana River contribute little to the value accounting for 0.44% and 0.10% respectively.

Despite the high average price it should be noted that high price disparities were noted. A high of KES. 100 per litre and a low of KES. 10 per litre were recorded. There is need to provide market information for farmers on the prices of the produce.

It should be further noted that nearly half of the amount does not accrue to farmers as it is paid to the wine tappers at an average of KES. 22 per litre. Considering the high percentage which is sold, wine is the most commercialised of all the coconut products.

4.2.6 Cocowood/Coconut Wood

The coconut tree trunk is a source of high quality hardwood which is used for construction, furniture making and production of artifacts. According to research done on Kenyan coconut wood, the characteristics and properties obtained were comparable with those from other parts of the world. The density ranges from low to heavy density 0.248 – 0.852gcm-3. The bending strength, bending stiffness and crushing strength also range from very weak to very strong due to the density variation (Oduor and Githiomi, 2010). Thus coconut wood can be a good substitute for more common

hardwoods hence aiding in conservation.

The wood is used in making premium quality furniture. However not many are aware of the coconut wood and its characteristics. Thus market awareness is necessary to ensure customers‟ willingness to pay the premium rates.

a) Volume of Cocowood Produced and Contribution to Production by Counties Findings indicate that a total of 168,224 were cut in 2012. The distribution by counties is as shown below. These findings further show that Kwale County was the leading producer of Cocowood accounting for 57.6%. It was followed by Kilifi County which accounted for 31.01%, Mombasa at 5.46% and Lamu at 4.67%. Tana River and Taita Taveta counties made minimal contribution at 0.47% and 0.79% respectively.

These findings may create an alarming impression that massive felling of coconut trees is going on in Kwale when compared to Kilifi as both have nearly the same number of trees. This can however be explained by the findings on age of trees which show that Kwale is leading in no. of trees aged 61 and above which are 1,291,728 compared to Kilifi with 454,578 such trees. It is at this age that the trees become senile and underproductive.

b) Marketing Channels for Cocowood The marketing dynamics indicate interesting results which point to low commercial exploitation of the coconut wood. According to Oduor and Githiomi (2010), efforts to promote the use of Cocowood in Kenya started in early 2003 in an attempt at searching for alternative wood species which could be used in the wood carving sub-sector. Findings indicate that majority of the wood cut is sold to consumers i.e. 44.25% which is followed closely by 43.81% which is utilized by the farmers. The remaining 11.94% is sold to traders. This is shown in the figure below;

These findings reveal low commercial utilization. There is need to step-up the effort to promote the commercial utilization to ensure farmers get value for the trees. Oduor and Githiomi (2010) highlighted various challenges which may explain this situation. These include; i.

Selection of the senile coconut tree, splitting/sawing and grading for specific use not yet fully understood by most players in the Kenyan market,

ii.

High cost of seasoning (Kiln technology) and other operations on coconut wood

iii.

Lack of know-how in coconut wood finishing and preservation technology

iv.

Inadequate market acceptance of coconut wood products at “premium” prices

v.

Low level of coconut tree replenishment in the country for sustainable harvesting and utilization of the resource.

c) Estimated Value of Cocowood Produced in 2012 The Cocowood harvested in 2012 is valued at KES 188,670,295. As expected, Kwale contributes the bulk of this accounting for 62.04% followed by Kilifi at 27.1% while Mombasa and Lamu each contribute 4.87%. Taita Taveta contributes 0.71% while Tana River contributes 0.42%. 4.2.7 Makuti/ Coconut Thatch Table 15: Estimated Value Cocowood Produced in 2012 Makuti are pieces of roofing material made from coconut leaves. It is a very eco friendly or “green” building material as it is made from leaves that are naturally wilting on the palm tree and therefore harvesting does not affect the parent plant in any way. The individual pieces (or tiles) have to be weaved first, (“Makuti”, 2013).

The Makuti are valued for aesthetic value and their ability to stay cool under the hot coastal weather. The demand and value of Makuti has risen rapidly over the last ten years. Long held as a cheap alternative to the expensive roofing materials, palm branches commonly referred to as makuti are fast rising as a symbol of prestige and cultural attraction in coast hotels, a phenomenon that has seen their prices on an unprecedented upward trajectory for the last decade with even five star hotels and villas spending millions in makuti roofing, (Muinde, 2013). There is already enough demand for the products of this value chain in the coastal region. However, in efforts to expand sales, new and emerging markets in hot areas outside the Coast region will explored for the sale of „makuti‟. These areas include counties in Eastern, Nyanza, North Eastern and Rift Valley provinces that experience hot weather conditions.

This rise in demand though positive has resulted in some undesirable activities. Some farmers now harvest the leaves and dry them under the sun instead of waiting for them to fall off the trees. This might affect the trees if not properly handled. It also results in poor quality. The cutting down of senile coconut trees (cocowood) and harvesting of leaves (makuti) is expected to increase annually by 5%. The cutting down of aged coconut trees will be done sustainably, through a replacement program that emphasizes on replanting new coconuts once the old ones have been harvested. Farmers will be educated on responsible cutting down of coconut trees and the best harvesting methods.

a) Volume of Makuti Produced and Contribution to Production by Counties It is estimated that a total of 131,926,990 pieces of Makuti were produced in 2012

Sources: Coconut Survey 2013

Figure 22: Graph of Estimated Production of Makuti in 2012 Kilifi County led in production accounting for a whopping 69.74% of the total production. It was followed by Kwale County which contributed 23.59%. Lamu on its part contributed 4.84% whereas Mombasa settled for 1.03%. Tana River County contributed the least with 0.8% whereas Taita Taveta had nothing to offer. This is shown in the figure below;

b) Marketing Channels for Makuti Out of the entire production 6.89% was consumed by the farmers, 38.33% was sold directly to final consumers whereas 53.38% was sold to traders. The remaining 1.4% was sold through cooperatives. This is shown in the figure below;

Sources: Coconut Survey 2013

Figure 24: Chart of Marketing Channels for Makuti

c) Estimated Value of Makuti Produced in 2012 The value of the Makuti produced is estimated at KES 1.7 billion. As expected, Kilifi contributed a large share of this value at 68.52% followed a distant second by Kwale which weighed in with 23.18%. Lamu was third with a contribution of 6.95% while Mombasa contributed 0.93%, Tana River 0.43% whereas Taita Taveta contributed nothing.

4.2.8 Brooms

Coconut brooms are made from the leaves of a coconut tree. They are said to be easy to use and have a long functional life. Many types of brooms can be made from the coconut leaves. One can make brooms with a stick and others without for instance.

a) Volume of Brooms Produced and Contribution to Production by Counties It is estimated that a total of 5,800,179 brooms were made in 2012.

Sources: Coconut Survey 2013

One interesting point is that Gachanja, Odhiambo and Musila, (2007) reported the production of brooms at 8,760,254 pieces while our findings reflect 5,800,179 pieces. The likely explanation is that Makuti being also a product of coconut leaves are offering stiff competition to brooms. Both the demand and value of Makuti is rising rapidly.

This view is also supported by the finding that while in 2006 Kilifi and Kwale produced nearly the same volume of Makuti, Kilifi is now leading by a large margin. On the contrary Kilifi now trails Kwale when it comes to production of the brooms.

Findings indicate that Kwale County contributed most to production of brooms with a share of 53.12%. It was followed closely by Kilifi with 39.91%. Lamu weighed in a distant third 3.5% whereas Mombasa drew in 3.48%. Tana River and Taita Taveta counties didn‟t register any contribution. This is shown in the figure below;

b) Marketing Channels for Brooms There are three outlets for the produced brooms. Out of the total production 12.29 was consumed by the producers, 39.4% was sold to traders whereas 48.31% was sold directly to consumers.

