Coconuts Get Pricier as Poor Weather Drives Global Shortage

A worker cracks coconut shells at the Pasciolco Agri Ventures factory in Tiaong, Quezon province, the Philippines, on Wednesday, Oct. 27, 2021. The peso rose versus the dollar after Economic Planning Chief Karl Chua said on Thursday that the Philippine economy has "strong potential" for growth in 3Q as looser lockdowns allowed employees to go back to work. Photographer: Veejay Villafranca/Bloomberg Photo by Veejay Villafranca /Bloomberg

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(Bloomberg) — 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.

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“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.”

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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.

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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.

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“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.”

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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.  

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“This proposed scheme is intended to secure local supply and stabilize prices without disrupting our export commitments,” the agency said in a statement.

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Other producers like Indonesia, Thailand and Vietnam are also seeing supplies constrained by weather issues and higher domestic consumption, Raperoga added.

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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. 

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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.