Asia • Philippines

Coco Technologies: Providing

Livelihood Opportunities for Poor
Coconut Farmers through Value-
Adding
Prepared by • Elvie Grace Ganchero & Perla Manapol (Philippines)
Sector • Agriculture
Enterprise Class • Local SME
Summary
Coco Technologies (CocoTech) is a privately-held enterprise in the Philippines that produces
geo-textiles from waste coconut husks. It pioneered the application of bioengineering using
cocofiber nets (coconets) in slope protection, river and shoreline rehabilitation and erosion
control in the Philippines and other countries in Asia and Europe. CocoTech grew from a
small community-based project with an initial capitalization of about US$7,0001 and five
employees in 1993 into a medium-sized enterprise 2 of 25 employees with revenues exceeding
$300,000 in 2006 and more than 6,000 families involved in the manufacture of CocoTech
products. This case examines the special challenges and opportunities of small-scale value-
adding and the innovative approaches adopted to ensure the sustainability of a nascent
technology that provides rural employment, protects the environment and helped revive an
ailing coconut industry.

Coconut farmers Among the Poorest of the Poor

In the early 1990’s, Dr. Justino Arboleda (known in the Philippines simply as Bo), an
agricultural engineer and scientist, was elected Dean of the College of Agriculture at Bicol
University. 3 After returning from his doctoral studies in Japan, he had immediately noticed
the worsening plight of the Filipino farmers and decided to undertake research on coconut
farming for three reasons:
ƒ Coconut farmers are disproportionately poor. There are 3.5 million coconut farmers (less
than four percent of the country’s estimated 89 million people) who comprise 20 percent
of the country’s poor.
ƒ The Philippines is the world’s second largest producer of coconuts 4 (next to Indonesia),
with 67 percent of the country’s farmlands planted to coconuts.
ƒ Coconut farming is the major industry of Bo’s native region, Bicol.

Reflecting on these facts, Bo made it his personal mission during his tenure in the University
to find out why, in spite of the abundance of coconuts, the coconut farmers are mired in
poverty and to find out what the agricultural academic community has done to address this
problem. He learned that the Government’s research and development activities were focused
mainly on rice and corn, which is why the country’s agricultural colleges and universities– the
majority of which are state-owned– pattern their curriculum to cater to this focus; as a result,
very little attention was given to other agricultural products, particularly coconuts.

The lack of coconut farming technological know-how was exacerbated by serious flooding
and landslides during the typhoon season (from June to November), which destroys farmland

1
All figures quoted are in US dollars
2
The Philippine Department of Trade and Industry defines small- and medium-size enterprise (SME) as
those with a capitalization of not more than US$2 million and a workforce of 100 or less.
3
Bicol is one of the poorest regions in the Philippines and one of the country’s major coconut-producing
regions, situated approximately 449 kilometers southeast of Manila.
4
Source: Nation Master Statistics. www.nationmaster.com

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 2
and crops. Because of the mountainous topography in the Philippines, soil erosion is a major
problem. Half of the land area is considered upland or slopes of more than 18 degrees, with
weather patterns characterized by strong tropical typhoons. Illegal and rampant logging
operations also contribute to increasing land degradation and denudation of forests.

As an agriculturist, Bo knew that farming and the environment go hand in hand in addressing
the farmers’ economic problems. Thus, the stage was set for his quest to find solutions.

Saving the Ailing Coconut Industry

In the Philippines, the coconut tree is called the “tree of life” because of its wide-ranging uses.
Nevertheless, the traditional focus on just copra (dried coconut flesh) and oil makes farmers
vulnerable to market fluctuations, and the coconut industry has been struggling to remain
viable. Desperate for income, some farmers cut down their coconut trees to sell as lumber,
leading to severe depletion of productive trees. Expanding the product line was viewed by
leaders of the country’s coconut industry as a means for bettering coconut farmers’ economic
conditions. In recent years, demand for virgin coconut oil and coconut biodiesel in both
domestic and international markets has re-invigorated the industry.

The Philippines produces six billion kilos of coconut husks per year (about 732,750 metric
tons of cocofibre per year), constituting the largest single source of country’s agricultural
waste and a major source of greenhouse gas emissions. 5 The husks are normally thrown away
or burned– in the process, harmful particulates and noxious gases are released into the
atmosphere. Out of this waste, Bo saw a huge potential; he just needed to find a way to add
value to waste coconut husks.

Bo proposed to conduct a study on the productive uses of the coconut husks to Bicol
University. Unfortunately, the University did not have the funds to support such a study, so he
took it to the International Research and Development Center (IRDC), the principal research
and development arm of the Government, who after several months finally agreed.