Figure 27: Chart of Marketing Channels for Brooms

The high percentage of brooms sold directly to consumers point to market inefficiency. There is need to progressing through the formal channel where it is possible to stimulate more demand and get higher value.

c) Estimated Value of Brooms Produced in 2012

The estimated value of brooms produced stands at KES 119, 640, 071. Kilifi leads in contribution to this valu Kwale follows closely with a share of 43.78%. Lamu and Mombasa account for the balance at 3.39% and 2.53% Sources: Coconut Survey 2013

It is interesting to note that Kilifi accounts for a higher percentage than Kwale despite Kwale leading in the volu higher prices were realised in Kilifi compared to Kwale.

4.2.9 Husks and Fibre

Most farmers are ignorant of the value addition capacity of the coconut husk. During the year 2011 the count worth KES 94.7M for use mainly in the horticulture sector. This is product made from coconut husks. Only 7%

the husks. It should however be noted that some coconuts are exported with the husks on. Regarding value additio farmers indicated producing fibre.

The coconut husk produces fibre which is used for making ropes, door mats and rugs. It also yields coco peat wh

especially in horticulture. The shell produces charcoal, handicrafts and activated carbon. The leaves are used fo brooms.

4.2.10 Processed Products

The processing aspect of the industry is highly fragmented, small in scale and abnormally informal when compa

sectors. This is complicated further by the many number of products which can be made from the coconut tre

valuation of processed products difficult. In addition there are no statistics of volume of raw materials taken in a products. KCDA should therefore prioritise and expedite the process of collecting monthly raw materials intake all licensed processors.

Some of the processors have closed shop albeit temporarily e.g. Mutpet, Deepan Manufacturers Ltd, Kokocept

Help Group. Some of the reasons given for closure include unavailability and high cost of raw materials. Some o order. The following tables the processors of some nut product and their capacity.

Coco Peat This is 'coir pith' or 'coir dust' is produced as a by-product when coconut husks are processed for the extraction of long fibre. Coco peat is the binding material that comes from the fibre fraction of the coconut husk. Coco peat is a good form of material when used in seed raising and propagation mix. It is proven that coco peat is a better media for growing commercial vegetable and flower seedlings compared to peat moss. For instance, Kenya‟s coco peat carries water eight times its weight, thus making it ideal as a growing medium. This guarantees a greater advantage over peat moss.

4.3 Summary of Products and Value

Below is a summary of estimated volume and value of coconut products produced in 2012.

Product

Units

Volume

Wine

Litres

153,311,377

7,236,523,322

59.0%

Mature nuts

Pieces

246,416,329

2,693,340,495

22.0%

Makuti

Pieces

131,926,990

1,745,615,617

14.2%

Immature nuts

Pieces

24,775,202

260,971,955

2.1%

Tree trunks

No. of Trees

168,224

188,670,295

1.5%

Brooms

Pieces

5,800,179

119,640,071

1.0%

Seedlings

No. Seedlings

325,395

16,269,730

0.1%

12,261,031,484

100.0%

of

Total

Value m(KES)

Percent Contribution

Source: 2013 Coconut Survey Table 21: Estimated Volume and Value of Coconut Products Produced in 2012

Palm wine continues to provide a huge proportion of the sub-sector earning. There is need to increase value addition of palm wine to ensure more gains are realised. Tender Coconut Water This is the liquid endosperm which occupies the large volume of space enclosed by the kernel inside the fresh coconut fruit. Coconut water is a natural, fat-free, low calorie and nutritious thirst quencher and energy drink packaged by nature itself. With very low total solid content, coconut water is a very nutritious fluid which contains sugar, protein, vitamins and micro-minerals needed by the human body. It is a good source of electrolytes such as potassium, sodium, magnesium, calcium and chloride and it rehydrates the body and is a natural isotonic beverage because of its balanced electrolyte content. It is claimed to be a natural contender in the sports drink market with its delicate aroma, taste, nutritional and functional characteristics required in a sports drink. Water from tender young coconut (7 – 9 month old) has been medically proven to dissolve kidney stones. By modifying its electrolyte content, it was been successfully used in oral rehydration and treatment of diarrhea in young children.

Confectionery Product The fresh coconut harvested for the flesh and milk is used to make the coconut cream, the flakes, powder, and desiccates. These components are largely ingredients for the baking industry in Kenya. KASHATAS, CAKES, ICE CREAM FLAVOURED ETC

Copra Copra is the dried coconut kernel. The name copra is derived from the Malayan word Kopra for dried coconut. Copra and the oil it contains are the principal products of the coconut tree. For years copra has been the primary product common to all coconut growing countries of the world. Copra making prevents the spoilage of fresh coconut meat by reducing its moisture content to a level safe for transport or storage. It is produced by drying split coconut kernels in shell (husked or un-husked) in the sun, in kiln dryers or a combination of both. The kernel is removed from the shell when it is partially dried or at the end of the drying operation. CHICKEN FEED

Virgin Coconut Oil This is the purest form of coconut oil that is water white in colour and contains natural Vitamin E and has very low peroxide value and low free fatty acid content. Virgin coconut oil is suitable for human consumption in its natural state immediately after extraction and filtration. Normally it solidifies at temperatures of 22 degrees centigrade and below, and liquidifies at temperatures of 27 degrees centigrade and above. This oil is obtained from the fresh and mature kernel of coconut by mechanical or natural means with or without the application of heat which does not lead to alteration of the oil and its properties. It is reputed as "mother of all oils" due to its many important uses.

Coir Fibre DOORMATS Coir fibres are found between the husk and the outer shell of a coconut. The individual fibre cells are narrow and hollow, with thick walls made of cellulose. They are pale when immature but later become hardened and yellowed as a layer of lignin is deposited on their walls. There are two varieties of coir. Brown coir is harvested from fully ripened coconuts. It is thick, strong and has high abrasion resistance. It is typically used in mats, brushes and sacking. Mature brown coir fibres contain more lignin and less cellulose than fibres such as flax and cotton and so are stronger but less flexible. They are made up of small threads, each about 1 mm long and 10 to 20 micrometres in diameter. White coir fibres are harvested from the coconuts before they are ripe. These fibres are white or light brown in colour and are smoother and finer but also weaker. They are generally spun to make yarn that is used in mats or rope. The coir fibre is relatively water-proof and is one of the few natural fibres resistant to damage by salt water.

4.4 Current Economic Value of the Coconut Sub-Sector The coconut industry contributes to the economy in diverse ways that include contribution to the GDP, employment and livelihoods, mitigation of forex losses, and to the hospitality industry as discussed hereunder.

4.4.1 Contribution to GDP According to World Bank country statistics, Kenyan GDP in 2012 stood at KES 3.4 trillion while agriculture GDP stood at KES 809.4 billion. It can thus be concluded that the coconut sub-sector contributed 1.5% of the agricultural GDP and 0.4% of the national GDP. While these figures may appear low, it should be noted that the industry faces challenges in managing statistics and therefore a lot goes unaccounted for.

4.4.2 Contribution to Employment and Livelihoods The number of farmers engaging in coconut production is estimated at 100,194. In addition the subsector provides income to seedling farmers, harvesters, de-huskers and wine tappers. Up the value chain, the subsector provides a livelihood to traders, transporters and processors.

4.4.3 Prevention of Forex Losses The value of the production is estimated $144.2 million. Were these products to be imported the country‟s forex reserves would be negatively impacted.

4.4.4 Contribution to Hospitality and Tourism The industry contributes through decorative value of live trees and Makuti which are widely used in construction of tourism hotels. Madafu are also used as a welcoming drink for tourists within the coastal region.

