Coconuts get pricier as poor weather drives global shortage

Economic Times

26-04-2025

iStock
The Philippine Coconut Authority said it's in talks with producers about keeping a portion of their coconut oil for domestic use before allowing exports. When Mohamad Fahmi Faat's family in Kuala Lumpur prepared only half their usual amount of food for recent Eid al-Fitr celebrations, he blamed an ongoing shortage of coconuts, a staple ingredient in many Asian cuisines.'Fresh coconut milk was very limited during Eid,' said the 45-year-old restaurant manager, who had to make less of signature dishes like beef rendang. 'I could only buy three packets instead of six and it wasn't enough.'
Poor weather in some of the world's top growers has hurt production, shrinking global supplies and, in some places, doubling prices of the increasingly sought-after tropical fruit. Some producing countries like the Philippines and Indonesia are considering export restrictions, while consumers are being urged to switch to alternatives of the ingredient used in everyday cooking and a range of products like vegan milk and energy drinks.The world's biggest coconut producer, the Philippines, expects a 20% decline in output this year. That's because for the past two years, extreme weather — from drought to tropical cyclones — has strained trees like those on the southern coastal plantations of one of its largest exporters.'The main reason behind the low supply is climate-driven,' Henry Raperoga, president and chief operating officer of Axelum Resources Corp., said an email. 'These events have led to reduced yields, delayed harvests and limited farmer mobility.' The Philippine Coconut Authority said it's in talks with producers about keeping a portion of their coconut oil for domestic use before allowing exports.
'This proposed scheme is intended to secure local supply and stabilize prices without disrupting our export commitments,' the agency said in a statement.Other producers like Indonesia, Thailand and Vietnam are also seeing supplies constrained by weather issues and higher domestic consumption, Raperoga added.In second-biggest producer Indonesia, the industry ministry has proposed a three-to-six month export ban, levies on outbound shipments, and benchmark pricing to stabilize local prices that have skyrocketed 150% in the past three months. Wholesale prices at a weekly auction in the Sri Lankan capital have more than doubled over the past year after a crop shortfall caused by a combination of poor weather and disease. The government in February granted a request from producers to import coconut kernels to help ease market pressure.Global demand, meanwhile, is expected to keep climbing thanks to the coconut's reputation as a tasty lactose-free and plant-based option, according to Axelum, which counts the US as its largest market and is also seeing growing sales in Europe and Latin America.Related products like coconut oil, milk and dessicated flakes are also gaining popularity thanks to wellness and sustainability trends. Coconut oil consumption is expected to rise slightly to 3.23 million tons this year from 3.2 million a year ago, according to the International Coconut Community, with the US, EU and China importing the most. The US Department of Agriculture forecasts global stockpiles of coconut oil to close the 2024-25 season at a four-year low. The squeeze has already translated to soaring prices of coconut oil, which have doubled since 2023 to trade at three-year highs of $2,658 a ton, according to data from Commodity3.That's causing some traders in Malaysia to temporarily shutter operations, with consumers urged to switch to alternatives like cooking cream or yogurt for curries, sauces and cakes, according to local media. For restaurant manager Fahmi, that's just not good enough.'Coconut milk is the heartbeat of Malaysian food,' he says. 'If you change or replace fresh coconut milk, the taste fails.'