Coconut Sector Strategy Solomon Islands - International ...

 
Coconut Sector Strategy Solomon Islands - International ...
Coconut Sector Strategy
   Solomon Islands
Coconut Sector Strategy Solomon Islands - International ...
COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

The International Trade Centre (ITC) is the joint agency of the World Trade Organization and the United
Nations.

ITC, Palais des Nations, 1211 Geneva 10, Switzerland (www.intracen.org)

     Views expressed in this document are those of the authors and do not necessarily coincide with
     those of ITC, UN or WTO. The designations employed and the presentation of material in this paper
     do not imply the expression of any opinion whatsoever on the part of the International Trade Centre
     concerning the legal status of any country, territory, city or area or of its authorities, or concerning the
     delimitation of its frontiers or boundaries.

     Mention of firms, products and product brands does not imply the endorsement of ITC.

This document has not been formally edited by the International Trade Centre.

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COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

                                         Acknowledgements

To the more than 100 sector stakeholders that participated in the Strategy Design including Malaita,
Guadacanal and Western province farmers, provincial Authorities, processors, support Institutions and
Government Representatives.
A special acknowledgement is awarded to the Solomon Islands Coconut Industry Secretariat members
:Cornelius Donga, Alfred Ramo, Jack chotu, Vernon Smith, Willie Tollie, Stephenson Talogwari, Titus
Sura, Dr. Judson Leafasia, Bevan Vollrath and to Mr. Hernan A. Manson and Mr. Antony Sandana from
the International Trade Centre.

In addition, special thanks go to the following individuals and institutions:
Solomon Islands Coconut Secretariat Members:
Cornelius Donga (Chair)                             Ministry of Commerce, Industry, labour and Immigration
Alfred Ramo                                         Commodity Export Marketing Authority
Jack Chottu                                         Private Sector
                                                    Farmer
Vernon Smith                                        Private Sector
                                                    Processor
Willie Tollie                                       Private Sector
                                                    Farmer
Stephenson Talogwari                                Ministry of Foreign Affairs
Titus Sura                                          Ministry of Agriculture and Livestock
Dr. Judson Leafasia (Chair until March 2010)        Ministry of Rural development
                                                    Permanent Secretary to Deputy Prime Minister
Bevan Vollrath (Vice Chair until June 2010)         Private Sector
                                                    Processor

Committee supporting members:
Alfred Maesulea (retired)                           Ministry of Agriculture and Livestock
Patteson Harisi                                     Private Sector – Shipper
Belani Tekulu                                       Private Sector – Buyer / Exporter

Malaita Province Coconut Committee Members:
Robert Kaua                                         Deputy Provincial Secretary
Michael Maeliau                                     Private Sector – Farmer
Tony Uania                                          Provincial Member
Labu Toito‘ona                                      Ministry of Agriculture Extension Officer
Job Kabui                                           Private Sector
Joses Naumai                                        Private Sector – Farmer
Peter Mana                                          Private Sector- Processor
Stephen Tolinao                                     Private Sector

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COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

Western Province Coconut Committee Members:

IODINE.PANASASA                       CIO-IDD
JOEL BILLY                            FARMER
JOHN TAUPA LILO                       PROCCESSOR
FREDLY NITALO                         FARMER/TEACHER
RICHARD BULEHITE                      PROV/AGRICULTURE
PETER QAQARA                          FARMER
VERONIKA.TANITO                       PROCCESSOR
JESCA.THEOKHERRAGUA                   FARMER

Guadalcanal Province Coconut Committee Members:
Sophia Chottu (Chair)                 Solomon Islands Career Development Centre (Private Sector)
Jacob Gala                            Private Sector- Farmer
Stephen Ngele                         Provincial Speaker
Barney Paulson                        Private Sector- Farmer
Ana Luvu                              Ministry of Finance
Nathaniel Ha‘amarasi                  Ministry of Agriculture and Livestock
Annie Maedia                          Solomon Islands Grass Root Women Association – (Private Sector)
Selina Beato                          Solomon Islands Grass Root Women Association – (Private Sector)
Remondo Kapini                        Private Sector- Farmer
Jacinta Ha‘amarasi                    Solomon Islands Grass Root Women Association – (Private Sector)
Cecil Beato                           Private Sector- Farmer

International Trade Centre
Hernan A. Manson (Team Leader)       Associate Adviser for Value chain and Strategy Development

Antony Sandana                       Senior Commodities Officer

Paul Roughan                         National Consultant (ITC)

Vinay Chand                          Senior Consultant on Coconut sector (ITC)

Collaborating Institutions
The Coordinating Committee would also like to provide its reconnaissance for the inputs and resources
provided by the following institutions:
                                                                      Dr. Abdoul Aziz Mbaye
EU Delegation                                                         Jenny Brown
                                                                      Peter Reddish
UNDP                                                                  Janet Funa

Asian & Pacific Coconut Community (APCC)                              Romulo N. Arancon (Jr.)
                                                                      Vinesh Prasad
South Pacific Community
                                                                      Shane Tutua

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COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

The present strategy has been put together by the stakeholders of the coconut sector and
institutions of the Solomon Islands.

With support from:

All ACP Agricultural Commodities Programme

Financed by the European Commission

In collaboration with:

The International Trade Centre (ITC)

For information on the methodology used for the development of this strategy, please
contact:
                 International Trade Centre
                 Division of Country Programmes
                 Export Strategy
                 Tel: +41 22 730 0111
                 Fax: +41 22 730 0575
                 Web: http://www.intracen.org
                 E-mail: exportstrategy@intracen.org

The designations used and the presentation in this report do not imply an expression of an opinion on
behalf of the ITC about the legal status of the countries, territories, cities or areas, about their legal
authority, or about the delimitation of their borders or territorial limits. This report was not officially edited
by the ITC

                                                        v
COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

DVD video of:
Coconut sector strategy
Solomon Islands

DVD instructions:
Open the ―Video_TS‖ folder from your CD drive, double-click the file ―VTS_01_1.VOB‖ to play the video file on
your computer.
Compatible with VLC Player and Windows Media Player

vi                                                                                            EC-10-174.E
COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

                Vision for the Coconut Sector

To have a modernized Coconut industry by 2020 that is able to contribute
significantly to national peace, unity and economic development for
prosperity of our people.