4.5 Import and Export of Coconut Products This section analyses the data on import and export trade of coconut products. The year analysis data is for the year 2011.

4.5.1 Value and Volumes of Imports The imports for 2011 were as shown below. Products weighing a total of 8.1 million Kgs valued at KES 825.1 million were imported. Imports 2011

Product Coco Peat

Weight in Kgs 3,209,290.00

CiF Value in KES 94,663,329

Coconut Cream

8,084.00

2,148,137

Coconut Cream Powder

2,693.00

1,733,457

22,552.00

2,658,785

8,703.00

4,235,433

4,659,415.00

695,297,386

Coconuts

76,077.00

2,443,789

Cosmetics

2,728.00

374,255

Desiccated Coconut

85,100.00

18,919,492

Nata Decoco

33,441.00

2,606,956

Grand Total

8,108,083.00

825,081,019

Coconut Milk Coconut Milk Powder Coconut Oil

Sources: Data by KRA Customs Department. Analysis by Author

Table 22: Imports of Coconut Products in 2011

4.5.2 Contribution by Various Products to Value of Total Imports The major products imported were coconut oil, coco peat and desiccated coconuts contributing 84.27%, 11.47% and 2.29% of the total value of imports respectively. This amounted to 98.03% of the total imports with the balance of 1.97% being contributed by other products as shown in the figure below;

Sources: Data by KRA Customs Department. (Analysis by Author)

Figure 28: Chart of Contribution by Products to Value of Total Imports in 2011 There is need to increase production of coconut oil and coco peat as there is a local market for the products. Most of the coconut oil was crude oil which is a raw material in manufacture of beauty products. Unfortunately most of the coconut husks from which coco peat is made are thrown away or used as fuel by the farmers oblivious of their value. There is also a need to link the importing companies with local producers to stem the loss of forex in importing products which can be substituted by local production.

4.5.3 Origin of Imports The key origins of coconut imports into the country were Indonesia accounting for 43.57%, followed by Singapore at 41.83%, India at 6.05% and Sri Lanka at 5.5%. Together these countries accounted for 97% of the imports with the balance coming from other countries as shown below;

Sources: Data by KRA Customs Department. Analysis by Author

Figure 29: Contribution by Countries to Value of Total Imports in 2011

4.5.4 Exports Kenyan coconut exports mainly comprise raw nuts. This has been a source of serious concerns with some even arguing for a ban on raw nuts exports. However, this would be counterproductive without an assured local market. It could lead to an oversupply in local market depressing prices leaving farmers with no option but to abandon the trees like was the case with cashew nuts sometime back.

4.5.5 Value and Volumes of Exports Products weighing a total of 8.6 million Kgs valued at KES 39.8 million were exported. It should be known that there is a lot of cross border coconut trade between Kenya and Tanzania all of which may not be captured in official statistics. Also the value of coconuts appears to be grossly understated at KES 2.5 per kg. This is shown in the table below;

Exports 2011

Products

Weight in Kgs

CIF value in KES

8,426,271

21,532,504

Virgin Coconut Oil

18,976

6,070,995

Coco Peat

88,200

5,133,105

Coconut Oil

16,460

3,430,055

9,177

3,038,012

Coconut Fibre

15,025

608,133

Coconut Milk

25

6,244

Coconuts

Desiccated Coconuts

Grand Total

8,574,134

39,819,049

Sources: Data by KRA Customs Department. Analysis by Author

Table 23: Exports of Coconut Products in 2011

The high export of raw coconut is a threat to value addition to the coconuts. This is reflected by the fact that the imports are dominated by value added coconut products. This results in low commercialization of the sector, poor income to value chain actors, loss of employment creation opportunities as well as forex losses. The overall impact of this is diminished contribution of the coconut subsector to wealth creation and development in the Coastal region. While an export ban is not recommended factors that limit processors capacity to add value need to addressed. Linkages between farmers and processors also need to be strengthened.

4.5.6 Contribution by Various Products to Value of Total Exports Key coconut products exported by Kenya are raw coconuts which in 2011 accounted for 54.08% of all exports. The other products contribution to exports was as follows; Virgin Coconut Oil at 15.25%, Coco Peat at 12.89%, Coconut Oil at 8.61%, Desiccated Coconut at 7.63%, Coconut Fibre at 1.53% and Coconut Milk at 0.02%. Sources: Data by KRA Customs Department. Analysis by Author

4.5.7 Destination of Exports The key coconut exports destination in 2011 were Tanzania (57.2%), Uganda (14.91%), USA (11.36%) and Yemen at (8.48%). These accounted for 92% with the balance going to other countries as shown below;

Sources: Data by KRA Customs Department. Analysis by Author

Figure 31: Chart of Contribution by Country to Value of Total Exports in 2011

4.5.8 Export Trends The following analysis would have been more informative if it had captured a longer period preferably 10 years. The available information however only allowed a comparison of a three year trading period (2010 - 2012). In the limited observation there was an increasing trend from 2010 towards 2011 which dropped in 2012. It is not predictable how the future trends in this segment will look like but this will depend a lot on what interventions the value chain influencers will direct towards the sector.

Sources: Data by KRA Customs Department. Analysis by Author

Figure 32: Graph of Trends in Export over the Years

4.6 Key Industry Players in the Coconut Value Chain An agricultural value chain comprises five key activities namely; input supply, production, processing, trading and consumption. In addition to these are various support services providers. The coconut value chain has the following key players along the value chain.

4.6.1 Input Supply The key inputs in the coconut value chain are seeds, seedlings, fertilizers, manure and water. Higher up the value chain are suppliers of equipment, tools, machines and consumables used in activities such as farming, wine tapping, harvesting and processing. The key players in input

supply in coconut value chain are;

4.6.2 Seed Nut Suppliers The seed nut suppliers are farmers who allow the nuts to mature to a level where they can be used as seeds. To ensure quality seeds KCDA engaged in an exercise which led to marking of over 8,000 coconut trees with good production qualities, (Kahindi, 2012). This will ensure quality seedlings with ultimate improvement in productivity. Seed nut suppliers play a critical role in ensuring adequate and consistent supply of seeds for planting by the nursery operators. 4.6.3 Nursery Operators

They supply coconut seedlings to farmers. They play an important role of ensuring adequate and quality seedlings are available. They can also play a key role in introducing new seedling varieties. KCDA has continued to invest in nursery operators through supply of seeds, financing, extension and training. In this regard more than 400 nursery operators have been trained throughout the coastal region, (Kahindi, 2012).

4.6.4 Suppliers of Other Farming Inputs These provide inputs such as chemicals and fertilizers. Most coconut farmers do not use these inputs due to lack of awareness and financial constraints. They play a key role in stocking the supplies and offering advice to farmers. They can also pass critical information to farmers e.g. through distribution of farming pamphlets and brochures.

4.6.5 Suppliers of Non-farming Inputs They provide tools, equipment, machinery and consumables. Players in this area include fabricators of processing equipment, suppliers of labeling and packaging materials. They play a key role in facilitating value addition to various coconut products.

4.6.6 Production of Primary Coconut Products

The key players here are farmers. It is estimated that there are about 100,194 farmers spread across the coastal region. The farmers are mainly small scale with an average of 99 trees per farmer. The farmers play a critical role in ensuring that upstream value chain players such as traders and processors have consistent supply of quality products. At the production level there are other players who are important. They include;

4.6.7 Harvesters The harvesters climb the tree and fell the tender or mature nuts. This is in a way a specialised skill since not everyone can climb the trees. The harvesters are paid per nuts or per tree harvested. Some of the harvesters are family members who offer the services for free.