The study involved a series of experimentation conducted by his students. The first task was
to design a machine called a decorticator, which grinds waste coconut husks, producing fibre
and peat- in the process discovering that a coconut husk is 35 percent fibre and 65 percent
dust or peat. Then, by using a 100-year-old weaving process, they learned that cocofiber
could be made into twines or ropes and woven into nets. They also discovered unique
characteristics of coconut fibre:
ƒ Coconut fibre is completely biodegradable
ƒ It degrades naturally at a rate that allows vegetation to settle firmly in the soil; in contrast,
Decorticator processing
other geotextiles degrade faster than plants can grow
ƒ The fibre has excellent water-absorption and water-holding capability, which helps to
prevent water from going directly into the soil– a major cause of soil erosion

5
Source: Philippine Coconut Authority

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 3
ƒ It has natural rooting hormones
Finally, they successfully tested the effectiveness of the nets for soil erosion control.

Consultations with local public works officials confirmed that the cocofiber nets were much
cheaper than imported synthetic materials that were commonly used in public works and
construction. Experimentation at local farms using coconut peat as soil enhancer also proved
highly successful. Bo encouraged local groups of farmers and cooperatives to go into
cocofiber-making by offering training courses, emphasizing the potential for an alternative
income stream. He introduced the cocofiber nets to the Philippine government units as an
effective technology to solve serious erosion problems, particularly in government
infrastructure projects, such as roads and bridges. He pointed out the potential for savings–
especially to the country’s foreign exchange reserve– by eliminating the need to import
pricier synthetic materials. Finally, he stressed that the government’s adoption of cocofiber
nets for erosion control would create a stable domestic market, and therefore help rejuvenate
the coconut industry.

Figure 1: Demonstration of cocofiber nets’ impact on controlling soil erosion

Denuded hillside… … covered by nets … grass seeds begin … after 3 months … after one year,
embedded with to sprout grass begins to grow fully covered with
seeds grass

Braving the Challenges

After his capacity building and advocacy efforts, Bo attempted to turn the project over to the
farming cooperatives, who were not enthusiastic because of the lack of government support in
providing initial capital and assistance in identifying markets. In addition, potential investors
approached by Bo were wary of putting money into a new technology that was as yet
unproven and largely unknown in the local market.

This failure to enlist support was a reality check for Bo. He decided to leave the University to
start a business– CocoTech– with the objective of helping poor coconut farmers and the
environment through the production and application of cocofiber nets.

The Beginnings of CocoTech

Bo was able to convince the University to lend CocoTech the decorticator that he and his
students had designed. He also sought financing from local banks for the nascent cocofiber

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 4
net business, but every bank he approached turned him down. Bo was relentless. In the end he
had to use his family’s life savings to fund the project. “My wife was so scared to put all we
had into the project as she herself wasn’t sure if the project would work, but I guess she
trusted me enough,” Bo confessed. His wife Julie added, “Actually, a part of it came from my
retirement, but deep inside, I knew that sharing what we have is my way of supporting Bo’s
dream to help the poor. Looking back, it was all worth it.” With the help of some relatives,
Bo was able to pool about $7,000 to start what was then called Juboken 6 Enterprise.

Based on feasibility studies, the viability of CocoTech’s operations depended on the

proximity of the raw materials to processing facilities- that is, within a radius of 50
kilometres. It was thus logical to focus the business activity in Bicol. This was helpful for
Bo’s fundraising efforts since Bicol was his native region, and he had a strong existing
network of relatives and friends. By the time he started his operations– employing a handful
of staff and convincing ten families to engage in cocofiber twine-making and weaving– he
had raised an additional US$2,000 without collateral in several small loans from contacts at
various rural banks.

Embedding the Community in CocoTech’s

Business Operation
Motivated by his desire to address obvious social and economic divides among the coconut
farming communities, Bo Arboleda designed a business model that involved the community
in every step of the process– a task made easy, because the production of coconets and other
cocofiber products is labour-intensive.

The production of coconets as well as other cocofiber products involves five major processes.
The steps and income generated for workers in each step is as follows (see Appendix A for an
illustration of the cocofiber process):
1. Purchase husks from coconut farmers for US$0.03 per husk.
2. Process husks into fibre and peat using the decorticator (decorticator operators earn US$3
to $5 per day).
3. Pack and distribute fibre to the community (workers [packing and loading] and drivers
earn an average of US$3 per day, and the company provides a transport vehicle).
4. Twine fibre: twining is often done collectively by families (they earn US$5 per day or
about $100 per month 7 , a significant increase for coconut farmers who typically earn up
to $30 per month).
5. Weave twine into nets (there are two weavers per loom; each receives US$2 per day).

6
Juboken is the former name of Coco Technologies Corporation. Juboken is the combination of the
names of Bo, his wife Julie and their son Ken. Even today, Juboken is still the most recognizable name
of the company. In fact, CocoTech’s main production facility in Bicol still carries the name of Juboken.
7
This is on the assumption that a family works only 20 days a month. But in reality most families work
every day except Sundays.