                                       vii
COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

                                                                                           Contents

COCONUT SECTOR STRATEGY .......................................................................................................................................I
SOLOMON ISLANDS...............................................................................................................................................................I
VISION FOR THE COCONUT SECTOR ........................................................................................................................ VI
NOTE TO THE READERS AND PURPOSE OF THIS DOCUMENT ..................................................................... X
MESSAGE FROM THE MINISTRY OF COMMERCE, INDUSTRY, IMMIGRATION AND LABOUR ........ XI
MESSAGE FROM THE MINISTRY OF AGRICULTURE AND LIVESTOCK ..................................................... XI
MESSAGE FROM THE SOLOMON ISLANDS COCONUT SECRETARIAT .................................................. XII
MESSAGE FROM COMMODITY EXPORT MARKETING AUTHORITY .......................................................... XII
MESSAGE COCONUT FARMERS OF SOLOMON ISLANDS ............................................................................. XII
1.       INTRODUCTION ............................................................................................................................................................. 1
     THE STRATEGY DEVELOPMENT PROCESS ......................................................................................................................................... 1
2.       NATIONAL SETTING .................................................................................................................................................... 2
     COUNTRY OVERVIEW................................................................................................................................................................................. 2
     DEVELOPMENT, SOCIETY AND ECONOMY .......................................................................................................................................... 3
3.       IMPORTANCE OF COCONUT SECTOR TO SOLOMON ISLANDS............................................................ 4
4.       CURRENT INDUSTRY SITUATION ......................................................................................................................... 8
     W ORLD PRODUCTION ............................................................................................................................................................................... 8
     THE COCONUT SECTOR IN SOLOMON ISLANDS ............................................................................................................................... 8
     REGIONAL CHARACTERISTICS ..............................................................................................................................................................12
     CONSTRAINTS AFFECTING VALUE CHAIN ACTORS ........................................................................................................................13
5.       STRATEGIC OPTIONS AND TARGET MARKETS: ........................................................................................ 14
     OVERALL NATIONAL PRIORITIES.........................................................................................................................................................15
4        STRATEGIC OBJECTIVES AND IMPLEMENTATION FRAMEWORK .................................................... 18
     STRATEGIC OBJECTIVES ........................................................................................................................................................................18
     INPUTS AND CAPACITY FRAMEWORK .................................................................................................................................................18
     PRIORITIES FOR IMPLEMENTATION ....................................................................................................................................................19
     THE STRATEGY DESIGN AND IMPLEMENTATION MECHANISM ...................................................................................................20
STRATEGIC OBJECTIVES ............................................................................................................................................... 22
DETAILED IMPLEMENTATION PLANS ....................................................................................................................... 29
     IMPLEMENTATION PROGRESS ..............................................................................................................................................................47
ANNEXES ................................................................................................................................................................................ 48
     ANNEX 1: CABINET NOTE .......................................................................................................................................................................49
     ANNEX 3: SOLOMON ISLANDS COCONUT INDUSTRY SECRETARIAT (SICIS) CODE OF PRACTICE ...........................54
     ANNEX 2: SICIS WORK PLAN ...............................................................................................................................................................55
     COORDINATOR ...........................................................................................................................................................................................56
     OFFICE MANAGER .....................................................................................................................................................................................57
     ANNEX 4: REFERENCES .........................................................................................................................................................................65

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Abbreviations
The following abbreviations are used:
AACP                     All ACP Agricultural Commodities Programme
ACP                      African Caribbean Pacific
AFT                      Aid for Trade
ASYCUDA                  Automated System for Customs Data
Aus AID                  Australian Aid Agency;
ACIAR                   Australian Center for Agricultural Research;
ADB                      Asian Development Bank
CCST                     Commodity Chain Stakeholders Team
CSP                      Country Strategy Report
CDF                      Community Development Fund
CIA                      U.S. Central Intelligent Agency
CDC                      Commodity Dependent Countries;
CDS                      Community Development Scheme;
CROP                     Council of Regional Organization of the Pacific;
DSAP                     Development Sustainable Agricultural Programme
EC                       European Commission
EPA                      Economic Partnership Agreement;
EU                       European Union;
FSM                      Federated States of Micronesia
FAO                      Food & Agriculture Organization of United Nations
GDP                      Gross Domestic Product;
GNP                      Gross National Products
HTFA                     High Temperature Forced Air;
HDI                      Human Development Index;
IFAD                     International Fund for Agriculture Development
ITC                      International Trade Center;
IMF                      International Monetary Fund;
IOs                      International Organizations
MORDI                    Mainstreaming Rural Development Innovations Programme
MDG                      Millennium Development Goals;
MSG                      Melanesian Spearhead Group;
MCPD                     Multi country Programme Document;
NZ                       New Zealand;
NZ Aid                   New Zealand Aid Agency;
PACER                    Pacific Agreement on Closer Economic Relations
PICs                     Pacific Island Countries
PNG                      Papua New Guinea
PIFS                     Pacific Island Forum Secretariat;
PICTA                    Pacific Island Countries Trade Agreement;
RAMSI                    Regional Assistance Mission to the Solomon Islands
RoO                      Rules of Origin
RPFS                     Regional Programme for Food Security
SPs                      Special Products
SDT                      Special and Differential Treatment
SPS                      Sanitary and Phyto-sanitary system
TA                       Technical Assistance
UNCTAD                   United Nations Conference for Trade and Develpment
USA                      United States of America;
VAI                      Vulnerability and Adaptation Initiative
WTO                      World Trade Organization

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COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