4.6.8 De-huskers They prepare the nuts for the market by removing the outer cover known as the husks. The dehusked nuts are easier and cheaper to transport as they are less bulky. The de-huskers are paid mostly on the basis of number of nuts de-husked rather than duration worked.

4.6.9 Wine Tappers These are people with specialised skills in wine tapping. They climb the tree to tap the wine and to collect the toddy which has settled on the bottle attached to the cut fluorescence. The payment for wine tappers is usually in kind through various arrangements. In some cases the tappers share the wine on a 50:50 basis or alternate days whereby the tapper takes one day‟s harvest and the farmer takes for the next day‟s.

4.7 Trading of Coconut Products The key players here are traders, farmer organisations, agents and logistic service providers. 4.7.1 Traders in the Coconut Value Chain The traders play key roles which include;

i.

Identification of location of produce

ii.

Bulking of products – they gather produce from various farmers for sorting, grading and packaging

iii.

Facilitating logistics e.g. transport, packaging and storage

iv.

In coconut value chain, traders play a critical financing role as they pay the farmers upon which point they take ownership of produce and all the risks thereafter. They also often pay for harvesting and de-husking of coconuts.

v.

Traders also provide feedback to farmers e.g. on quality of products and consumer complaints or suggestions.

The traders include retailers, wholesalers/distributors, exporters and importers. There is also the palm wine bar operators known as mangwes who sell the palm wine to final consumers.

4.7.2 Farmers/Producer Organisations Some farmers and wine tappers are organised into associations or groups such as cooperatives. The groups play a key role in bulking produce, looking for market and negotiating for good prices for members. Such groups can also play key roles in value addition and provision of financial services. In addition the groups make it easier for members to receive services such as information, linkage, extension and training.

4.7.3 Agents/Middlemen These are also known as brokers and they play key role of linking buyers and sellers. They are hated by farmers who complain that they exploit them. Nonetheless the brokers play a key role in managing information along the value chain.

4.7.4 Logistic Service Providers They provide services such as transport, warehousing and packaging in distribution logistics.

Most farmers and traders do not own a means of transport and rely on external transport such as PSVs, commercial distribution vehicles, human beings, bi-cycles, motorcycles, carts and animals such as donkeys among others. They ensure the products reach the consumers at the right place, at the right time and at the right condition.

4.7.5 Processing of Coconut Products Key players here are the primary and secondary processors. They play a key role in value addition. Where processors have contractual arrangement with producers, they can play a critical role of providing, stable, reliable and favorable market. In the coconut sub-sector the primary processors are mainly farmers or farmer groups who make products such as Makuti, brooms and artifacts. Secondary processors engage in more advanced value addition by producing various nut, timber and wine products.

4.7.6 Consumers of Coconut Products Consumers are critical for without them there can be no industry. There are various ways in which consumers of coconut products can be categorized. These include;

i.

Domestic vs. international consumers

ii.

Urban vs. rural consumers

iii.

Coastal vs. up-country consumers

iv.

Individuals vs. institutional consumers

v.

Final consumers vs. industrial consumers

4.7.7 Value Chain Facilitators These play a critical role of offering support services to various value chain actors. The key players here are; i.

Government both national and county governments who offer various services such as subsidized inputs and extension services

ii.

Regulators ensure players abide by stipulated rules for the benefit of the industry. Key regulators relevant to coconut subsector include KCDA, NACADA, KEPHIS, KEBS, KRA e.t.c

iii.

Research institutions create a knowledge base for various aspects of the chain from production to consumption. In the coconut sector we have institutions such as KARI which provide agricultural research services, Kenya Industrial Research and Development Institute (KIRDI) which conducts research and development in all industrial and allied technologies. Other research related institutions include universities and National Council for Science and Technology.

iv.

Non-governmental organizations – these are mainly not for profit organizations which are not owned or operated by government. In the coconut sectors there are many non-state actors involved. These in addition to NGOs include Community Based Organizations (CBOs) and Faith Based Organizations (FBOs). Such groups are involved in activities such as advocacy and even value addition. Most of the processors in the coconut sector have a non-profit orientation or background.

v.

Trade facilitators are organizations which promote trade in the coconut products such as Export Promotion Council.

vi.

Business development service providers are private professionals offering advisory services such as research, consultancy and training on various business aspects

vii.

Financial institutions provide financial services to players along the value chains. They include banks, SACCOs, ROSCAS, Microfinance Institutions, donors, government devolved funds and private equity firms among others.

4.8 Challenges Facing Players in Coconut Subsector This section looks at the challenges encountered along the value chain by various players. Addressing these challenges will increase value chain efficiency and the subsectors gains.

4.8.1 Challenges Faced by Nursery Operators Production Challenges Faced by Nursery Operators Challenges were encountered by 90% of the operators. The major production challenges faced are drought and lack of knowledge and skills each noted by 23.3% of the respondents. These are

followed by pests and diseases by 16.7%, theft of seedlings by 13.3%, low seed quality by 13.3% and inadequate supply of seeds also faced by 13.3% of the respondents. Other challenges are faced by less than 10% of the respondents as shown in the figure below;

Figure 33: Graph of Production Challenges Facing Nursery Operators

Product

Definition/Description

Coco peat

Cocopeat (also known as cocos or coir) is the pithy remnants of the coconut

It is used as growth medium for high value crops. Its demand in Kenya is rising.

husk after the extraction of coir fibre.

Also used as an industrial absorbent

This is the liquid that comes

Used as ingredient in preparation of

Coconut milk

Uses/Remarks

from the grated meat/white flesh of a coconut Coir Fibre

coir is the fibrous material found between the hard, internal shell and the outer coat of a coconut

various dishes

Typically, white coir spun into yarn is used in the manufacture of rope and, thanks to its strong resistance to salt water, in fishing nets. Brown coir is stronger and more widely used than white coir. Applications include sacking, brushes, doormats, rugs, mattresses, insulation panels and packaging

Copra

This is the dried kernel or meat of the coconut i.e. the white flesh inside the shell

Coconut oil is extracted from it The resulting residue called copra cake is used as livestock feed

Copra cake

The residue of copra after extraction of oil

Used as livestock feed

Copra oil

Oil extracted from copra

Industrial uses e.g. biodiesel, engine lubrication, transformer oil etc Used for cooking Cosmetic application and soap manufacture

Desiccated coconut

Desiccated Coconut is a grated, dried (3% moisture content max.), and unsweetened fresh meat or kernel of a mature coconut.

Desiccated Coconut is ideal for use as fillers, toppings and as ingredients, especially in the baking of biscuits, snack bars, cakes, cookies and so on.

Nata de coco

It is a chewy,

Nata de coco is most commonly

Virgin Oil

Coconut

translucent, jellylike foodstuff produced by the fermentation of coconut water.

sweetened as a candy or dessert, and can accompany many things including pickles, drinks, ice cream, puddings and fruit mixes.

Coconut oil is an edible oil extracted from the kernel or

It has many applications in cooking e.g. frying

meat of matured coconuts harvested from the coconut

It has industrial application such as lubrication and fuel

palm. It has various applications in food, medicine, and industry.