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 5
CocoTech’s product processing is typically carried out by the under-employed members of
the coconut farming communities such as women and out-of-school young men. Generally,
an entire family gets involved in twining, usually led by women and a handful of otherwise
unemployable males (for example, the physically handicapped). If a family employs four
members, their income is four times greater. Families pay for the fabrication of the twining
equipment, which cost about US$30 to $40 per “twiner.” This is considered to be their
contribution to the project.

Weaving is done exclusively by women– in part out of tradition and in part because of the
stigma attached to weaving as female only activity– and men are primarily involved in plant
operations. This involves heavier and more intense work such as operating and maintaining
the decorticating equipment, and sorting fibre for distribution to various households. The
operations workers put in 5am to 5pm days each week. Women who work from home are
more flexible with their time.

CocoTech invested heavily in the capacity-building

of individuals, families and local enterprises to
ensure a robust and dynamic supply chain. The
company considered the community as its primary
business partners. By 2006, more than 8,000
families were involved in the Philippine coconut
fibre industry.

Over the past thirteen years, CocoTech has validated a novel supply chain that includes the
direct involvement of the coconut farmers, eliminating the middlemen.

The figure below illustrates the critical sphere of CocoTech’s business partners, which are the
key elements of its business model.

Figure 2: CocoTech’s Business Model

Market: local and international (for CocoTech’s

cocofiber products and bioengineering services)

Embedding the Community in the Companies

Operations: Family enterprises, individuals and
community-based

The Company: CocoTech

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 6
Sharing Operational Accountability with the
Community
CocoTech organized the community partners with the help of local government units.
Together they provided training in business affairs, such as ensuring the quality of the
products, timely delivery of cocofibre for twining and transporting the twine from one
community or household to another for weaving. In essence, the community partners
represent the assembly line of the CocoTech’s operations. Sharing the accountability of the
company’s operations with the local farmer organizations has helped create a sense of
ownership on the part of the community and efficiency on the part of the company.

Replicating a Community-Based Approach to

Production
The success of the community-business partnership approach of Juboken prompted Bo to
replicate the model in other parts of the country. CocoTech’s primary strategy for replication
and scaling up was to partner with various community-based organizations (such as NGOs,
small and medium sized enterprises and people’s organizations) located in coconut producing
provinces where CocoTech’s projects are located. In some cases the cost and convenience of
shipping goods from the suppliers to Manila are also a consideration in its choice of partners.
An example is the replication of the SRE model in the province of Sulu in the Autonomous
Region in Muslim Mindanao (see Box 1) who has access to two cargo ships that supply the
Sulu-to-Manila route.

The company’s partners are autonomous and self-reliant enterprises. CocoTech encourages
each one of them to develop its own markets, wherever possible. CocoTech does, however,
provide technical assistance in designing and fabricating machinery and equipment. In some
cases, CocoTech loans or donates machinery and equipment, and provides hands-on training
in bioengineering. Today, there are at least nine “CocoTech-like” enterprises around the
country (see Appendix B for partner locations). They serve as consolidators of coconet
production activities in their respective provinces and sell the coconets to CocoTech.

Box 1: The Multiplier Effect of CocoTech: The SRE Experience

“Kung hindi lang sa project na ito, siguro ngayon ay lima na ang anak ko!” (“If it were not for this project,
I am sure that by now I would already have five children!”), Flora Navaresa, one of the women workers
who produce cocofiber nets at the cocofibre processing facility of Sustainable Rural Enterprise (SRE),
told a visiting journalist.

In 2001, SRE, a community based organization based in Aklan Province, visited CocoTech’s facility in
Albay. Having learned about CocoTech’s operations, SRE figured that acquiring the coconut fibre
processing technology of CocoTech was an ideal method of disposing thousands of waste coconut

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 7
husks that SRE’s partner, the Ibajay Small Coconut Farmers Development Cooperative (ISCFDC), had
accumulated at its mini-oil mill facility in Ibajay, Aklan.

Two staff members of SRE made a follow-up visit to learn about the processes, including the design of
equipment such as the decorticator, sieving drum, twiner and loom. A series of training sessions
followed, covering skills in twining, weaving, operating and maintaining machinery and equipment and
quality control. It was also during this period of training that the SRE women discovered that they could
double production by modifying and improving the original twiner and loom that had been brought in
from CocoTech– improvements that were, in turn, replicated by CocoTech.

