Coconut in El Salvador
El cultivo del coco tiene para muchas personas en el mundo valor social y económico. Además de que el coco suplementa elementos nutritivos, sus componentes se pueden utilizar como de materia prima para el procesamiento de todo tipo de productos. La cooperativa El Jobal procesa en El Salvador aceite de coco. En este trabajo se persigue el objetivo de identificar opciones de mejora para El Jobal en su integración a la cadena global de aceite de coco / jabón.
Actores productivos de El Salvador forman parte de la cadena global de jabón de aceite de coco. La cooperativa El Jobal cultiva coco maduro y procesa el aceite de coco orgánico. Esta cooperativa representa los intereses de los agricultores. El aceite de coco orgánico es vendido a Shuchil, que procesa barras orgánicas de jabón. El jabón se vende tanto en el mercado nacional y mundial. Al igual que en la cadena global, la cadena salvadoreña tiene las características de una cadena impulsada por el comprador. Las barreras de ingreso en los mercados de países desarrollados son altas para los agentes de El Salvador. Esto se debe a la demanda sofisticada, requiere normas privadas y públicas y la necesidad de conocimiento de los mercados de países desarrollados. La integración en el CCG El Jobal requiere de escalamiento.
La opción de escalamiento preferida (FOD) analizada en esta tesis es la exportación de aceite de coco orgánico a Europa para la industria cosmética. Esta opción fue seleccionada por el Centro de Promoción de Importaciones de Países en Desarrollo (CBI), cuando reportó oportunidades de comercialización para los pequeños productores de aceite de coco orgánico de los países en desarrollo como El Salvador. Para conseguir el acceso a los mercados europeos El Jobal tiene que mejorar los procesos y productos con el fin de cumplir con las normas del sector privado y público. Por otra parte la calidad debe mejorar y considerar los esfuerzos la comercialización del aceite de coco.
Coconut in El Salvador
Coconut production in El Salvador is not something new. The oldest of all plantations is 74 years old. It is situated in the Jiquilisco Bay, which is a longestablished coconut growing area. Overall, coconut growing is considered as a smallholder crop, which is not very labor intensive in maintenance. For that reason not a lot of importance is given to coconut cultivation. However, coconut farming has for many people in the world social and economic value. It supplements nutrition and diverse parts are used as raw material inputs for the industry, which produces coconut water, coconut milk, coconut cream, copra, coconut oil, coconut flour, coconut fiber, charcoal of coconut and many other products. (Velden, E van der, 2005, p: 1)
Coconut actors in El Salvador have not yet exploited the various commercialization opportunities of coconut. The major Salvadoran processor of products derived out of coconut is El Jobal. This is a coconut oil producing cooperative locate on the island Espíritu Santo. The cooperative attends to the interests of 195 farmers, which are the associates. The production of coconut oil suffers from problems. The low prices received for the oil lowers the incentive to continue the processing activities. Instead of assuring high quality by using good quality coconut as input material, inferior coconuts are used. The good quality coconut can be sold easily at the national market. They obtain a price of USD 135.7 for 1,000 kg coconut. I t is appealing for farmers to sell the nuts without further processing. Other problems relate to the remoteness of the island, the bad condition of the oil expeller and the competition from the cheaper palm kernel oil, which can be used to substitute coconut oil in soap product ion. (Velden, E van der, 2005, p: 2)
The cooperative El Jobal is located on the island El Espíritu Santo in the Jiquilisco Bay area, to the south of Usultután. The total coconut cultivation area on the island covers 1,126 hectares. It is the largest grower of coconut in the region. El Jobal ships mature coconuts to El Puerto de Triunfo. From here buyers transport the coconuts to the wholesale market in San Salvador. (Velden, E van der, 2005, p: 67)
Global Chain diagram
Wholesalers act as intermediaries; they buy coconut oil soap from final processing industries and sell to downstream actors in the chain. Wholesalers provide retailers the opportunity to buy their range of products, without having to negotiate with every producer. Wholesalers export coconut oil soap as well to other countries. Some multinational cosmetic industries sell directly to retailers and ignore wholesalers. Retailers acquire toilet soap bars from importers, wholesalers, or directly from final processing industries. There are different kinds of retailers that offer toilet soap to consumers like supermarkets and drugstores.
