"..a bardy view!"

Coconut Water (part 3) and Begnino Aquino (III)

Philippines President Binigno Aquino III was in the US earlier this week and during the course of his visit he received a surprise four-year investment pledge for his country's coconut industry.

The deal, worth $15million, was proposed by a string of American executives who queued up to visit him at his hotel. Guess who some of these were? Pepsi and Vita Coco to name just two.

Pepsi are already investing heavily in South American coconut plantations, and Vita Coca's backers include Madonna and Rihanna. Both companies informed him about the huge global market for coconut water and touted the "medicinal values" for the health conscious consumer.

His Communications Secretary Ricky Carandang reported that the President was in "good spirits" upon hearing this news.

"These companies want to source the demand for coconut water from the Philippines, so this is a big opportunity for our coconut industry and for our farmers" Mr Carandang said.

PepsiCo are particularly keen to expand its coconut harvesting operation. But part of the deal is that they will also plant more trees. Vita Coco chief Michal Kirben says "there's a lot of room to bring rebirth to the industry in general."

But let's analyse this for what its worth. The "proposed" investment is $3.75m a year, and if most of it comes from just two of the big players, then that is less than $2m each, possibly much less when other groups are involved such as Fiesta Coco Equity (a local affiliate of Vita Coco) who also knocked on Aquino's door.

Now we are talking – about $1m per corporation. You don't need to be a financial wizard to figure that out. Quite how these paltry sums are expected to revive the Philippines' coconut industry is a mystery. Madonna alone invested $2m in Vita Coco – and that was money into a company, not a country.

$15m doesn't sound so attractive now does it? These multi-nationals are not renowned for their philanthropy or desire to improve the world. For sure they market their drinks as a benefit to mankind, but they principally benefit their shareholders, who will not be the mugs who harvest their products from source at 1100% less than the retail value. That is indeed the true price of coconut water for the humble worker.

It's akin to medieval feudalism in the modern age. Supposing that more and more coconut plantations exist purely for the production of coconut water? They are harvested young and never reach maturity, they will not be able to produce the many bi-products associated with the coconut, and the prices of coir and copra will increase. This will have a significant detrimental economic impact in many areas.

One could argue that the planting of more trees will be good for the environment and create jobs. But it is a false economy, because there is no long-term sustainability, and creates a short term business opportunity. It is based purely on a fad.

I'm not talking about key commodities like coffee, tea, cocoa, bananas or pineapples for example. These and many other products grow and develop with a finite end. The coconut is different. The Coconut tree is unique because of its versatility and its specific various stages. It's not called the "tree of life" for nothing.

Time and again I impress that there needs to be a sustainable and fair trade policy to the production of coconut water; that at least half a plantation must be allowed to fulfil a purpose naturally. I do not see this foresight from the multi-national companies – I only see exploitation.

Invariably they invest in infrastructure and create employment, but they can very easily pack their bags and move on, when either they find better opportunities, or when the markets fail. They have no loyalty other than to themselves.

I use the 1100% mark-up figure as a benchmark based on my knowledge from source to shelf. If Pepsi and Vita Coco are prepared to invest $15m how much do you think they will make? You can bet most Filipinos will not see any of it.

If the Philippines government wish to revamp and restore their coconut industry then there are other ways to do it. Coconut water is not the solution.

$15m over four years from a handful of US corporations is pathetic and insulting. If the Philippines can't find that money themselves, and dedicate a desire to lift their industry by its bootstraps and do it with pride – an industry incorporating all aspects of coconut production – and with drive and determination to make them a world leader in the commodity – then they are sorely incompetent.

President Aquino should have sent the suits from Pepsi and Vita Coco packing. He should have said “I enjoyed the joke, but quite frankly I have a country to run. Thanks for the offer – but no thanks!”

I'd like to think that was the real reason he was in “good spirits”!

Coconut Water – the price of well-being?


September 23, 2011 - Posted by | Coconut Trees, Conservation, Culture, Current Affairs, Education, Science, The Philippines, Travel

1 Comment »

  1. Couldn’t agree with you more and Pepsi is a joke. They were the first ones to disinvest from our old country on the grounds of racism. Seems pretty rich coming from them in the light of this? I have no doubt that when it stops suiting them they will cut and run. Do yourselves a favour and don’t let them in.


    Comment by Spook Moor | September 23, 2011 | Reply

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