               Note to the readers and purpose of this document
As part of the EU funded All ACP Agriculture Commodities Programme (AAACP), the Solomon Islands
government undertook the development of a Sector wide holistic strategy for Coconuts and Coconut
value added products.
The initiative was led by Private sector and involved more than 100 stakeholders including farmers,
processors and support institutions from the Western, Malaita and Guadalcanal Provinces. The Ministries
of Agriculture and Livestock, Commerce, Industry, Labour and Immigration, Rural Development and
National Planning and aid coordination were equally involved. The main technical agency providing
support to the Solomon Islands Government for participatory strategy design was the International Trade
Centre (ITC).
The emphasis on the Coconut sector came out of the ACP Secretariat Pacific Kick-Off Workshop held in
Apia, Samoa in February, 2008, where the European Union sought to determine the type of external
assistance necessary to help build the capacity of commodity dependant stakeholders in the Pacific
region.
In this meeting regional and national delegates prioritised the main sectors and countries of intervention.
For Solomon Islands, Coconut was prioritised given its high market potential, the deep impact in rural
areas, the need to support farmer communities diversify from Copra and the low level of external support
provided to the sector.
Under the ACP programme, South Pacific Community (SPC) provided support to ITC and the sector
stakeholders for the development of this strategy.
The Strategy development process has already shown impact through the establishment by Government
of a Solomon Island Coconut Sector Industry Secretariat (SICIS) composed of Stakeholder elected
members representing private and public institutions. This is the first time a national private public body
composed of actual beneficiary representatives (including farmers) has been given the mandate by
Government to represent a sector. Since 2009 the SICIS has worked on a voluntary basis to lead the
strategy development process and plan for implementation using ITC‘s market-led participatory
approach.
The strategy focuses on capitalising in existing opportunities for improved income generation for the rural
areas as well as in promoting investment for the development and strengthening of the processing and
value added industries.
The strategy is aligned to the National Coalition for Reform and Advancement (NCRA) policy statement
and to the Agricultural Development Plan. It is also in line with the Enhanced Integrated Framework
Diagnostic Trade Integration Study and contributes to the nation‘s achievement of the Millennium
Development Goals.
The purpose of this document is to guide and support the development of the Coconut industry by
providing a plan and a management framework that articulates value chain actors, private sector,
existing resources, development activities and donor support.
The parties concerned in the design and in implementation are farmers, private sector enterprises,
processors, buyers, policy makers, government and support institutions.

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COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

    Message from the Ministry of Commerce, Industry, Immigration
    and Labour

Solomon Islands wealth has long been described in terms of its potential and for too long this potential
has not been reached. This has held true for the wealth potential of our vast coconut crop. However after
more than a century of turning coconuts into copra, it is well past time to move beyond copra and reap
the wealth that new products and new uses can unlock from the ―tree of life‖. It is for this reason that I
have pledged the full support and resources of the Ministry for Commerce, Industry, Immigration and
Labour, and for this reason that I have great satisfaction in this the final product
This critical document while the culmination of the strategy development process, represents only the
beginning of the long task of renewing and re-invigorating our coconut industry. As Minister for
Commerce, Industry, Immigration and Labour, I commit the capacity and staff of the Ministry going
forward into the full implementation of this strategy of key national importance.

    Message from the Ministry of Agriculture and Livestock

The development and launch of the Coconut Sector Strategy opens a new chapter in the development of
the Solomon Islands Coconut Industry and brings a lot of hope to our rural farmers.
The industry is now to be led by the beneficiaries themselves.
As the Minister of Agriculture of the New Government, I fully support the Coconut Strategic Plan. Our
Government‘s policy statement fully recognizes and supports the need to urgently develop the Coconut
Industry. This is also further translated through the Ministry of Agriculture and Livestock development
policies.
With the coconut Strategic Plan at hand, I humbly ask the Government, my Minister Colleagues, donor
and implementing partners to support the Secretariat and the Implementation of the strategy in order to
achieve its development objectives and impact.
I would also like to thank ITC for their invaluable contribution and support as well as the European
Delegation for bringing the strategy development to Solomon Islands and for financing its
implementation.
Finally I wish to commend the work of the Coconut Secretariat for their tireless effort in putting together
the plan and their commitment to oversee its implementation.

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COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

      Message from the Solomon Islands Coconut Secretariat

The Coconut Secretariat has great pride in the finalisation of this Strategy document for many reasons. It
represents the confidence of government and donor partners not only in the industry, but in the ability of
industry to participate in a coordinating role with government. As such it represents the best opportunity
for a truly transformative national development, and for the improvement in lives and futures of the rural
majority of the country.
The commitment shown by all stakeholders has been huge and welcome and we look forward to
continuing this important work with them all.

      Message from Commodity Export Marketing Authority
Having a national coconut plan in place puts all relevant coconut industry stakeholders in perspective
towards strategizing the available options and achieving a more focused implementation process.
CEMA sees the important contribution of the coconut and cocoa industry in sustaining and improving the
livelihood of the rural people over the years. Especially given the economic benefits these industries
have made to the family units. Unlike logging the entire family directly participate in generating income
through engagement in activities in these two industries.
CEMA will continue to play its role in facilitating all relevant stakeholders participating in whatever
development along the value chain for these two industries.

      Message Coconut Farmers of Solomon Islands
The Coconut Farmers have been working in their plantations for the last century in good and bad times,
prosperous times and times of poverty. Still we persevere. It is our sincere hope that through the
implementation of this strategy help is on its way and development reaches rural populations.
It is our vision and belief that: The Coconut Industry will be the uniting feature of the lives of the people
in the whole of Solomon Islands, families working together, earning their livelihood through this industry.
With the development of this Industry our children will be able to attend School and University. This
Industry will unite the whole of Solomon Islands together.