In the Netherlands the majority of soap is distributed by drugstores, but supermarkets are gaining grounds. (Velden, E van der, 2005, p: 29-30)
El Salvador Chain diagram
Internal agents govern the production and trade networks. The main economic actors in the coconut oil/soap chain are growers, processors of coconut oil, toilet bar soap processing industries, wholesalers, and retailers. Furthermore, other agents are traders, brokers, exporters, and importers. They enable market Access of the coconut oil/ soap for further processing or sales. All actors in the chain are closely linked to and depend on each other. Organizational aspects are of importance within the GCC approach.
Coconut is a smallholder crop, 96% of the cultivated land is smaller than four hectares. The coconuts are grown for tender nut consumption or as input for further processing. Around 70 percent is used for further processing. For producing coconut oil, the fruit is harvested after nine to eleven months. Coconut fruits contain 55.7 percent copra after nine months and close to 94 percent copra after eleven month (MAG, 2001). Farmers sell coconut to traders or directly to coconut mills. Growers selling to industries for further processing often husk coconut and dry copra before selling.
(Velden, E van der, 2005, p: 29)
The cooperative El Jobal is the only actor in El Salvador that grows coconut for the production of (organic) coconut oil. The cooperative consists of 195 associates and was founded in 1980 to represent the interests of the farmers. Members of the cooperative cultivate coconut. Around 80 percent of the harvest is sold as mature coconut to wholesalers and the remaining part is used as input for further processing. The farmers of the cooperative grow as well corn, bananas and sesame seeds, and have cattle, poultry, and a pond with shrimps. (Velden, E van der, 2005, p: 55)
Institutional and policy dimension
Institutions influence agro-commodity chains by regulations, arrangements and policies.
In the coconut oil/ soap chain different global, regional, and local agents shape the framework. Governments and certification institutes provide public and private standards for trade and processing of coconut oil/ soap. (Velden, E van der, 2005, p: 48)
Regulations and strategies of governments and institutions create incentives and disincentives for agents along the chain. The impacts of global and regional agents are discussed. SHUCHI L will have to take the behavior of these agents into account when exporting their soaps to Europe In addition; national policies will affect the behavior of Salvadoran coconut oil/soap actors. Finally, nongovernmental organizations in El Salvador support farmers and processors to improve their situation. (Velden, E van der, 2005, p: 48)
Since the 70s the Salvadoran government does not give much priority to (nontraditional) agriculture. Where as it is still fairly important for the economy More than 26 percent of the population is employed in the farming sector (IICA) In2004 0.9 (MH) percent of the fiscal budget was spent on agriculture, while 8.5 (World Bank, 2005) percent of the GDP in 2003 was earned in this sector. To get an idea about the scale and productivity, 1.4 percent of the Dutch working population (LEI, 2005) works in the agricultural sector and 10.3 percent is produced of the total value added in the Netherlands. The Salvadoran government recently started to promote diversification of agricultural production. They aim at decreasing the dependence of traditional crops like coffee and sugarcane for the earning of foreign exchange. In 2002 the government started the program FRUTALES to increase the production and commercialization of fruits. Coconut is one of the products included in the project. (Velden, E van der, 2005, p: 48)
The program is set up in collaboration with the Inter -American Agricultural Cooperation Institute (IICA) and the US Department of Agriculture (USDA). Other institutions participating in the program are Federación Salvadoreña de Cooperativa de la Reforma Agraria (FESACORA) and Centro de Transferencia de Tecnología Agropecuaria y Forestal (CENTA) . FESACORA offers assistance in the strengthening of producer’s organizations while CENTA offers technical assistance to producers (Van den Broek, 2004) the program offers various services to farmers and processors such as market information, technical assistance, consults for producers and organizations, production manuals and financial assistance. (Velden, E van der, 2005, p: 72)
El Jobal receives within the FRUTAL ES program technical assistance from the IICA. They started to breed coconut palms of the hybrid id type because of their resistance against the disease lethal yellowing. Nowadays around 140 of the 1125.6 hectares are grown with the hybrid palm (Interview El Jobal, 29 October 2004). Besides, El Jobal sells 150-200 young palms a month to other actors in the chain. (Velden, E van der, 2005, p: 73)
El Jobal is the only present coconut oil processor left. In the past two other small cooperatives were producing, but due to organizational problems, high costs of production and low prices they left the market. El Jobal faces various problems considering the availability of necessary spare parts for machinery, the competition of inexpensive palm kernel oil and the lack of quality control. El Jobal could use assistance in organizational aspects of working in a cooperative, upgrading coconut oil in cooking oil for increased value added, help for the commercialization of the products and improving the accessibility to financial means (Interview El Jobal, 20 January 2004). The Salvadoran government and non governmental organizations could provide solutions. (Velden, E van der, 2005, p: 73)
The government role in coordination of the economy is limited in El Salvador (Ambassade van het Koninkr ij k der Neder landen, 2005). Policy during the last decade was mainly aimed at withdrawing the role of the government in the Salvadoran economy.