In 2003 SRE delivered its first batch of nets to CocoTech, produced by 75 families. A grant in 2004 from
the World Bank Development Marketplace allowed SRE to expand its operations by purchasing a larger-
capacity decorticator and training more families in other communities (including families of former
Nationalist People’s Army communist insurgents). With guidance from CocoTech, SRE staff members
acquired skills in cocofiber processing and were able to carry out its own demonstration installations at
local mangroves and fishponds. In addition, SRE expanded its product line by processing coconut dust
into cocopeat, with help from CocoTech, Sagana 100 (the country’s leading producer of organic
fertilizer) and the Philippine Coconut Authority. In 2005, SRE’s “Aklan Model” was successfully
replicated in the Autonomous Region in Muslim Mindanao in Indanan, Sulu– in collaboration with the
Philippine Business for Social Progress/Center for Corporate Citizenship and the German Development
Service. The first phase of the Sulu project is expected to benefit more than 250 families of poor coconut
farmers and former Muslim rebels by the end of 2006. SRE is also a leading advocate for the increased
use of cocofiber products in the Philippines.

Currently SRE sells all of its production to CocoTech. SRE has a workforce of more than 400 families,
and the majority of workers are women. This newfound “women power” has allowed its partner, the
ISCFDC, to increase its membership by three-fold and to elect its first-ever woman chairperson. Women
workers are now eligible to take out small loans from lending institutions and local shops and stores.
SRE is gaining a reputation as Western Visayas Region’s leading producer of quality cocofiber products.

Installations of the coconets in nearby Antique Province have become tourist attractions. This particular
project was credited with minimizing the effects of the typhoon Milenyo, which caused flooding and
landslides in other unprotected areas of the province. The Governor of Antique expressed her gratitude
and hoped that many more vulnerable areas will have similar coconet installations.

For all of these achievements, SRE gives credit to CocoTech.

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 8
Expanding the Market to Provide More Work for
the Communities
Bo’s first few clients were local government units and domestic companies involved in land
development and landscaping activities. Aside from the production of cocofiber net
geotextiles, CocoTech also provided the following technical services to customers: project
feasibility study, bioengineering system design, installation services and supply of
bioengineering materials (cocofiber nets). This was moderately successful, but CocoTech
aimed to stimulate employment for the families of coconut farmers, and the only way to do
this was to expand the market.

An opportunity arose when Bo was invited by the German Development Service to participate
in a conference in Munich, Germany where he met the officers of Bestmann Bioengineering
Company. The company was looking for a natural alternative for jute and plastic fibres which
Bestmann was using at the time to make mattresses and upholstery for car seats for clients
such as Mercedes Benz. Bo convinced the company to try cocofiber.

Bo came back to the Philippines with a job order from Bestmann, the latter having discovered
that cocofiber was indeed superior, particularly for its water-absorption capacity and natural
biodegradability. The company asked CocoTech to help carry out a larger-scale experiment
on the use of cocofiber for erosion control in Europe. They were particularly interested in
using a natural fibre. This partnership introduced CocoTech to the international market. It
opened new opportunities for the company not only in providing cocofiber nets but also in
providing bioengineering services for foreign projects (a list of the company’s international
bioengineering projects is included in Appendix C).

Dealing With a Challenging Business

Environment
According to data from the Philippine Coconut Authority and the Philippine Department of
Trade and Industry, there is a large unmet export market for cocofiber nets. However, while it
pays up front, the low buying price and high cost of transportation diminish the profitability
of the export market. Other exporting countries such as Sri Lanka and Vietnam are able to
export their cocofibre products at a lower price than the Philippines because of lower
production costs. To compound the problem, foreign customers also require production
volumes that are beyond the capacity of CocoTech and its production partners. Based on these
factors, CocoTech is focused on expanding the domestic market.

To increase domestic use of cocofibre products, Bo wrote and advocated the passage of
Presidential Memorandum 25 (see Appendix D). The Memorandum was signed on September
2002 by President Arroyo, mandating the use of cocofiber products in all government
infrastructure projects.

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 9
 The Memorandum was significant for the
Figure 3: CocoTech Company Performance
industry because it helped ensure
(1996-2006, in Php)
increased domestic demand. Most
important, as cited above, the domestic
80,000,000 market commands a higher price than the
Project Value

60,000,000 export market, translating to higher pay

40,000,000 for the workers. As a basis for
20,000,000 comparison, the domestic market pays
0 US$0.46 per square meter of cocofiber
96 97 98 99 00 01 02 03 04 05 06
nets, landed Manila, while the export
Year
price dips to $0.32 per square meter,
landed country of destination.
While the total number of projects in 2003 was higher (nine) than in 2002 (seven), the total
value (US$500,000) was lower than the US$1.2 million in 2002, in that many of the projects
in 2003 were small-scale. This was a calculated move by CocoTech, because a fire in early
2003 had gutted its main plant, destroying a large volume of its stock of coconets, which
reduced its capacity to meet the volume requirements of large-scale projects. Figure 3 exhibits
the company’s performance over an 11-year period (see Appendix E for details).