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1. Introduction
Solomon Islands is classified a Least Developed Nation (LDC) under UNDP terminology with more than
seventy five percent (75%) of its labour force is engaged in subsistence farming and fishing. Eighty five
percent (85%) of the total population (a total of 595,613 in 2009) live in the rural areas scattered across
992 islands in its archipelago.
Over the last decades, Solomon Islands‘ economy and people have been dependent on agriculture for
growth and subsistence. During the period 2001 to 2006, the main income earners for the economy were
Timber, Fisheries, Palm Oil, Cocoa and Copra.
As it is well known, Solomon Islands went through approximately 3 years of Social unrest staring in 1999.
The tensions affected severely the lives of Solomon Islanders and the economy and placed the country
in a donor aid dependency situation.
In 2010, 7 years after the conflict slow recovery has been seen and in the case of Coconut, Cocoa and
Palm Oil volumes and income contribution have still not regained previous levels (CEMA).
One of the main elements hampering economic development is related to lack of private sector
investment, lack of trust among actors, infrastructural limitations as well as high cost and
underdeveloped maritime transport services. In fact, most manufactured goods and petroleum products
must be imported.
Despite the above constraints, several opportunities for economic development and improvement of the
livelihoods of Solomon Islanders exist in Agriculture and Agro-processing.
The present strategy constitutes a tool for Government and Solomon Islanders to better capitalize on
existing market opportunities and align support services and donor aid to ensuring the Coconut sector‘s
vision can be achieved.
This strategy is looking into capitalizing on the undoubted opportunity and potential for the coconut
sector. It is anticipated that the implementation will benefit Solomon Island people as a whole together
with the processing sector and more than 40,000 farmers.

The strategy development process
More than 100 sector stakeholders representing private sector, rural communities, Government support
Institutions, Buyers and Ministries have developed this strategy in a participatory way using the value
chain approach. A total of Nine official Stakeholder workshops were conducted at national and provincial
levels and coordination meetings were held monthly since 2009.
The strategy has for the first time united different actors under the same roof to strategically decide on
sustainable and viable alternatives to produce and sell coconut products.
Overall agreement was achieved at a national level through a shared vision of the main development
priorities. Additionally and under the national framework, refined options were identified and adapted by
the provincial value chain actors including Guadalcanal, Western and Malaita provinces.
It is important to highlight that the scope of the present strategy is National and many of its components
are of common importance across all provinces.
A paramount objective was to seek the integration, representation and priorities of rural farmer
communities in order to achieve better decision making and more successful implementation results.
This was done through the EU funded All ACP Agriculture Commodities Programme (AAACP) with the
leadership from the Ministry of Commerce, Industry, Labour and Immigration in cooperation with the
Ministry of Agriculture and Livestock.
The target clients of the strategy are expected to be private sector including farmer associations,
Government Institutions; Business and Trade support organizations; development agencies and funding
partners.
Results are already being evidenced as the strategy development has enabled the creation and
appointment by Cabinet of a sector specific platform (Solomon Islands Coconut Secretariat) for public-
private partnership for decision making.

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COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

2. National Setting
Solomon Islands represent a unique configuration of geography, population and history all of which play
an overarching importance in the trajectory of development and policy. This national setting is outlined
as the starting point for understanding the demands which any effective national strategy must respond
to.

Country overview

Dispersed, archipelagic, and indigenous
1000 islands dot an expanse stretching 1600 km between eastern- and western-most inhabited points.
85% of the population lives in more than 5000 villages throughout the archipelago, and hold legal
authority through traditional rights, of a similar proportion of the land and coastal sea.

Extremely diverse, young and rapidly growing
There are more than 70 indigenous languages with hundreds of dialects, contained with all three Pacific
peoples (Melanesian, Polynesian and Micronesian) in 540,000 people. A recent survey estimated
223,603 children under 15 from a total of 533,671 people (41.9%) and the current population doubling
time is under 30 years.

Rural Economies
The rural majority sustains itself from the resources in its various traditional territories, with limited
reliance on national and global integration, and maintaining the status of these polities as the
predominant basis for societal relations, rather than a 'public' or civil society as assumed by notions of
democratic statehood.

Dual economy
The majority of human consumption of basic items of food and shelter in the country is grown, caught or
otherwise sourced within customary lands and seas. While poorly monetized, this represents the bulk of
the national economy. Government and urban dwellers have a higher dependence on monetized trade
which is captured more readily in national accounts statistics. This cash economy functions with heavy
reliance on the outside world, exporting commodities and primary products, while importing food and
manufactured goods. These two elements – subsistence and cash – form a dual economy, albeit one
that is continuing to mix at higher and higher rates.

Government
The Solomon Islands became a British protectorate in 1899 and gained Independence in 1978 within the
British Commonwealth. The Queen of England still remains the Head of State but is represented by a
Governor General appointed by the Queen upon the recommendation of the Prime Minister.
Government is Parliamentary democracy.        Parliament is unicameral composing of 50 Members.
Cabinet is appointed by the Governor General upon the advice of the Prime Minister.

Cash economy dependent on international trade
Solomon Islands as a lesser developed nation, and more than 75% of its labour force is engaged in
subsistence and fishing. Most manufactured goods and petroleum products must be imported.
Until 1998, when world prices for tropical timber fell steeply, timber was Solomon Islands main export
product, and, in recent years, Solomon Islands forests were dangerously over harvested. Other
important cash crops and exports include copra and palm oil. In 1998 Ross Mining of Australia began
producing gold at Gold Ridge on Guadalcanal. However in the wake of the civil violence in June 2000,
exports of palm oil and gold ceased while exports of timber fell.
Solomon Islands' fisheries also offer prospects for export and domestic economic expansion. However, a
Japanese joint venture, Solomon Taiyo Ltd., which operated the only fish cannery in the country, closed

                                                    2
COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

in mid-2000 as a result of the ethnic disturbances. Though the plant has reopened under local
management, the export of tuna has not resumed. Negotiations are underway which may lead to the
eventual reopening of the Gold Ridge mine. The major oil-palm plantation has reopened under a new
company.
Tourism, particularly diving, could be an important service industry for Solomon Islands. Growth in that
industry is hampered, however, by lack of infrastructure and transportation limitations.