It has personal application where it can be used a moisturizer and is used as an ingredient in soap and hair products

Source: Compiled by authors from various online sources

Product Raw Material Units e.g. pieces, kgs, litres Coco timber

Volume

Productio n

of Units units e.g. of raw pieces, materia l kgs, bought

Volume

Cost of

of Units raw produced materials per month

Manufacturin Cost of g Total Transpor t costs Costs

Desiccate d coconut Copra Copra oil Virgin coconut oil Coconut milk (cream and light) Bottled

ARTIFACTS, LAMP SHADES, SOAPS BODY LOTION AND CREAM, DOOR MATS, COIR FIBRE AND ROPES, COCOPEAT, MAKUTI, FURNITURE, WOOD, CHARCOAL, SHELL, BROOMS, VINEGAR, PALM WINE, COCONUT

Product

Coco timber Desiccated coconut Copra Copra oil

Volum Volumesold Selling e Selling Volume Selling individuals e.g. price per Sold to Price Per exported Price Per 50kgs unit traders Unit Unit

Virgin coconut oil (VCO)

Coconut milk (cream and light)

Bottled palm wine

Coconut vinegar

Brooms

Shell charcoal

Coco-wood Furniture

Makuti

Coco-peat

Coir fibre and ropes

Door mats

Body lotion and cream

Soap

Lamp shades

Artefact

Total

Product

Units of Trade e.g. pieces,

Volume of Units traded per month

Buying Cost per unit

pieces,

per month

unit

Cost of transport

Other direct costs e.g. storage, packaging, preparation

Immature nuts Mature nuts Toddy (palm wine) Husks Fibre Wood

packaging, preparation

Makuti

Desiccated coconut

Copra

Copra oil

Coco timber

Desiccated coconut

Copra

Copra oil

Virgin coconut oil

Coconut milk (cream and light)

Bottled palm wine

Coconut vinegar

Brooms

Shell charcoal

Coco-wood Furniture

Makuti

Coco-peat

Coir fibre and ropes

Door mats

Body lotion and cream

Soap

Lamp shades

Artifact

Total

15. What sales channels do you use and what prices are realised through each channel?

Product

units sold

Unit

to Price individuals

Immature nuts Mature nuts Toddy (palm wine) Husks Fibre Wood Makuti Desiccated coconut Copra

Units

Unit

sold to other traders

Price

units Sold Unit Units Unit Exporte to Price d Price processors

Copra oil Coco timber Desiccated coconut Copra

1. Whole nut The fresh mature coconut is sold as a whole nut in both local and export markets. Instead of processing the whole nut, actors (mainly local farmers and traders) in this value chain sell it direct to consumers. At the coastal strip of Kenya fresh mature coconut has been used for food for decades. The fresh mature coconut is sometimes de-husked and sold to vendors who then take it to the market. Notably, once the whole coconut (could be mature or immature) is sold it is can be re-directed to other value chains to produce oil, desiccated coconut, by-products, etc.

Thus, in some cases it is difficult to separate this shortest value chain from the processing value chains. Mature nuts are a key ingredient in preparation of various home dishes whereby the inner flesh is utilized. Kwale and Kilifi counties dominate the production of mature coconuts with 46% and 44% of the total respectively, while about 10% comes from all other counties. Over 60% of all mature nuts are sold to traders who then supply coconut processing factories.

2. Desiccated coconut, coconut water and related products Tender coconuts known as madafu are harvested at 7 to 8 months maturity and are valued for their sweet water and gelatinous kernel. They are used fresh immediately after harvest by cutting off the edge of the nut and drinking the sweet water with a straw. The madafu have a short shelf life and start deteriorating within 24 to 26 hours after harvest, so they tend to be consumed close to their place of production. Kwale, Kilifi, Mombasa and Taita counties are the largest producers of madafu and respectively account for 55%, 27%, 11% and 5% of all the madafu produced in Kenya.

Simple processing technologies exist to convert the coconut kernel into products that can be consumed by the families of coconut farmers or sold into the domestic market to increase farmers‟ income. These products include coconut water, coconut milk, cream, powder, and flour, and desiccated coconuts. Coconut water occupies the center of the coconut kernel. It contains sugar, dietary fiber, proteins, antioxidants, vitamins, and minerals, and provides an isotonic electrolyte balance. It is consumed as a refreshing drink throughout the humid tropics, and is gaining popularity as a sport drink. Mature fruits have significantly less liquid than young, immature coconuts, barring spoilage. Coconut water can be fermented to produce coconut vinegar. Coconut milk is obtained primarily by pressing the grated coconut's white kernel or by passing hot water or milk through grated coconut, which extracts the oil and aromatic compounds. It has a fat content around 17%. When refrigerated and left to set, coconut cream will rise to the top and separate from the milk. Coconut milk can be further processed by fermentation into Nata-decoco, a white, gelatinous and chewy product that can be sweetened by boiling in a sugar solution. Coconut milk is also used to produce virgin coconut oil.

3. Coconut oil The most commercially important product of coconut is the oil obtained from its kernel. Coconut oil contributes nearly 7% of the total vegetable oils traded in the world. The volume of coconut oil produced in the world in 2013 was estimated at over 3.5 million metric tons, with the Philippines (1.725m), Indonesia (0.974m) and India (0.447m) being the three largest producers.

Coconut oil is extracted from the dried coconut kernel (copra) using mechanical expellers or solvent extraction. After extraction, the oil is unsuitable for human consumption and must be refined, bleached and deodorized, hence its designation in general trade as RBD coconut oil. Although there is no industry standard definition of “Virgin Coconut Oil” (VCO), it can only be obtained from fresh coconut kernel using a quick drying method or through a wet milling process. Traditionally, the wet milling process has been used to produce a VCO of very high quality because of the high level of antioxidants that it contains.

4. Coconut by-products

The processing of coconut to produce coconut water, coconut milk, copra and coconut oil generates by-products that can be converted into other products that have great commercial value. These by-products are the husks, the kernel shells and the coconut kernel cake. Coconut husks are rich in fiber known as coir and are the raw material for the coir industry; they are used in ropes, mats, door mats, brushes, sacks, caulking for boats, and as stuffing fiber for mattresses. They can find a valuable use in potting mix (known as coco peat) for the horticultural industry. Through incomplete burning, coconut husks and shells can be converted to charcoal briquettes or activated carbon of high quality for the removal of impurities. Coconut shells are a The cake resulting from the extraction of oil is known as coconut kernel cake or copra meal. It is a good ingredient in dairy rations as a source of energy and protein, but its high fiber content makes it unsuitable for monogastric animals. A 10% inclusion rate or 1.5-2 kg/d is recommended as the maximum safe level for cows.

5. Coconut (palm) wine and related products When an incision is made in the flower clusters of the coconut, a sweet sap (sugar content up to 16%), also known as toddy, is obtained. When left to ferment on its own, it becomes coconut wine, which can be distilled to produce a strong alcoholic drink.

Boiling the sap produces a sweet syrup or candy that can be processed further to yield coconut sugar also referred to as palm sugar. A well-maintained tree can produce around 300-400 liters of toddy per year.

6. Coconut wood and leaves The stiff mid-ribs of coconut leaves are used for making brooms. The leaves also provide material for woven baskets and for roofing thatch; they can also be woven into mats. Coconut trunks are used for building small bridges, huts and even houses; they are preferred for their straightness, strength, and salt resistance, and are increasingly being used as an ecologically sound substitute for endangered hardwoods.

6.3 Contribution of Different Coconut Value Chains to the Sub-sector GDP The average contribution of different value chains to coconut production, export and import

monetary values is used as a proxy to their contribution to the subsector GDP (Table 6.1). Thus it is assumed that production, export and import activities contribute equal shares to the subsector GDP, though, as expected production is likely have a higher share due to the relatively higher contribution to rural employment and support to manufacturing activities in the country. Following this assumption coconut oil value chain emerges as the main contributor to subsector GDP (36.1%), followed by whole coconuts (25.5%), palm wine and related products (19.7%) and by-products (8.6%). The latter comprises one of the major value chains in terms of imports (only second to coconut oil value chain) and exports (only after whole coconut and coconut value chains). The by-products considered here are mainly processed into coco peat and other composts, animal feeds and handicrafts. Most of them are sold mainly to flower producers, construction industry, livestock farmers and tourists.

