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The main finding was that the traditional coconut supply
chain is long and complex because the growing areas
are far away from the mills that extract the oil from the
dried coconuts (copra). Middlemen connect the farmers
with the mills and deliver important logistical services.
We have identified three main areas that need attention
in the coconut supply chains.
Based on Proforest’s recommendations from the
supply chain risk assessment we have developed a
coconut supply chain risk mitigation plan. The plan
will be tested on a pilot scale in 2019 and brought to
full scale in 2020. The three key pillars for our risk
mitigation plan are:
Progressing on responsible sourcing of coconut oil
As stated in our Policy for Responsible Sourcing of
Vegetable Oils, in AAK, we actively include smallholders
in our supply chains. In order to simplify the supply
chain for the farmers and to ensure traceability we have
started a direct sourcing project in Indonesia. Here our
partner mill collects the copra directly from the village
level, as a means to ensure that a bigger share of the
value goes to the farmers. We will continue to work with
this project in 2019 and develop it even further.
Supplier engagement Smallholder impact
Traditional coconut supply chain
Individual
smallholder
farmers
Middlemen providing
logistical services
connecting the farmers
to the mill
Group of
smallholder
farmers
AAK and mill directly picking
up copra from farmers
and providing training
and equipment
AAK initiated
the direct
sourcing project
Coconut
oil mill
AAK
AAK's direct sourcing supply chain
Vegan coconut oil
AAK is the co-development company, closely
working together with our customers and also
closely monitoring trends in the markets. Coconut oil
is a preferred ingredient for many plant-based applications
like vegan ice cream or cheese. However, in
2018, together with one customer, AAK discovered
that the vegan community was highly concerned that
monkeys could have been involved in the harvesting
of coconuts.
It is a common practice, mainly in Thailand and
Malaysia, that pig-tailed macaques are trained
to pick coconuts from the trees. This means that
coconut oil coming from a supply chain where
monkeys are involved in the harvesting process
cannot be classified as vegan anymore by the
standards of The Vegan Society.
AAK has been working closely together with our
suppliers in 2018 to develop a supply chain that
can verify that no monkeys have been involved in
the harvesting process. Therefore, we are now able
to provide products that can achieve The Vegan
Society’s trademark on end products.
Market uptake