Economic Importance of Coconut Oil

by Lisa Smith; Updated September 26, 2017
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Coconut oil, from the seed of the palm coconut, Cocos nucifera, is highly revered in Asia as the "Tree of Life" or as the fruit of the gods. Every part of the palm is usable for human needs -- food, shelter and fiber. According to the Encyclopaedia Brittanica, the coconut and African oil palms have important roles in international trade as sources of vegetable oil and fat. Coconut oil has high world demand as an ingredient in cosmetics, soaps, hair oils, body oils and in food products and has surged in popularity because of its health benefits.

Background

Early Spanish explorers called it coco, meaning "monkey face." According to the Just Change Trust in India, over 500 million coconut palms are cultivated in tropical regions, where coconuts are the prime source of fats and protein for more than 400 million people. Coconut oil is one of nine internationally traded vegetable oils and ranks eighth in global production. Demand grew by 8 percent annually during 1993 to 2004. On many islands, coconut is a staple in the diet. Nearly one third of the world's population depends on coconut for nutrition and trade.

Economic Role

Coconut palms yield roughly 20 percent of the market's oils and fats, Just Change Trust estimates. As of 2006, the U.S. annually imported 190 million pounds of coconut oil, whose worldwide trade reached $20 million. Several countries' economies are based on the coconut palm. The UN Food and Agriculture Organization reports the top producers are the Philippines, Indonesia, Brazil, and India. Production is based in Southern Asia, Central and South America, Oceania and southern Africa; Asia accounts for 84 percent. Lately, civil wars and crop failures have driven up the EU Rotterdam coconut oil price, which has doubled during 2010-2011, nearing $2,000 per tonne, according to the UK Grocer.

Palm Cultivation

Coconut palms grow in the wet tropical and subtropical coastal Indian and Pacific ocean regions. They grow best near sea level, within 15 degrees of the Equator. They need annual rainfall of at least 120cm, temperatures from 70 to 86 degrees Fahrenheit and sandy, slightly acidic soil with good drainage. After the first six to nine years, the coconut palm bears fruit, producing roughly 50 fruits per tree per year, up to 300. Because the nuts can fall from a height of 30 yards, in Southern Asia and Australia, monkeys (e.g., Malaya macaques) are trained to harvest them. These skilled, unpaid laborers can pick hundreds of coconuts daily. Coconut flesh is either eaten raw or dried to form copra, the meat of the seed and the source for coconut oil.

Role in Human Health and Nutrition

Coconut oil is moisturizing and has been used for centuries as a hair tonic and skin care product. Coconut oil and milk are ingredients in cooking, frying, soaps and cosmetics, and foods like margarine and popcorn. Coconut meal leftovers from oil and milk production feeds livestock. The Coconut Research Center describes the nut as rich in fiber, vitamins, and minerals with oil comprising mainly medium-chain fatty acids. Coconut oil is a "functional food" that is popular in traditional medicine in Asia and used worldwide to treat a wide variety of health problems from abscesses to upset stomachs. Scientific studies have found it effective for treating enlarged prostate and improving serum cholesterol.

About the Author

Lisa Smith has been an editor and writer since 1991. Her articles have appeared in "Newton Magazine" and she has contributed to myriad popular books, including "Masters of Deception" and "Click: The Ultimate Photography Guide for Generation Now." She earned her B.A. in semiotics from Brown University and completed coursework for an M.A. in history at New Mexico State University.

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