Table 6.1: Percent Contribution of Different Value Chains to Coconut Subsector GDP

Value chain

% domestic production value

% export value

% import value Assumed % contribution to subsector GDP 25.5 0.3

1. Whole coconut

22.1

54.1

2. Desiccated coconut, coconut water and related products

2.1

7.6

3.9

3. Coconut by-products

NA**

14.4

11.5

4.5 8.6

36.1 4. Coconut oil

NA

23.9

84.3

59

NA

NA

16.8

NA

NA

100.0

100.0

100.0

5. Coconut (palm) wine

19.7

and related products 6. Coconut wood and 5.6

leaves 100.0 Total

Source: adapted from KCDA, 2013

NA = data not available

**In estimating the average percentages in the last column the missing values are assumed to be zeros

With the exception of the whole nut and desiccated coconut, coconut water and related products, the percentage contribution of each value chain to the subsector GDP is used as the criterion for apportioning the Master Plan budget. For instance, the coconut oil value chain is allocated the 36.1% of the total Master Plan budget. For the budget allocation to the whole nut and desiccated coconut, coconut water and related products value chains, it was considered that most of the whole nuts sold in the market eventually end up being processed into other products. Moreover, this Master Plan places more emphasis on value addition than sale of whole nuts. Thus it was considered appropriate to exchange proportions of budget allocations of these two value chains. This consideration resulted in whole nut and desiccated coconut, coconut water and related products value chains being allocated 4.5% and 25.5% of the Master Plan budget respectively.

6.4 The Role of Indirect Actors The indirect actors considered in the Master Plan are divided into value chain enablers (e.g., government and its research and extension departments) and value chain supporters (finance institutions, agro-dealers, farm implement suppliers, machinery suppliers, etc.) that contribute to the successful flow of product through the different value chains. These play a critical role in the successful functioning of the value chains. In addition to providing farmers with key inputs such as new seeds and seedlings, extension services, human capacity services, etc., government and its related institutions also establishes, monitors, and enforces rules, regulations, and policies regarding quality standards. Credit institutions and some NGOs also provide some of the much needed capital to farmers, traders and processors in these value chains. Similarly, the agro-dealers, and other input/machinery suppliers are important linkages to the value chain actors and cannot be ignored when promoting the sub-sector.

6.5 Current and Expected Situations of the Value Chains

6.5.1 Whole nut value chain Current situation The prices of the whole nut in the country have been low (average of KES 13.7 per kg) and mainly depend on the seasonality of the crop. About ten years ago when the interest in the industry was at its lowest, farms were virtually abandoned and a kilogram of coconut fetched less than KES 6. This however changed with the entry of the Tanzanian traders and the formation of KCDA. The Tanzanians have made the prices to move from KES 6 to KES 16 per kilogram (Figure 6.3). Most Kenyans however do not consume the whole nut and therefore local prices are lower than export prices. Although most of the whole nut is latter processed into other products, focus is placed on selling of the whole nuts only as value addition and by-products have been identified as different specific value chains. Thus this is the shortest coconut value chain in the subsector.

Currently, this value chain earns the highest income for farmers. In 2012, about 3.39 billion nuts were sold, earning farmers and traders approximately KES 2.9 billon. For the country whole nut has also been the leading subsector export commodity in terms of value, accounting for over 54% of all coconut exports. About 61% of the nuts are sold to traders who probably later channel them to the processing value chains.

Figure 6.3: Whole Coconut Value Chain

The Coconut Farmer

By-products Mature Fresh / Whole

16

Fresh Mature Coconut Trader

20

Value Local Market for Fresh

addition Export Market for Fresh

and processing

Mature Coconut

Mature Coconut

30

40

Consumers of Fresh Mature Coconut

---------------- Not part of the chain Numbers represent prices in KES/kg Source: own presentation Expected Situation

Production Although coconut production for this value chain is projected to increase by 5% annually, this Master plan will endeavor to maintain the current sales of fresh coconuts as extra nuts will be channeled to value addition chains. Thus the percentage contribution to exports and subsector GDP of this value chain is likely to decrease as investments in coconut processing increase. All imports of whole nut will be eliminated by 2018 as there will be enough fresh coconuts in the country.

Marketing and distribution of whole nuts With increased coconut production, more local, regional and international markets will be explored. The expanding East Africa Community market where members are allowed to trade freely across the boundaries will be exploited. Expansion of international markets will target UAE and USA among other countries.

Value chain Enablement Research on new coconut varieties and particularly hybrids will be up-scaled in order to increase the fresh coconut production. New high yielding, early maturing and drought resistant coconut tree varieties are expected to be introduced to farmers in major coconut growing areas. More coconut seedlings will be grown and nursery operators increased. Farmer cooperatives will be established in order to increase the bargaining power of producers at the marketing stage. Farmer demonstration plots will be introduced to exhibit possible agronomic practices that farmers need to undertake to increase coconut yields. Some of the organizations that will help farmers and traders are KCDA, KALRO and county governments.

Value chain support Coconut producers and traders will be made to access more funding from banks and credit institutions. These funds will be used to enhance fertilizer application and increase number of nursery operators, and support agronomic activities. Coconut development fund will also be established to avail more funds to farmers and coconut traders.

6.4.3 Coconut oil Copra is very easy to process at the cottage level. It is currently being processed by farmers and sold directly as copra oil. However, local prices are low due to the poor quality. Currently the price of copra at the farm level is about KES 40/kg (Figure 6.5). To many farmers, it makes more business sense to sell the dry nut even at the lowest price of KES 8/kg. Despite these challenges, in some instances, traders amalgamate their coconuts and crush them into copra and sell direct to the millers. About 8 main industries that used to deal in copra before 2006 have closed down and those in operation are now largely dependent on imported palm oil from Malaysia. Some also buy dry nuts and produce copra at the factory level. Some of the companies still processing Copra oil,

but at a small scale, are Amua, Serendi, Kentaste, and Malindi Industries.

The process of making virgin coconut oil (VCO) demands that the source of raw coconut is carefully controlled. This is done in order to have the finished product comply with the strict international standards that favor organically produced nuts. The nuts selected for virgin oil production fetch higher farm gate prices than those sold for other uses. Currently, a number of firms are making their entry into processing VCO and are heavily engaged in contracting farmers who have to meet certain agronomical standards.

The oil produced is sold directly to end users and other manufacturers who use it as raw materials for cosmetics, cooking oil, soap, pharmaceuticals and other products. At the moment there are just a handful of virgin coconut oil producers that are exporting their products. These include Navida, BICODE, Kentaste and Serendi (K). Approximately 30% of what these firms process is sold locally and the rest is exported mainly to Europe and USA. Currently Kenya is a net import of virgin coconut oil though it is processing approximately 35 tons annually. According to Figure 9.5, these processors derive more income/benefits than producers participating in this value chain.