While the presidential mandate has increased domestic demand, another obstacle remains:
CocoTech’s biggest client, the Department of Public Works and Highways (DPWH), takes an
inordinately long time to pay for its purchase orders. This adversely affects the company’s
income stream and ability to pay its workers on time– a tremendous blow to worker morale
especially because most of them depend on their earnings from CocoTech for their day-to-day
needs. These challenges forced the company to diversify its product line (see Appendix F)
and focus on bioengineering and consulting services, particularly on its expertise in designing
large-scale soil erosion control projects abroad, which translate to increased orders for
cocofiber nets. This allowed the company to grow despite the challenges. Earnings in 2005
totalled US$320,000, with earnings for 2006 expected to reach $500,000.

CocoTech saw the competitive advantage of the Philippines not just in exporting cocofiber
but also in processing cocofiber into other coco-based products aside from coconets to
stimulate the local economy (see Appendix G). “We need to add value to cocofiber to provide
more jobs for our communities,” Bo emphasized.

Testing the Bioengineering Technology

Recently, several partnerships with foreign companies and governments have been forged. In
2005, the Dutch government, along with a Dutch company, partnered with CocoTech (25
percent by CocoTech; 25 percent by the Dutch company and 50 percent by the Dutch
government) to create an enterprise producing twines for doormats. Twines are sent from
CocoTech in the Philippines to The Netherlands, where they are processed into doormats and
then exported to other countries. Eventually the partners plan to carry out the entire process in
the Philippines.

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 10
In 2005, CocoTech partnered with Guangzhou Kekai Technology Development Co. Ltd., a
Chinese company, to carry out an experiment using cocofiber nets (instead of plastic nets) to
cover the surface of a Chinese landfill. The project was worth about US$100,000 in cocofiber
nets and proved to be a huge success. Within eighteen months, the landfill was transformed
into a beautiful, green park.

CocoTech has been invited by the Chinese Ministry of Agriculture to carry out experiments
using cocofiber nets in anti-desertification of the Gobi Desert and in restoring riverbanks
throughout the country (see Figure 4). An industry observer predicts that if just one of these
two experiments succeeds, “Our cocofiber processing workers would have jobs for the next
30 years.” However, funding has not been secured to support the research studies on anti-
desertification.

Also in 2005, CocoTech forged a joint venture with

a Sri Lankan company, called EcoProtect
Engineering Pvt. Ltd., to promote the use of
cocofiber nets in Sri Lanka. By providing technical
expertise in bioengineering applications, CocoTech
receives 15 percent of profits from this new
venture. Until CocoTech came along, Sri Lanka
exported all of its cocofiber products. The
Figure 4: Demonstration site of anti- devastation brought by the 2005 tsunami helped
desertification project in the Gobi Desert CocoTech convince the Sri Lankan government to
use its own cocofiber nets to restore thousands of
hectares of destroyed landscape.

In the Philippines, after a devastating landslide in Leyte, CocoTech was hired by a private
European organization to install coconets on the hillsides and mountains whose collapse
wiped out entire villages. In addition, Cocotech’s coco-peat products were used to help
restore the farmlands that had all but disappeared. Today, the mountains and hillsides are
sprouting vegetations, and farmlands are once again retuning to productive uses, albeit not as
yet fully restored to their original conditions (see Figure 5). The most important thing is that
land and soil have been rejuvenated and will be in better condition than before the disaster.

Figure 5: Rehabilitating the hillsides

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 11
CocoTech is proud of its pool of talented Filipino engineers working on the company’s
various experimental projects abroad. However, investment is needed to train more engineers
in the emerging technology of bioengineering.

Measuring the Impacts of CocoTech

COMMUNITIES AS VITAL BUSINESS PARTNERS
The community has been a vital partner of the company. “Without the community of coconut
farmers, we have no business. And we wouldn’t be in this business if it were not for them,” Bo
muses. Partnerships with coconut farmers’ cooperatives provide a sustainable supply of waste
coconut husks and a pool of local business partners which forms the supply chain of the
company.

The local government units also play a critical facilitating role in the entire operations. For
example, community leaders are often the arbiters to settle complaints and conflicts between
the working families, the company, and the community. They also help facilitate training
programmes, workshops and demo installations, leading to increased local use of coconut
fibre products.

TRANSFORMING THE COCONUT FARMERS INTO SELF-RELIANT

COMMUNITIES: A DIRECT POSITIVE IMPACT OF COCOTECH
As mentioned earlier, one household earns up to US$5 per day– from a base of $1 a day. A
study conducted by Bicol University indicated that where there are twining and weaving
activities, there are also sari-sari (general merchandise) stores; where there are no such
activities, there are no stores. This suggests that an economic activity such as weaving and
twining spur economic growth. It also suggests a multiplier effect: from the families
supplying the material to the company, to local enterprises.