Development, society and economy

Economic transition and rural development
As a primarily subsistence economy, the bulk of human welfare and economic production is in the
subsistence sector, loosely defined as production and consumption which are closely linked and often
practiced entirely within the production unit. In the Solomons this means that the bulk of food and shelter
needs are sourced from agricultural, silvicultural, arboricultural and fishing systems that are practiced
and maintained by families and villages. As more than 85% of Solomon Islands land and coastal sea
remains within the domain of customary authority and tenure, such subsistence livelihoods are possible
with only limited reliance on cash and the monetized market. However, these cycles of production and
consumption are rapidly moving into greater intersection with the cash economy, through population
growth, social change, urban drift and regional natural resource depletion.
This economic transition has been approached by successive governments as a rural development
issue, whereby policy goals have emphasized the creation of cash income options in ―rural areas‖,
composed of people governing and managing themselves, in territories under customary tenure.
Sustainable cash incomes have remained difficult to achieve due to poor infrastructure, low commodity
prices and difficulties in introducing higher value products. Commodities (copra and cocoa in that order)
remain the main route to cash incomes for the rural population, and there is continued strong interest in
enabling this to be diversified. The current NCRA policy augments this approach to livelihood creation
                                            1
with the goal of creating growth centres in the rural areas, to act as stimulus points within the rural
terrain, and hopefully provide some of the infrastructural services needed to unlock the export production
potential inherent in the majority of the country outside of urban areas.

Conflict, post-conflict and recovery
The most notable recent episode of history has been the 1998-2003 national civil unrest called the
―tensions‖ in which major governmental institutions were rendered inoperable and violence led to the
largest internal displacement (estimated 20,000 people) in the entire Pacific region. The Solomon
Islands Government was insolvent by 2002. Since the RAMSI intervention in 2003, the government has
recast its budget. It has consolidated and renegotiated its domestic debt and with Australian backing, is
now seeking to renegotiate its foreign obligations. Principal aid donors are Australia, New Zealand, the
European Union, Japan, and the Republic of China.
Despite the presence now of the regional peacekeeping force RAMSI, Solomon Islands‘ social service
institutions and policy processes remain affected by the effects of this period and face significant
challenges have been compounded by the impacts of both the global economic crises and successive
natural disasters.
The need to build peace between and within communities is a major concern of national authorities, and
is closely linked with the focus on rural development. It is recognised that livelihood opportunities,
employment and cash incomes in the rural areas are key to reducing urban drift and hence the potential
for a resumption of civil conflict around the capital.

1
    NCRA Policy Statement Document

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COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

3. Importance of Coconut sector to Solomon Islands

Coconut is a central feature of an integrated livelihood system for the overall majority of Solomon
Islanders, particularly people in rural areas. Coconut is a common food item for Solomon Island cultures,
and copra is the most widespread cash crop in the country. There is a large standing volume of trees,
comprising a mix of older large plantations and more evenly age-distributed smallholder planting.
Coconut distribution and significance
Half the cultivated land in the Solomon Islands is planted with coconuts. It is difficult to estimate
production because coconuts are spread over many islands and a great deal of production goes un-
harvested and likely to remain that way because some are in uninhabited areas and due to difficulties of
access. As such, there is a large reserve of untapped assets.
Table 1: Estimated standing hectarage Source: CEMA 2010

 Province        Hectarage        % HA        Prod. 1984)          % Prod.       Yield*      Planted
 Western                14,454           25        13,816                32           0.96    2,093
 Isabel                  5,230           9          2,969                    7        0.57    817
 Central                 7,909           13         9,073                21           1.15    1,287
 Guadal                 12,758           22         7,324                17           0.57    1,824
 Malaita                11,980           20         5,575                13           0.47    1,980
 Makira                  3,555           6          2,662                    6        0.75    540
 Temotu                  3,032           5          1,167                    3        0.38    470
 Solomons               58,918        100          42,586                99          0.69     9,011
 Coconut Development Project Survey, MAL, 1984/85
 * Yield = tonnes of copra per hectare
The smallholder plantings are estimated to make up the larger proportion of the total planted area, and
are set to be the predominant arrangement for any expansion in the future, due to the phasing out of the
large plantation system.

Livelihoods contribution of Copra
Coconuts are by far the most important crop grown in the country in terms of area. Coconut trees provide
essential food and nutrition as well as cash income.

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COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

Table 2: Comparison of Copra, cocoa and logging exports Source: World Bank 2009

Although timber, fisheries, oil palm and cocoa earn an often higher level of export income, coconuts
directly and indirectly affect a far larger part of the population and are crucial for the poorer sections of
the population. Logging while a significantly higher source of export earnings, cannot be easily compared
to copra and cocoa because of the large social and environmental externalities associated with it as well
its unsustainability.
The World Bank Sources of Growth briefing papers highlight some major advantages offered to the
coconut industry by smallholders:
       All production is now undertaken by small holders and it has several attractions for smallholders.
       Coconut is a low maintenance, low technology crop with favourable growing conditions in SI.
       Harvesting intensity can be readily adjusted to market conditions with any labour hire falling, along
       with area harvested, when prices are depressed. The lack of other opportunities in rural SI and the
       corresponding low opportunity cost of labour, has meant that copra production has remained a
       relatively attractive cash crop option for small holders. The product is also less susceptible to
       deterioration in storage than cocoa beans.
(World Bank 2009)
This combination of overall scale and wide distribution across households affords the coconut industry
the most important potential for equitable and sustainable growth in the national economy.

Rationale for sector approach and strategy
During the aftermath of the Social unrest, several studies funded by international organizations were
carried out. The focus of the studies was on recommendations on how to recover the Solomon Island
economy.
The International Trade Center was selected by the EU to play a leading role in a program that targets
agricultural commodity sectors in APC countries. At a workshop in Samoa in May of 2009, the
delegation of the Solomon Islands called for the program to support a participatory stakeholder approach
to design a comprehensive strategy for development of their coconut sector. Following a consultation
and briefing mission held in Honiara in July of 2009, a strategy development coordinating committee
composed of public and private representatives was formed. Under the proposed ITC intervention,
overall sector stratify design and implementation activities will be supported within the country by the
coordinating committee and by the operation sector strategy support team.