Figure 6.5: Coconut Oil Value Chain

The Coconut Copra

Coconut Farmer

40

16 Coconut Trader

Copra Trader 20 Copra

20

Trader 42 42 Copra Oil

Virgin Oil

Processor

Processor

Crude

Virgin Coconut

Oil

Oil

160

600

Crude Oil

Virgin Oil

120

22

750

Food and non-food manufacturers:

0 Cooking oil, food ingredients, cosmetics,

80

soap, body

0

oil, hair and spa products 300

148

1200

Cooking Oil

So

Cosmet

Trader

ap

ic

450

188

1600

Other

Consumers of Coconut oil & Coconut Oil Products

Numbers represent prices in KES/kg

Source: own presentation By-products e.g., Husks

Expected Situation Production It is expected that farmers will produce enough nuts for processing products of this value chain. Approximately 17 nuts are usually required to extract a litre (approximately 1 kg) of coconut oil. The weight of an average piece of coconut is about 0.8 Kg. Thus 13.6 kg of nuts are required for the production of 1 kg of oil. In the country, the amount of coconut oil currently being imported is 4,659,415 Kg (KCDA, 2013). This is the amount targeted to be produced by local processors by 2018. However, it is important to note that the demand for oil will continue to rise due to population increase, lifestyle changes and increased preference for health foods such as coconut oil. It is assumed this increase will be 5% per year.

To offset the current annual coconut oil imports by 2018, farmers will be expected to increase their produce gradually and eventually achieving 76,041,652.80 kg or 95,052,066 pieces of coconut by that year. This converts to a total of 1,357,886.66 trees (assuming that a single tree produces 70 nuts per year) for coconut oil only. If this trend is maintained the country will even be exporting some surplus coconut oil by 2019 (Table 6.3).

Table 6.3: Projection of Expected Production of Nuts and Oil (2014-2018)

2014 1. Mature trees harvested 452,629 2. Amount of nuts

2015

2016

678,943

905,258

2017 1,131,572

2018 1,357,887

2019 1,584,201

processed (pieces) 31,684,022 47,526,033 63,368,044 79,210,055 3. Amount of nuts processed (kg) 25,347,218 38,020,826 50,694,435 63,368,044 4. Oil produced and sold (kg) 1,863,766 2,795,649 3,727,532 4,659,415 5. Oil imports (kg) 4,892,386 5,137,005 5,393,855 5,663,548 6. Oil imports less oil produced in kg (5-4) 3,028,620 2,341,356 1,666,323 1,004,133 The oil produced and sold in 2017 is the current import volume (see KCDA, 2013)

95,052,067

110,894,077

76,041,653

88,715,262

5,591,298

6,523,181

5,946,725

6,244,062

355,427

- 279,119

Source: own projection Processing The extraction of the coconut oil is a complex process which requires use of various technologies. It is therefore expected that by 2018 processors will have formed common interest groups/associations to scale up oil extraction to medium and large scale levels and to increase their bargaining power. They will be expected to produce 5,591,298 kg of oil by this year (see Table 6.3). It is therefore expected that they will be accessing machinery for medium scale and large processing depending on the size of the group. Through support from financers or creditors, processors or processor groups will be expected to acquire a set of machinery which has a screening machine, boiler, digesters, press, clarifier and generator. This machine produces 0.5 tons of coconut oil/hour. Large scale processors could acquire a refinery which would comprise elements such as hammer mill, bucket elevator, screw press and conveyor, centrifuge, vibratory sieve, micro filter, filtered oil storage tanks, crude coconut oil tanks and volumetric filling machine. The refinery produces 1 ton of coconut oil/ton.

Distribution and Marketing The coastal region serves as the main coconut oil consumption area due to the tradition of relying on coconut products. Thus most of the coconut oil will be distributed in this region. To expand the market, awareness creation of the nutritional value of coconut oil and its health benefits will be done in other parts of the country. For the sale of the surplus, additional markets will be explored in Uganda, Tanzania, Rwanda, and Ethiopia. Some of the strategies to be used to increase sales and consumption of coconut oil and its products will include advertisement in print media, TVs,

radios, road shows and trade exhibitions. Quality coconut oil will also be promoted in foreign markets (mainly through trade shows) in order to capture emerging markets in the European Union and sub-Saharan Africa.

Value chain enablement Farmers, processors and traders will be mobilized to form cooperatives/associations to facilitate training and accessibility of external resources such as credit. Through private-public partnerships, a standard for coconut oil will be developed. Awareness creation of coconut oil standard will be done through workshops, brochures, pamphlets, local print media, radio and TVs. This will be

done to enhance harmonization of local, regional and international trade of coconut oil and its acceptability. Government institutions will also be involved in setting up demonstration models for farmers and processors in order to enhance transfer of necessary knowledge and thereby increase productivity of the value chain.

It is expected that KCDA and KALRO will build capacity of farmers and processors by enabling them to access quality seeds and oil processing machinery. KEPHIS is expected to test the quality of coconut seedlings in order to ascertain that they are of the high quality and eliminate any risk of pest and diseases. KEBS is expected to ensure maintenance of quality of coconut oil and train processors on proper packaging in order to attain the desired internationally accepted standards. The organization will also be involved in providing quality standard stickers to processors in order to promote regional and international marketability of the coconut oil products. Infrastructure conditions in the production and processing areas will need to be improved in order to facilitate coconut transportation and also enhance marketing of coconut oil in both locally and regional markets.

Value chain Support Credit services from banks, farmer cooperatives, NGOs and other organizations will be required to promote coconut oil production. Input suppliers such as nursery operators, agro-chemical and fertilizer traders will be provided with necessary incentives in order to enhance input accessibility by farmers. In particular, the government will be advised to continue providing subsidized fertilizers to coconut farmers. Coconut tree nurseries will be increased in number as demand for seedlings increase.

6.4.4 Coconut by-products Coconut by-products considered in this value chain include shell, husk (coir/firbre) and cake. The husk will be used to process coco peat and copra cake (also referred to as coir pith, coir fiber pith, coir dust, or simply coir).

Current Situation The current technology of processing coir fibre involves mechanical extraction of fibre from the husk using a decorticating machine. The fibre is then classified into three classes: the long, medium and short fibre. Coir fibre is of much value because of its natural resilience, durability,

resistance to dampness and anti-termite characteristics. The current biggest market in Kenya for coir fibre is the Prisons Department. There are efforts to expand the local market to include manufacturers of mattresses, mat weavers and car upholstery manufacturers. Some stakeholders are also exploring weaving of geo-textiles. These will target greenhouse farmers, dam and road constructors (for use in the prevention of soil erosion), and sport stadia management (growing grass in stadia). The price of the fibre ranges from KES 15-40 per kg depending on the nature of the final product (Figure 6.6). Coco peat‟s market share of plant growing media (coco peat, peat moss, etc.) in Kenya amounts to approximately KES 120 million. Currently the country imports coco peat amounting KES 94 million annually. However, the country has also annual imports of about KES 5 million (KCDA, 2013). The demand for coco peat has been increasing due to environmental concerns in the flower industry. To-date most flower producers are using biodegradable products and coco peat is one of them. Thus the Kenyan flower industry is the main consumer of this product. As Figure 6.6 indicates processors of coco peat have higher benefits than other actors in the value chain.

Figure 6.6: Coconut By-Products Value Chain Uses

Coconut

Fresh

Coconu t for Other

4 Copra Cake Coconut

Coconut Husk

Trader

Trader Peat Block

10

80

6

Coconut Husk Consumers of Coconut

Processor

Copra

Virgin Coconut

The Coconut

Cake (Farmers etc)

Coconut Oil

Farmer Coconut Coir

CopraFibre Oil Processor Coconut Husks

8

Coco Peat Block Trader

36

Coconut Fibre

Trader

110

Flower & Seedling

40

Gro

wers Producers of mats, car Numbers represent prices in KES/kg

upholstery, flower holders, chairs etc

Source: own presentation

Copra Cake The copra cake is important as an ingredient of animal feeds. Currently the level of production is very low due to low processing capacity and competition with other animal feeds. In particular, demand for copra cake in the coastal region where most of the coconut is produced is very low.