The advent of cocofiber products has not only invigorated the depressed coconut farming
industry, but has also created an entirely new industry that has, in turn, spawned new local
enterprises.

EMPOWERMENT OF WOMEN
Women play a critical role in the supply chain as they represent 85 percent of CocoTech’s
workforce. The cocofiber processing allows them to work out of their homes, keeping them
accessible to their children. Their newfound financial independence has helped them to gain
access to credit, join cooperatives and become less dependent on their husbands. The most
dramatic and significant aspects are the intangible impacts on women: acquiring a sense of
self-importance and increased self-esteem, because they bring in additional resources for the
family.

The company’s activities have also contributed to the reduction of juvenile delinquency
through employment of out-of-school youth (ages 18 and up). Further, in many communities

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 12
where CocoTech and partners have operations, there has been a significant reduction in
smoking among men and women because they have been made to understand that cocofiber is
a highly flammable material.

VALUE PROPOSITION FOR OTHER STAKEHOLDERS

Aside from the families involved in the company’s supply chain, the local government
benefits also. Formerly economically stagnant towns have been transformed into vibrant
communities. Local shops enjoy increased sales which translate to higher taxes paid to the
local government coffers. In addition, local farmers’ cooperatives, many of them on the verge
of collapse a few years ago, have increased membership through more contributions to capital
build-up– a significant development especially because in the Philippines less than ten
percent of cooperatives survive. 8

Continued collaboration with academic institutions, especially the engineering and agriculture
departments of major universities in the country, have led to improved equipment and
processes, new technology discoveries and a pool of qualified engineering graduates, 12 of
whom have joined CocoTech so far.

Reaping the Fruits of Hard Work

In November 2005, Bo Arboleda won first prize at
the First World Challenge Competition sponsored
by BBC World Television and the Royal Dutch
Shell Corporation for his pioneering work in soil
erosion control through the use of cocofiber nets.

Bo shared his insights about winning the award,

“The money that we won (US$20,000 cash) was
important to a small and growing company like us.
But what was more meaningful to me was the idea
that through the award, it will be much easier to promote coco fiber products throughout the
world, which will help reduce poverty in coconut-producing countries because more jobs
would be created in processing these products.” In a tribute to his workers, Bo added,
“Winning first prize was a great honor not only for me but for the Philippines and for our
business partners, the farmers.”

Challenges & Constraints

AT THE COMPANY LEVEL
ƒ SMEs are often unable to borrow money even from government financing institutions
because of requirements for collateral (usually in the form of real estate).

8
Data from the Cooperative Development Authority, Aklan.

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 13
ƒ The cost of domestic shipping is often unaffordable for local entrepreneurs.
ƒ The domestic market pays a higher price, but payment and collection, particularly from
the public sector, can be a lengthy and expensive process.
ƒ The export market pays up-front, but international competition makes the price too low
and requires production volumes beyond the capability of CocoTech.
ƒ Funding is needed to support research studies in anti-desertification, to complement the
pilot project in the Gobi Desert in Mongolia; if the pilot project is proven feasible,
demand for cocofiber nets would outstrip global supply.
ƒ Funding is needed to train engineers and others in bioengineering.
ƒ Funding is needed to support skills training workshops on twining and weaving as a
means to expand the current worker base.

AT THE LOCAL MARKET LEVEL

ƒ There is limited knowledge among the country’s potential users of coconets and their
beneficial effects on the environment, rural economies and the coconut industry in
general.
ƒ Despite the issuance of Presidential Memorandum 25 mandating the use of cocofiber nets
on all government infrastructure projects, implementation by the DPWH has been slow
and inadequate.
ƒ There is a need to promote the use of coconut dust-based organic fertilizer and soil
enhancer, especially as the country’s agricultural sector lacks access to affordable and
environment- friendly fertilizer. According to the Philippine Coconut Authority, global
demand is expected to rise especially now that the European Union members have banned
the use of peat moss in favour of coconut dust or cocopeat.
ƒ Lack of uptake for cocofiber nets has led to increased costs of infrastructure projects
because materials for soil erosion control and soil stabilization are often imported; for
example, the cost of shot-crete (made of steel wire sprayed by concrete) is almost three-
times that of cocofiber nets and cocopeat.

AT THE INDUSTRY LEVEL

ƒ There is a need to form an international consortium of cocofiber product producers in
order to extract more equitable prices in the export market, as well as to ensure fair and
sound labour practices.