                                                            5
COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

Given the fact that 75% of Solomon Islands labour force is related to subsistence farming and
agriculture, the Coconut sector has huge impact on the rural population and together with Cocoa has
constituted one of the main elements for rural income generation throughout the past decades. In fact,
household needs and other necessary items are met through the sales of Coconut and Cocoa which are
the main cash crops.
Coconuts are, however, overwhelmingly a smallholder crop. Former plantation production in the Solomon
Islands has diminished in importance to almost negligible proportions. Instead a classical commodity
approach dominates requiring a long value chain that specialises in collection, aggregation, transport and
selling. Traditional commodity production leads to very low returns and no capital formation. Farmers
make a meagre US$ 14 from a FOB value of US$ 220 and world market price of US$ 450. With exports
around 40,000 tons, which amounts to an annual FOB value of just under US$ 9 million per annum.
Elsewhere, coconut producers have taken important strides in adding value through by-product utilisation
as well as higher value products. India, Indonesia, Malaysia, Philippines, Sri Lanka and Thailand are
producing more coconut milk and Brazil has pioneered tender coconut water. Husk utilisation is being
driven by a growing market for peat and mulch and for coir in China. Coconut shell charcoal production
continues to grow to feed the demand for activated carbon.
Bringing these best practice experiences to help develop the industry in the Solomon Islands is
technically possible but requires a change in mind set from commodities to products. Instead of being
limited by freight of bulky low value commodities, the country could focus on catering to local markets
and exporting low volume, high value products. Moreover, by concentrating on village based systems,
gains could be shared widely and more equitably.

Anticipated impacts of sector improvement
The sector representatives of Western, Malaita and Guadalcanal Provinces agreed on the importance of
activating the coconut sector for achieving national unity and development given that the populations that
live in the rural areas depend entirely on agriculture and fishing for their livelihoods.
It is anticipated that by revitalizing the Coconut industry and providing viable alternatives for value
addition at national and rural levels substantial impact will be achieved:
   •    85% of the population will directly benefit and volatile dependency on Copra exports will be
        reduced
   •    Increasing income earnings of rural communities and providing more employment opportunities
        for men and women
   •    Value addition: Empowerment of rural economic centres and promotion of investments
   •    Import substitution particularly for fuel (USD 700 million per year), food, animal feed and soap
   •    Electrification of rural areas (oil as fuel for generators)
   •    Promotion of other sectors such as livestock (development of animal feed)
   •    Diversification away from timber and reduction of forest depletion

National policy settings
The table below is a summary of the main strategy contributions to achieving the goals and opportunities
defined by the Solomon Island Government through The National Coalition for Reform and Advancement
(NCRA) Government Policy Statement of October 2010. The relevant areas in the NCRA are quoted in
the table with their respective index numbers.

                                                    6
COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

Table 3: The National Coalition for Reform and Advancement– Government Policy Statement & the strategy contributions to
implementing it

3.2 Empowering Solomon Islanders

2.2.1       Providing      Contribution of sector to food security and economic security
Security

3.2.2 Creating      and    Advance living standards and quality of life through increased coconut sector
promoting                  contribution to Solomon Islanders
opportunities

3.2.3 Private sector       Strategy emphasis on capitalizing on rural based economic wealth generation
investment
opportunities

4.3 Economic Reforms

4.3.2 Private sector       Strategy anchored on private sector led growth for wealth creation and poverty
led growth                 reduction

4.3.3 Growth centres       Strategy is promoting economic growth centres through market options as well as
                           reinforcement of rural economic communities in rural areas
                           Strategy is also advocating for infrastructure and commercialisation structures

4.3.4.4    Wage     and    Contribution of sector to export promotion and diversification away from logs
salary

4.3.4.5 The Capacity       Strategy implementation framework is a tool for aid coordination and resource
of       Development       mobilisation
planning

5. Major Sectors

5.1.1 Real        Sector   Strategy main thrust is to strengthen marketing and financial arrangements for
Review                     revitalization of commodities that the rural sector will substantially benefit from.

5.1.2 Agriculture          Rehabilitate Coconut and improve domestic and export marketing infrastructures
                           Establishment of more copra milling facilities in rural areas, to facilitate the
                           production of coconut oil, biofuel, animal feed and other downstream products for
                           export.

5.1.6 Manufacturing        Strategy contributing to Stimulate the expansion and diversification of the
                           manufacturing sector for economic growth.
                           Provision of appropriate investment incentive for manufacturer and exporters.

6. Service Sectors

6.22                Port   Extra port, transport and support service infrastructure
Infrastructure
Development

7. Governance

Promotion of One           Strategy implementation mechanism is an efficient and effective coordination
stop agency approach       platform to ensure government policies are aligned with private sector needs.

                                                          7
COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

4. Current Industry Situation
The current coconut industry situation for Solomon Islands is dominated by a high reliance on copra
exports which face high risks due to the price-taking nature of the industry.

World Production
An estimated 70 billion coconuts are produced in the world today with Asia and the Pacific regions
accounting for over 80%. The Pacific alone accounts for 3.6 billion coconuts per annum. Roughly 40% of
global production is used to produce copra and then coconut oil and meal. Another 33% are consumed
fresh and 9% as drinking nuts.
Although world production of milk now probably accounts for nearly 800 million coconuts, commercial
utilization is still dominated by copra production for oil. Leading world producers of coconut oil include the
Philippines, India, Indonesia, Malaysia and Sri Lanka.

The coconut sector in Solomon Islands
Solomon Islands is not excepted from many of the challenges faced by Pacific island states.
In Solomon Islands, as indeed in several coconut rich Pacific countries, copra continues to dominate
trade mainly due to prohibitive freight inefficiencies, the lack of bulking capacity and weak sector
coordination.
Currently the main destination of copra exports is Philippines. This introduces considerable strategic risk
to Solomon Islands because of the high dependency on this market. Anecdotal evidence suggests that
international trader buyers are topping up their own copra with cheaper good quality imports from
Solomon Islands.

