Coconut Market – Value-added Processing
An assignment for Strongim Bisnis, a program supported by the Australian Government in Solomon Islands.
Duration: Over 30 days in April/May 2018, 20 days of which will be in Solomon Islands (Honiara)
Specialist inputs: One consultant is sought
ARF rate: Up to C4
Background to the Strongim Bisnis program
Strongim Bisnis is an AUD14 million, three-year market systems development (MSD) program funded by the Australian Government in Solomon Islands, working under the umbrella of the Solomon Islands Growth Program (SIGP). Its goal is to stimulate growth in specific sectors (initially tourism, cocoa and coconut) through activities that catalyse business innovation, change practices, strengthen collaboration, manage risks, build resilience and increase women’s participation and empowerment. It commenced in July 2017.
The program has three end-of-program outcomes (EOPOs) to June 2020:
- Business is demonstrating potential for increased productivity, greater resilience, better risk management, more income earning opportunities and access to high value markets, measured by higher agricultural yields, more efficient use of assets and labour, and new business models that favour employment, incomes or trade.
- The private sector and government work together to increase opportunities for trade and investment, and form external partnerships that accelerate business growth, measured by a more favourable investment climate and external partnerships that accelerate changing business practice.
- Women and youth have increased economic opportunity, measured by women’s and youth participation in the above outcomes, and specific measures for women’s and youth economic empowerment.
Background to this Assignment
Coconuts in Solomon Islands have historically been valued commercially as copra, which is traded internationally for use in the production of oil, soap and other products. While copra has dominated trade in coconut in the past, the decline in world trade of copra, volatile prices, and high cost of transportation mean that there are low margins for all throughout the value chain. Growers are increasingly looking for higher value markets to sell their coconuts; or when there are options – shifting to other income earning activities. More companies are looking at niche and higher value markets (organic) or looking at value addition (CNO, VCO, cream, coir) for more opportunities.
This increasing interest of companies and growers alike to explore options for producing higher-value coconut has started to spark innovation into new products for domestic and export markets and capturing more value out of each nut using a zero-waste approach – in other words using all parts of the nut. The sale of coconuts for virgin coconut oil and selling coconuts in the local markets can produce higher margins for growers who have access to these markets; and in some areas of the country these markets have displaced the trade of copra. However, growers in remote areas who do not have access to these alternative outlets for coconuts will continue to rely on copra from income, until alternative markets develop.
Given the volatility of copra in the world market, coconut sector stakeholders agree that future and sustainable growth of the sector will need to be driven by product diversification and value addition.
Objective of the Assignment
The objective of the assignment is to inform Strongim Bisnis’ strategy in promoting value-added processing in the Solomon Islands. The assignment will include a deep demand assessment for coconut value-added products in domestic, regional/international markets, as well as analyse the feasibility of operating value-added processing/sales operations at the micro, small, and medium-scale level in Solomon Islands. The strategy will be devised using market analytics and trends, and will need to take into consideration Solomon Islands’ coconut sector/actor context, capacities, and constraints. Private sector actors in the Solomon Islands and potential foreign investors should have an understanding of whether investing in value-added processing for specific products and using specific technologies is a viable proposition.
Scope of Work
The consultant will undertake the following:
- Review relevant documentation including: the SIGP Design document the Solomon Islands Government National Development Strategy (2016-2035), The Coconut Sector Strategy for Solomon Islands, The Coconut Sector Market System Analysis (MSA), sectoral plans and policies for coconut, and any other relevant documents.
- Attend a briefing from the Strongim Bisnis, management team and undertake consultations with relevant stakeholders (to be determined based on gaps in knowledge from the desk analysis.)
- Conduct demand analysis:
- What is the demand for coconut value-added products in regional and international markets?