AT THE BUSINESS ENVIRONMENT LEVEL

ƒ The cost of doing business in the Philippines is relatively high, due to excessive
bureaucracy and lack of transparency in negotiating/awarding contracts. This reduces the
potential to generate a higher income for coconut farmers.
ƒ A lack of national quality standards for cocofiber nets left small producers at the mercy of
the DPWH. Fortunately, as a result of Bo’s contribution in preparing the data, the DPWH
finally released the national standards for coconets and cocopeat in September 2006.

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 14
Conclusion: The Important Adventure
Bo Arboleda named his original company Juboken, representing his name and those of his
wife and son. He then realized that in the Japanese language– in which he is fluent- Ju means
important and boken means adventure. Indeed, for this visionary who was once a political
activist and a detainee during the Marcos martial law period– which forced him to study
abroad– Juboken was but a continuation of his life’s dream to help the poor. This became the
perfect name for a company that symbolizes his hope and the hopes of thousands of coconut
farmers.

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 15
References
BBC. Official website. Available at www.bbc.co.uk.

Coco Green. Official website. Available at www.cocogreen.net

Garde, Rico. 2001. “Juboken: Bo’s Adventure in Eco-Entrepreneurship.” AIM.

Nation Master. Official website. Available at www.nationmaster.com

Project monitoring report of Indanan, Sulu, in the Autonomous Region in Muslim Mindanao
(ARMM). Project replication and interview notes with workers and their families and with
Governor. March 2006.

Radio programme in early September 2006 featuring the Governor of the Province of
Antique, shortly after Typhoon Milenyo caused flash floods and landslides, giving
special mention to coconet-covered hillsides that were left unscathed.

Shell. Official website. Available at www.shell.com.

United Nations Development Programme (UNDP). 2005. “Philippine Human Development

Report.” Manila.

United Nations Food and Agriculture Organization. Official website. Available at

www.fao.org.

Interviews
Arboleda, Julie. 2 October 2006.

Arboleda, Justino “Bo.” 29 September 2006.

Company staff and Finance Manager, Coco Tech. 7 to 9 October 2006.

Philippine Coconut Authority, Aklan office. 11 October 2006.

Philippine Department of Trade and Industry

Workers and their families, chairwoman of coconut farmers’ cooperative, school principal,
and town Mayor, SRE facility in Aklan. 27 to 30 September 2006.

Photographs courtesy of CocoTech and SRE

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 16
 Appendix A: Coco Fiber Processing
s

Step 1. Gathering of waste coconut husks Step 2. Decorticating the husks

Step 3. Packing and Distribution of

Step 4. Twining
Cocofiber to the community

Step 5. Weaving Step 6. Finished nets

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 17
 Appendix B: Map of the Philippines Islands and CocoTech’s Areas of
Operation and Partners

COCO TECHNOLOGIES
CORPORATION
Bioengineering and
Marketing Office –
Quezon City, Metro
Manila

BALER PLANT
Baler, Aurora, Quezon

LABO PLANT
Labo, Camarines Norte

LUPI PLANT
Lupi, Camarines Sur

JUBOKEN/CocoTech
ENTERPRISES INC.
Gapo, Camalig, Albay

Bulan Plant, Sorsogon

SUSTAINABLE RURAL
ENTERPRISES
Kalibo, Aklan

PAMMPCO-
PIFARMCO-PUSCO
Panaon, Southern Leyte

PAMMPCO-
PIFARMCO-PUSCO
Panaon, Southern Leyte

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 18
 Appendix C: List of CocoTech international service projects

Implementing Company/
Country Name of Projects
Partner

Germany and the Bestmann Bioengineering

Wedel River Rehabilitation
Netherlands Company
Elbe River Bank Rehabilitation
Berlin Bypass Greening Project
Schipol Airport Creek Rehabilitation
Erfurt Central Park River Rehabilitation

Japan Fujimi Green Engineering Shimizu River

MIC Corporation Lake Biwa
Inage Creek
Kobe River
Edo River
Umegaoka River
Yokohama River
Kanda River
Fujigaoka River

United States Bio-Engineering Group Tenesse River

Bonterra America Missisippi River
Washington River
Buffalo Creek
Nashua River
Wilson Greatbatch Wetland Project
Beacon Heights Landfill

Malaysia Agrumaju Bhd. Petalinjaya Industrial Park River

Guangzhou Rivers Enterprises

China Artificial Wetland Project
Co., Ltd
Ecogreen Mongolia Desert Rehabilitation Piloting Project
Fuyang Golf Inc. Fuyang Golf Course

Sri Lanka EcoProtect-Cocotech Southern Highway Road Protection Project

Kumagai-Gumi Slope Protection
Horana Slope Protection

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 19
 Appendix D: Presidential Memorandum No. 25

OFFICE OF THE PRESIDENT OF THE PHILIPPINES

Malacañang
Manila, September 2, 2002

MEMORANDUM CIRCULAR NO. 25

DIECTING ALL NATIONAL AND LOCAL GOVERNMENT AGENCIES, BUREAUS, AND OTHER
INSTRUMENTALITIES INCLUDING AGRICULTURAL INSTITUTIONS AND COUNCILS TO USE
COCO PEAT OR COIR DUST AND COCONUT FIBER MATERIALS FOR SOIL CONDITIONING AND
EROSION CONTROL.