Production entities
Production entities are those entities in control of coconut supply, and the supply of basic processed
coconut product where that is traded (e.g. copra).
These entities, while at the producer end at the base of the value chain, are critical components of sector
function and will mediate the responses of the sector to both price and regulatory signals.
Three classes of production entity are important for planning purposes:
Stands– Actual productive coconut stands which may be exclusive or shared. The tenure of the land
planted but more importantly the rights to them, are important factors for planning effectively for changed
production regimes.
Production groups – the people who produce the product and their organisation. The role of coconut in
the livelihood mix of production groups will determine the price response of such groups, as well as the
ability of groups to adopt particular technologies or production arrangements. The availability of other
livelihood options is also critical, since price elasticity of supply will depend on the return of coconut –
based production relative to other options.
Processing units – the infrastructure which is used for basic processing of the coconuts. In the case of
copra, equipment necessary is widely available, but hot air dryers of a specific quality may not be. Virgin
coconut oil requirements are even more specific and limit the participation of many production groups in
this segment.
The two different social settings of plantings have strong implications for the production responses of the
overall national planted stand, with each exhibiting different profiles. These differences are summarized
in Table 3.

                                                      8
COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

Table 4: Characteristic differences of two major modes of coconut plantings

                                  Smallholder                                                  Plantation
Description                       Stands planted by families or individuals,                   Stands    established       by    plantation
                                  usually on customary land, with access                       companies in the past, normally on
                                  to nuts for production sometimes cycled                      alienated land. Now often accessed by
                                  over time. These stands are also usually                     multiple individuals or families or by
                                  accessed for subsistence use.                                some sort of organization – company,
                                                                                               cooperative etc and linked to a central
                                                                                               processing facility (drier, wharf etc).
Size of stand                     One hectare to tens of hectares.                             Up to several thousand hectares of
                                                                                               contiguous plantings.
Producer                          A stand may be shared amongst several                        Often accessed by multiple groups or
arrangements                      individuals, with access cycled over time.                   families or by some sort of organization
                                                                                               – company, cooperative etc, which
                                                                                               operates a linked processing facility.
Current uses                      Copra, VCO, subsistence                                      Copra, subsistence
Price response                    Highly dependent on labour returns of                        Less dependent on relative returns of
of stand                          copra relative to other products available                   copra to other products, because of
                                  to the producers (e.g. cocoa, marine                         sunken investment and better production
                                  products, other uses of labour).                             efficiencies.

Product segments
Copra
Although direct consumption of fresh nuts is very important nutritionally, coconuts are of commercial
value primarily as copra.
Copra earnings are the most important source of cash for a majority of farmers in the country. The
production of copra is price elastic and increased rapidly from 15,000 tons in 2003 to 39,000 tons in 2008
and declined to 25,000 tons in 2009. (See Table 1 below). Despite the official statistics, private sector
buyers estimate that the figures are inconsistent and might be overstated.
The production in 2010 is estimated to be at around 20,000 tons.
Production
Statistical data showed that copra production increased from 19 metric tonnes in 1946 to a peak of
41,900 tons in 1985. Following the 1985 peak, copra exports fluctuated between 20,000 tons to 30,000
tons, a trend which reflects no growth over the past 25 years.
Figure 1: Copra Production 1946 - 2009

                 45000
                 40000
                 35000
   Metric tone

                 30000
                 25000
                 20000
                 15000
                 10000
                  5000
                     0
                         1 2 3 4 5 6 7 8 910111213141516171819202122232425262728293031323334353637383940414243444546474849505152535455565758596061626364
                   MT 1 1 4 1 1 1 1 1 2 1 2 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 2 2 2 2 2 3 2 3 3 2 4 4 3 2 2 3 2 2 2 2 2 2 2 2 2 2 1 1 1 1 2 2 2 2 3 2
                   Year 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2

Solomon Islands coconut industry development trends also showed a shift taking place between the
plantation and smallholder sector contribution. Statistical data from government sources and CEMA

