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R37m coconut boost for small farmers
R37m coconut boost for small farmers

R37m coconut boost for small farmers

FMCG SUPPLIER NEWS - Jun 24th, 10:47

Cape Town – A high degree of interest in the medical and health benefits of coconut oil has led to a joint venture worth $4m (about R37m) between Agri-Vie and Vida Oils International. 

According to Deon Coetzee, CEO of Vida Oils International, the company sees a significant market development potential for coconut oil and wants to create greater access to market for less developed African countries.

Coconut competes in the Lauric oil (palmkernel and coconut oils) market where it provides a cost-benefit in food, pharmaceutical, cosmetic and chemical applications.

“Coconut oil is already a key ingredient in dermatological applications and the critical role of coconut products are increasingly growing in acceptance in the US,” said Coetzee.

The joint venture would involve processing coconut into specialist oils and fats for the food, pharmaceuticals, cosmetics and chemical sectors in South Africa.

Avril Stassen, a partner in Agri-Vie, said that the transaction comprised the acquisition and merger of three separate South African and Mozambican entities from different vendors.

Initially small scale growers in Mozambique, who tend to lose most of their crop to waste, will be used and integrated with Asian supply chains to diversify the supply base.

These Mozambican communities will be uplifted by the introduction of market price stability and improved sustainable agricultural practices, according to Stassen.

Stassen said Vida Oils is set to increase the output of coconut oil by three- to fourfold over the next three to five years.

“Currently, this is an untapped market and only a very small portion of the coconuts produced in Mozambique are currently converted to value added products. Most of the final product will be sold into the South African market to replace imported lauric oils.”

Louis Strydom, a director and founding member of Vida Oils International, said the strong growth in demand for Lauric oils over the past decade has highlighted a number of environmentally damaging and socially harmful plantation practices in the industry.

“From the onset we have implemented a supplier engagement programme that ensures our feedstock procurement operation is founded on developing a socially, economically and environmentally sustainable supply,” said Strydom.

Vida Oils will also develop markets for byproducts for the small-scale growers by converting the husk and the shell of the coconut and uprooted trees into a biomass energy source and growing medium and environmental rehabilitation products.

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