- Building off of Coconut Market for PNG Technical Report 113 by PHAMA, which markets and for what products (crude coconut oil; virgin coconut oil; white copra & its derivatives – body oils, lotions & creams, desiccated coconut; coconut soap; coconut cooking oil; coconut water (processed & green tender nut); coconut fibre products; and activate carbon) present the best opportunities for Solomon Islands (SI) exporters and why (keeping in mind the capacity of exporters and the constraints in the coconut market system in SI)? What is the current scale of market for coconut-derived value-added goods, growth trends and consumer preferences for such products?
- What standards/certifications or other requirements would need to be met to export into these new markets? What are the costs associated with the certifications?
- Who are the main buyers in these markets for the recommended products (company name, profile, website URL, contact information, products the company purchases).
- What is the current/potential demand for coconut value-added products in Solomon Islands?
- What products (i.e. crude coconut oil; virgin coconut oil, white copra & its derivatives body oils, lotions & creams, desiccated coconut; coconut soap; and coconut cooking oil; coconut water (processed & green tender nut), coconut fibre products, and activated carbon) have the biggest potential for production/sales in SI and why (compared with competing imported products’ quality, price, packaging, and brand power)?
- What policies/regulations would have to change to promote SI value-added processing/sales?
- Conduct feasibility studies (minimum 5 products including micro, small, and medium-scale processing):
- What products are feasible to produce in SIs for sale in domestic and export markets at the micro, small and medium scale? Analysing investment, production, transportation/shipping, and other operating costs and keeping in mind potential demand, competition from imported products, and local context/capacity?
- This will include an analysis of what specific technologies are suitable at the micro, small, and medium-scale processing level for the identified value-added products (within the SI context and capacity/constraints)? Each processing technology recommended will include: name of technology company, equipment identification number, list of preferred regional suppliers of the equipment with contact information, description of volume capacity of equipment, description of power needs, and any other relevant specifications.
- The feasibility studies must include business cases (i.e. pro forma financial statements detailing the investment capital required, operating costs, and anticipated revenues – among other factors - with pessimistic/realistic/optimistic projections) using excel tables.
- Identify any specific market development opportunities; and recommend appropriate actions to meet those identified market opportunities including any appropriate supply chain development and market development work.
- Conduct an assessment results workshop with industry stakeholders in Honiara.
Deliverables and schedule
The assignment will commence in April and require 30 days of inputs by the consultant (including travel, reading, consultation, analysis, and report writing). The assignment should be completed in May 2018. Submission dates for deliverables will be finalized upon contract signing. All deliverables must be approved by Strongim Bisnis.
Timeframe and deliverables
Up to 1 day (virtual)
Strongim Bisnis briefing
Up to .5 day
Draft report outline
Demand analysis (regional/international)
Up to 3 days
Draft demand analysis (regional/international) – MSWord
Final demand analysis (regional/international) – MSWord and PPT Summary
Demand analysis (domestic Solomon Islands)
Up to 10 days
Draft demand analysis (domestic) - MSWord
Final demand analysis (domestic) – MSWord and PPT Summary
Up to 14.5 days (4.5 days virtual)
Draft list of products and justification for choosing these products for analysis
Final list of products to be included in feasibility study
Draft feasibility studies – Excel analysis
Final feasibility studies– Excel analysis and PPT Summary
Assessment results workshop with industry stakeholders in Honiara
Skills and experience required
The consultant should have:
- University degree in business, agricultural economics, agribusiness management, or a closely related field; MBA or post-graduate degree preferred.
- At least 7 years of relevant experience in agri-business; coconut sector and pacific experience preferred.
- Demonstrated experience in conducting demand assessments and business feasibility studies; coconut sector preferred.
- Demonstrated experience with value-added processing technologies for micro, small, and medium-scale processing.
- Understanding of the context, capacities and constraints of coconut value-added processing in the pacific region; Solomon Islands preferred.
- Proven ability to produce high quality comprehensible analytical reports and provide sound recommendations.
- Excellent command of English and excellent writing skills;