                                                                               9
COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

showed production share contribution by smallholders went from 50% level in1946 to 100% in 2010.
This provides strong indication that smallholders have become the sole survivor to maintain the industry
following the many challenges the industry has been through. Given this situation, there is strong
justification for the focus of development assistance to lie in strengthening the smallholder sector for
future industrial development.
Since Plantations at Yandina in the Russell Islands stopped crushing nearly 10 years ago, there has
been limited downstream processing of copra. There have been a number of unsuccessful attempts to
rehabilitate defunct mills as well as plans for larger operations and one or two active units. There is minor
vertical diversification in the shape of soap production on the main islands from small scale coconut oil
units and horizontal diversification in the form of small scale minor production and export of virgin
coconut oil.
The custom in the Solomon Islands is for small farmers to join a group often based on family or clan
basis with the lead farmer having smoke or heat drier facilities. It is not unusual to have up to 25 farmers
working in collaboration with those using the drier paying for the service. The largest is a cooperative in
the north of Malaita which has a system of 7 estates with up to 350 farmers and 368 ha in each estate
although that includes landless farmers. The average price for coconuts at present varies between
Sb$0.20 - $0.30 per nut. The lower figure appears to be more common with a few virgin oil operators
sometimes paying the higher one.
Export market chain
Most copra is sold to traders which ply the islands transacting purchases and often providing their own
transport to Honiara. Some are indigenous traders, usually around 2 or 3 on main islands. These local
traders, as well as agents acting for main export traders based in Honiara, have a variety of packaging
and transport arrangements with producers, and aggregate up to 36 jute sacks containing just under 90
kg each which is an average truck load for shipment but there are no minimum or maximum limits.
Honiara wharf rates for copra during the period of strategy development and finalisation varied
significantly between around SBD 1.90 and SBD8.00 per kg.
Inter-Island traffic is provided by local shippers to Honiara, with no exports from any other point today.
There is some competition between them but the level of traffic determines whether it is 2 or more
shippers. Rates are standardised, usually on a provincial sub-regional basis and depend on distance
between the pickup region and the capital. They range from SBD20 to SBD40 per sack, translating to a
freight cost of 22c-44c per kg.
Truckers may collect from more than one copra seller to gather a full load. They are very efficient and
can load from the truck to the ship within 15 minutes. There is choice for producers on buyers and for
buyers on shippers and for both on contracted truckers but rates and prices do not vary much. Payments
are normally on a cash basis. Transport to inter island shipping points is paid for by the trader or shared
between trader and producer and sometimes paid entirely by the producer. The local freight is normally
undertaken by contracted road hauliers in small trucks averages at Sol$ 20 per sack. The sacks have to
be normally purchased at Sol$ 2 per sack from the buyer although they can sometimes be provided by
the buyer or agent for the main traders.
The number of main buyers in Honiara has dwindled to between two and three. Chek Al Ming of Agricom
and Chris Holland of Holland Commodities form this small group. All three are competent experienced
traders and shippers. They buy at the port in Honiara but also have agents in the provinces who buy on
their behalf. They all operate under similar constraints and do not appear to compete in price, with only
temporary differences in prices offered on the Honiara wharf. The three have their warehousing and
make their own loading arrangements. One has equipment to help load ships.
International trade and exports
The main destination of copra exports appears to be Philippine buyers. They are reported to be topping
up their own copra with imports from the Solomon Islands to use underutilised crushing capacity. Most
copra produced globally is crushed for oil in producing countries, with Philippines and Indonesia leading
exporters of oil.
Traders finance the working capital of the value chain through a system of buyers who, in turn, finance
trucking and shipping. Practically all coconut products produced make their way to Honiara or Noro for
international shipment.
Exports of copra increased from 15,000 tons in 2003 to slightly above 40,000 tons in 2008 (See Figure 3
prepared by CEMA showing price elasticity and volumes).

                                                     10
COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

                             Figure 2: Value and Volume of Copra Exports 2001-2009

                                                                                              (SI$'000)
         MT
 45000                                                                                      180000
 40000                                                                                      160000
 35000                                                                                      140000
 30000                                                                                      120000
 25000                                                                                      100000        Vol
 20000                                                                                      80000         Val
 15000                                                                                      60000
 10000                                                                                      40000
  5000                                                                                      20000
     0                                                                                      0
           2001    2002     2003    2004      2005      2006     2007      2008      2009

The main producers of copra have the provinces of Malaita, Guadalcanal and Western each contributing
to about 22% of total exports of 25,000 tons (see Fig 4 and 5).
The main destination of copra exports currently is Philippines which is reported to be topping up its own
copra with imports from the Solomon Islands and the Pacific island Nations to use underutilized crushing
capacity. Most copra produced globally is crushed for oil in producing countries, with Philippines and
Indonesia leading exporters of oil.

Virgin coconut oil
The virgin oil producers are linked to a buyer who helped provide technology and training and markets
jointly. The system generates a low level of throughput usually not more than 100 tons per annum for any
one province and often half that figure. However, the value density of the product is quite high
throughout the value chain, with current (2011) village prices in excess of $20 per kilo.

Green coconut
Honiara is the major local market for fresh (―green‖) coconuts, with product being sourced from the
immediate environs along the coastal road running to the east and west of the capital. The fresh
coconuts are harvested by hand by tree climbers husked at collection points in the plantation, then
transported in bulk (2-3t truck loads) to the Honiara main market. The product from plantations in the
immediate vicinity of Honiara may be sold directly to the public at roadside stalls bordering the source
plantations for the nuts. Current retail prices range from $1.50-$4.00 per nut, with the lower price for
roadside plantation sales and the higher for sales in the main market or smaller urban markets.

                                                      11
COCONUT SECTOR STRATEGY: SOLOMON ISLANDS

Regional characteristics
Production in the country over the period 2001-2009 has been dominated by Malaita and Central
provinces.
Figure 3: Medium Term Provincial Contribution

   CUMULATIVE PROVINCIAL PRODUCTION 2001-2009                                                 Makira Temotu            Western
                                                                                               8%      2%               19%
                                                                                  Malaita                                Choiseul
                                                                                   16%                                      6%
                                                                                                                         Isabel
                                                                                          Guadalcanal                      4%
                                                                                             27%

                                                                                                                       Central
                                                                                                                        18%

Cumulative production figures in Figure 3, over 2001-2009 provide an indication of the productive
capacity of different provinces. Guadalcanal, Western, Central and Malaita provinces together produced
80% of the total copra crop for this period, with the other four provinces making up the remaining 20%.
Annual breakdowns in Figure 4, however reveal a decline in the share due to Central Province from its
peak in 2002 following due to a long running industrial dispute in the large Russell Islands plantation.
Current production is dominated by Malaita, Guadalcanal and Western Provinces, together accounting
for almost 70% of production.
Figure 4: Variations in Provincial Contributions 2001-9

                                            Annual Copra Contribution by Province
                                     100%
    % of Natioanl Copra Production

                                      90%                                                                     Temotu
                                      80%
                                                                                                              Makira
                                      70%
                                      60%                                                                     Malaita
                                      50%                                                                     Guadalcanal
                                      40%
                                                                                                              Central
                                      30%
                                      20%                                                                     Isabel
                                      10%                                                                     Choiseul
                                       0%
                                                                                                              Western
                                        2001   2002   2003   2004   2005   2006    2007     2008   2009

Guadalcanal
The largest island in the country with a population of 78,229, is credited with being the largest producer
of copra. Honiara offers a good market for coconuts, in particular drinking nuts, and this leads to a higher
price than in other provinces. However, lower freight rates compensate and there is major copra
production as well as some oil and downstream soap making. The island has a limited road structure
with much of the island not covered. The nuts supplied to Honiara largely come from the coconuts grown
by the roadside.

                                                                           12
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