The government is a supporter of free trade, but implemented some legislation that may prevent distortions to the economy and society. An example is the law implemented after the civil war, which states that individuals and legal persons cannot own more than 245 hectares of land. This law has complications for the structure of the chain and concentration of cultivators. (Velden, E van der, 2005, p: 73)
The government does not have special regulation (public standards) regarding toilet soap bars. New products have to be registered at the Ministry of Economic Affairs (CONAMYPE, 2005). This department provides as well marketing studies of soap to SHUCHI L. Furthermore, SHUCHI L receives technical assistance from Centromype, Conamype, GTZ and Expoaid. Centromype and Conamype are organizations that help with starting small businesses and supply training, statistics and information about laws and trade agreements. Expoaid and GTZ provide financial means and bring together actors to visit trade fairs for promoting their products. (Velden, E van der, 2005, p: 73)
Recently free trade agreements were signed between Central America and the US. This may become advantageous for SHUCHI L because of their exporting activities to the US. A small part of the soap is exported to Europe. The EU considers El Salvador as a developing country and is part of the GSP. However, El Salvador risks losing this preferential position because of their constitution that withholds the right for civil servants to organize in trade unions. Because of the GSP, imported soap is exempted from import tariffs. Losing their status will signify that Salvadoran products will become more expensive and as a result more unattractive. (Velden, E van der, 2005, p: 74)
Only members of the cooperative have the opportunity to supply mature coconut for oil production, other farmers sell to intermediaries. El Jobal owns boats for transportation to the harbor; but does not own vehicles for further transportation to markets. A clear disadvantage is the remoteness of the island, transportation to markets is time consuming and expensive. (Velden, E van der, 2005, p: 68)
Coconut oil production in Central America is highly concentrated. El Jobal is the only producer of organic coconut oil in the region. Producers of soap use coconut oil or palm kernel oil for manufacturing soap bars. Palm kernel oil is the cheaper alternative and is imported from Honduras by some processors. Soap processing industries are concentrated because of high star t up costs. In the niche market of organic coconut oil soap, SHUCHI L is the only certified producer in El Salvador. (Velden, E van der, 2005, p: 70)
Also retailers are concentrated in El Salvador. A couple of large supermarket chains control the market and specialty shops selling organic products are rare.
The Salvadoran government recently started to promote diversification of agricultural production. They aim at decreasing the dependence of traditional crops like coffee and sugarcane for the earning of foreign exchange. (Velden, E van der, 2005, p: 72)
The government role in coordination of the economy is limited in El Salvador (Ambassade van het Koninkrijk der Nederlanden, 2005). Policy during the last decade was mainly aimed at withdrawing the role of the government in the Salvadoran economy. The government is a supporter of free trade, but implemented some legislation that may prevent distortions to the economy and society. (Velden, E van der, 2005, p: 73)
Velden, E van der. 2005. Going Up the Value Ladder The Case of the Coconut Oil/ Soap Chain of El Salvador. Master thesis Economics. Faculty of Economics and Business Administration. Tilburg University.
- Ellen Van Der Velden, e-mail firstname.lastname@example.org