In line with the program to promote better farm practices and environment conservation to mitigate the
effect of drought during El Niño years, all heads of National and Local Government agencies, bureaus,
and instrumentalities including Government institutions and councils involved in the implementation of
farming programs are hereby directed to prescribe the use of coco peat and other coconut husk
materials in farming and horticulture as effective soil conditioner and water moisture conservator.

Likewise, the use of geo-textiles and bio-logs or fascines made from coir or coconut fiber is hereby
prescribed for use in infrastructure and public work projects for soil erosion control, more particularly of
the Department of Public Works and Highways. These coir products, proven for their high tensile
strength, are abundant, available, and biodegradable.

The use of coir will further provide additional income to coconut farmers and generate more jobs in the
countryside.

The Department of Agriculture, the Department of Public Works and Highways and the Philippine
Coconut Authority shall issue the corresponding Implementing Guidelines within thirty (30) days from the
date of issuance of this Memorandum Circular.

For strict compliance.

Manila, September 2, 2002

By the President:

(Signed) ALBERTO G. ROMULO

Executive Secretary

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 20
 Appendix E: CocoTech’s Project Performance

Value of Projects
Year of Operation No of Projects
(in Php)

1996 1 750,000.00
1997 3 8,246,000.00
1998 2 8,265,000.00
1999 4 2,073,000.00
2000 4 6,361,000.00
2001 6 7,503,866.00
2002 6 66,740,000.00
2003 9 25,000,000.00
2004 8 15,200,000.00
2005 7 13,600,000.00
2006 18 16,499,983.34
TOTAL 170,238,849.34
US$ 3,404,776.99

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 21
 Appendix F: List of products and services

A. EROSION CONTROL: COCONETS, ROLLS, WATLLES & INTERLOCKING

BLOCKS
• Riverbank Protection
• Shoreline & Mangrove Protection & Rehabilitation
• Road slope protection
• Steep slope protection and erosion control
• Waste management
• Wastewater purification
• Shoreline and mangrove protection and rehabilitation
• Grass mat production
B. GROWING MEDIA: COCO BRICKS & BLOCKS
• Cocopeat block and bricks are used as construction materials. Cocopeat is
one coconut husk is 35% fiber and 65% dust). It has excellent water-
absorption capability (8 times its weight)
• Coco pot – is an environment friendly, organic seedling propagation pots
Wattle – coco fivers stuffed in nets, designed to hood orchids and other
hanging plants
• Grow pole – is used for vines and creeping plants
Cocopeat – the use of coconut dust as soil enhancer and mulch (stays more than
10 years in the soil; improves soil texture/structure, insulates roots from extreme
temperatures, promotes microbial and root growth, absorbs strong, unpleasant
odors).
C. OTHER PRODUCTS
• Coir twines - for agricultural, industrial & home applications
• Plant Hangers - for agricultural and home use
• Caps and Bags - for fashion and occasions

Other innovative uses of CocoTech’s cocofiber nets include:

• As a substitute for sand filters, which is now being used by Manila Water.
• As a substitute for synthetic and petroleum-based filters at a water
filtration system which was tested and used in South Korea.
• Restoration of a landfill project in Guangzhou by replacing the plastic
net covering. The coconets were embedded with plant and flower seeds.
So effective was the experiment that the landfill has been transformed into a
beautiful park.

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 22
 Appendix G: Coconut husks products

Coco pots Cocopeat

Plant liner
Car seat
Brush rope

Grow poles Liner

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 23
September 2007

The information presented in this case study has been reviewed and signed-off by the company to
ensure its accuracy. The views expressed in the case study are the ones of the author and do not
necessarily reflect those of the UN, UNDP or their Member States.

Copyright @ 2007
United Nations Development Programme

All rights reserved. No part of this document may be reproduced, stored in a retrieval system or
transmitted, in any form by any means, electronic, mechanical, photocopying or otherwise, without
prior permission of UNDP.

Design: Suazion, Inc. (N, USA)

For more information on Growing Inclusive Markets:

www.growinginclusivemarkets.org or gim@undp.org

United Nations Development Programme

Private Sector Division, Partnerships Bureau
One United Nations Plaza, 23rd floor
New York, NY 10017, USA

Case Study • CocoTech: Providing Livelihood Opportunities for Poor Coconut Farmers 24