First wk November, VCO Survey in North.

VCO Fact Finding Tour – Vanualevu Fiji
3rd Nov – 7th Nov 2008

Overview:

The situation with the production Cold Pressed Coconut Oil using either the DME or the Tiny Tech method in the Northern Division of Fiji during my visit was in an appalling state. The reasons for the small processing centres becoming defunctt were to some extent complicated due to the different situations the various processing centres were subjected to both internally and externally. For instance one of the producers had its products returned because it did not meet food safety and health standards that were being flaunted by Asian producers.

This problem persists with most virgin coconut oil producers thereby presenting a challenge to those enterprises that are ready to take their businesses another step forward and practice some food safety and health requirements and start to derive an income from the most lucrative segment of the VCO industry which is the use of VCO as a medication.

The aromatic oils and soap making segment of the VCO industry targets the tourism industry and is as lucrative as the medicinal segment but the volatile political situation in Fiji to some extent dictates the success of these micro enterprises.

The industry was born in Fiji some 14years ago with the introduction of the Direct Micro Expeller by Dan Ethrington. There however has been very little done to educate the local market on the health benefits of the VCO in order to create some sustainability for this industry when the economy fluctuates rapidly over short period of time. Cottage industries like this could effectively contribute collectively to Fiji’s balance of payments since coconuts is second most grown crop besides sugar cane.

The dominant problem with DME’s is in part replacement, availability, cost, and access to these equipments. Since the majority of these processing centres are located in rural areas, the operators lack information on how; to access replacement parts and therefore continuously have a the problem of consistency in production and supply problem.

Most DME’s have galvanized flat iron sheets used to make the bed of the drier. Over time the flat iron rusts and is only replaced when the shredded coconut flesh falls through. Because of these rusting portions there will tend to be traces of iron, and lead found in the coconut oil.

This has a devastating impact on the niche markets being targeted in Europe and the America’s. Quality control, food safety and health requirements for VCO production does not exist in any form which processors could follow.

Producers do realise the need to setup processing plants that meet these HACCP standards. The major concern is in the cost of investment and the slow return of investment rate, high interest and loan repayment rates, economic recession in dominant world economies, increasing freight and fuel and labor costs coupled to inflation at 3% and the poverty line drawn to $6.5k per household the risk is quite high for rural dwellers without much equity to venture into.

However if these processors are certified with HACCP or ISO 22,000; there is a window of hope for the producers in the industry as it would be the platform to launch their products into the global market. The expertise of the FACT Marketing Officer would help such industries secure some of these markets.

Most DME’s produce; 1 litre of Cold Pressed Coconut Oil from 10 - 13 whole nuts. Depending on the size of the processing plant (graters/scrapers, driers etc), the volume of oil produced daily vary from 20 litres to 400 litres in a day at an average cost of $4.57 per litre. An average mark up of 30% would earn the business $1.37 per litre. Illustrated below is a basic operation and processing cost for the production of 1 litre of VCO.

The VCO production process:

1. Field Collection.
2. Sorting.
3. Husk removal.
4. Halving of nuts.
5. Grading
6. Cleaning/washing of kernel
7. Grating
8. Drying
9. Pressing
10. Filtering
11. Storing
12. Bottling
13. Packaging

‘Fermentation’ could be the best alternative for VCO production given the little investment required and quality of oil obtained. The process may be slower but it is more viable for rural based processing plants because of the limited overhead costs. On the other hand the processing centre is un-clustered therefore making it easier to qualify for HACCP certification based on simple and contaminant free production systems if set up right.

The ‘Tiny Tech Technology’ (TTT) may be the best option for bulk processing because of the mills capacity to process 1,200-1,400 whole nuts per day. The TTT has an average input output ratio of 10 nuts /litre oil. The cost of establishment is approximately $25k fjd FOB plus cost of shed and driers.

A very important factor in the success of these indigenous owned enterprises is the location of the plant. Most rural dwellers are easily lured to easier form of income. When these opportunities arise they tend to opt for the easy way out and stop VCO production. The other factor that affected the success of these enterprises was notion that since the initial plant was either Govt or NGO assisted the repairs or maintenance was to be continually at the cost of Govt or the NGO.

(Report By Mr Sanfred Smith - FACT)