Expected Situation De-husking and processing The production of coconut by-products through de-husking and processing is expected to increase and offset imports by 2018. This is because more coconut oil, desiccated coconut and coconut milk products will increase whose by-products will form the raw materials for this value chain. This means that as the volume of processed fresh coconut increases, more husks (coir/fiber), cake and shell will be produced. Among the by-products produced, cocopeat is expected to be prioritized due to the high local demand in the flower industry.

The by-products will be processed at all levels: local (household), medium (mainly individual entrepreneurs and small groups) and large scale (large companies) levels. Machinery for washing, heat-treatment, screening and grading will be availed in the market and full accessibility is expected to be achieved by 2016.

Marketing and distribution channels Local, regional and international markets will be targeted. Emerging regional markets in Burundi, Rwanda, Uganda and Tanzania will be identified. Awareness will also be created through continuous advertisements in order to reach more consumers in different parts of the country.

Value chain enablement Research will be done on the awareness of and perceptions on locally processed by-products. Other forms of research to be conducted will be on achievement of zero waste and its linkage to climate change. Trade and road shows will be conducted to promote the by-products in the local markets. Storage yards for the husks (fibre/coir), shells and cakes will be constructed through public-private partnerships. Farmers will also be mobilized and trained on local processing of the by-products in their farms.

Value chain support Besides benefiting from financial and credit service providers, this value chain will need support from non-governmental organizations and other private sector players involved in capacity building of actors in the coconut industry. This will help in improving skills of processing coconut

by-products.

6.4.5 Coconut (palm) wine and related products Wine production involves tapping, fermentation and marketing. Over the years, toddy demand has been constant while supply has been dependent on the rainfall patterns. During the rainy season, toddy production is generally low. The production steadily rises as the long rains subside. The low production level during the rainy season increases the demand, pushing toddy prices upwards, while during the high toddy production season supply is higher than demand. This at times leads to post harvest loses and poor prices at the farm level.

Current Situation Coconut wine (toddy) is regarded as one of the main traditional products of the coconut tree. In some cases it is viewed as controversial product (mainly after fermentation) and therefore embroiled in traditional, faith-based (religious) and legality issues. Toddy is tapped by special traditionally skilled people who are paid about KES 50/kg. The traders (middlemen) sell it at KES 100/kg. It then retails at KES 150/kg (Figure 6.7). It is estimated that there are over 6,500 toddy pubs (Mangwes) in the coastal region. On average each Mangwe sells an average of 60 litres or kgs of toddy per day.

In 2012, approximately 153,311,377 litres of toddy were produced and sold at a total value of 7,236,523,322 (KCDA, 2013). KCDA has made efforts to modernize the distribution and consumption of toddy through legislation and regulation, though not everything has been streamlined. The toddy pubs (Mangwes) are required by legislation to meet certain minimum hygiene standards before they are licensed to operate. However some operators have failed to comply.

64

Regarding the coconut sap or sugar syrup, there are no commercial quantities being tapped despite the huge potential for income generation from this activity. The main hindrance has been lack of a consistent market for sugar syrup. However, there is some tapping done by individual households, mainly for home consumption.

Figure 6.7: Coconut Toddy Value Chain

The Coconut

Farmer

Tapped Toddy

50

Toddy Traders

100

Toddy Clubs / Ba

150

Consumers of palm wine

Numbers represent prices in KES/kg

Source: own presentation

Expected Situation Since palm wine is neither exported nor imported, it is difficult to predict the production level to be achieved by 2018. Thus, pessimistically, it is recommended that the current production level be doubled by 2018.

Tapping To double the current production level by 2018, farmers are expected to be equiped with better tapping skills. Thus they are expected to be trained on important practices like how to make incisions on coconut trees and how to cut the flourescent from the base in order to prevent toddy from clogging. Farmers will also require training on good agronomic practices such as regular weeding, application of manure/fertilizers as well as pests and disease control. The focus will be to scale up the current tapping that uses few specialized tappers to large scale tapping that will rely on a pool of well trained individuals who will be employees of brewing companies. These companies are expected to initiate long term tapping contractual agreements with farmers.

Fermentation The fermentation of toddy will be scaled up as the process will be done at the factories and not at homesteads or Mangwes. Toddy will be distilled to yield high quality alcoholic drinks with high nutritional value and sold at premium prices. It is expected that through public-private partnerships equipments such as distillers, stabilizers, coolers, storage and packaging machines and bottles will be accessed by palm wine investors.

Marketing and distribution With large brewing companies being involved in the industry, more local markets at the Coast region and in other counties will be reached. It is expected that regional markets within the East Africa Community such as Tanzania, Burundi and Uganda will be more important. Kenya alone has a lot of potential for wine consumption as Nairobi, Kisumu, Nakuru, Thika and Eldoret have large populations that can consume palm wine. It is expected that palm wine will be promoted and marketed alongside other local brews.

Value chain enablement Standards on the production, fermentation, packaging and marketing of palm wine will be developed in order to establish sanity in the palm wine industry. Research on soil structure and pH level will be done to determine areas that would produce the best toddy for fermentation and subsequent processing into palm wine. Farmers‟ in common interest groups will be empowered through training and enabled to establish long term contractual agreements with brewers. Creation of awareness of the palm wine as an alternative alcoholic drink will be done in different regions of Kenya and in neighboring countries. Palm wine will also be registered with NACADA as an alcoholic drink in order to increase its marketability and acceptability locally and regionally. Through workshops and seminars police and local people will be educated on the differences between palm wine and local brews.

Value chain Support Companies and common interest groups/associations interested in establishing brewing factories will facilitated to access credit from the Coconut Development Fund and other sources at affordable interest rates. Alternatively, credit from local microfinance institutions (MFIs) will be availed to farmers at affordable interest rates to enable them to start toddy fermentation businesses. Such credit providers will be KCB, Cooperative and Equity banks, among other finacial institutions that have shown interest in supporting agribusinesses. Other support institutions will included NGOs such as MESPT which will capacity build farmers to enable them venture into wine production.

6.4.6 Coconut Wood and Leaves The coconut trunk is harvested for wood after the tree has outlived its productive economic life, in terms of nut and toddy production. This is normally done after about 60 years. The distinctively patterned timber “coco wood” is used to make handicraft, traditional utensils, furniture and other household items. The timber trunks are used in construction and particularly as a flooring material. The leaves are harvested for making brooms as well as roofing materials commonly called “makuti”, which are ideal thatching materials in hot areas.

The Current Situation With a high demand for timber and „makuti, there has been indiscriminate logging that does not select the senile or unproductive trees. Particularly with „makuti‟, some farmers have started harvesting leaves and drying them under the sun instead of waiting for them to fall off the trees. At an average price of KES 12.80 per piece of „makuti, it is estimated that farmers earned about KES 1.7 billion in 2013. Currently the production level of „makuti‟ stands at 132 million pieces annually.

The brooms made from coconut leaves however face stiff competition from those made from other materials. The wood fetches approximately KES 1200 per piece at the farm gate level (Figure 6.8). Currently it is commonly used to make furniture and traditional artefacts which are sold mainly to tourists.

Expected Situation This value chain will involve production, processing and marketing stages. If well-structured and promoted it has potential to generate high income for the actors and create employment for youths involved in the construction industry. However, promotion of this value chain has to be handled cautiously as it can lead to destruction of productive coconut plantations if harvesting of wood and leaves is not regulated.

Figure 6.8: Coconut Wood and Leaves Value Chain

The Coconut

Farmer

Mature Coconut Trees&

Leaves Tree Trunk

1000

Coconut Tree Trunk

Traders

1200

Coconut Material Workshops

(Furniture, tiles, artifacts) Artefac

Furnitu

Tile

ts

re

s

1500

4000

1700