Coconut Overflow In Developing Rural SMEs
By Nurhafiza Ulfa
Student; Islamic Economy Institute of Bengkalis (STIE SYARIAH)
A village is a small area with a smaller number of people than an urban area. The most prominent feature of these areas is the increase in poverty.
Every year the number of villagers with income below the minimum wage has been increasing. This factor occurs due to a lack of source of income and job opportunities in villages. In certain areas, there are villages that still lack the infrastructure to meet the needs of the daily livelihood of residents.
On the other hand, the geographical location of a village offers good potential for development because it still has vacant garden areas that have not been utilized to the maximum.
Most villages have one commodity of very high value, namely the coconut tree. Waste from coconut such as coconut fibre is very rarely used and even more likely to be considered as waste.
In some parts of Southeast Asia, coconut fibre waste has been used to produce souvenirs, but in most rural SMEs in Indonesia, the souvenir products from this fibre are still of low quality because of the traditional ways they are processed.
In the world market, the processed coconut waste is known as coco fibre, which is coconut fibre and coco peat, which is coconut powder. Coco Fiber is used as the main raw material to make mattresses, spring beds, ropes, rugs and even in one of the luxury cars in European countries, they are using coco fiber to make car seats. We have to note that export demand for such fibres in China has reached 10,000-tons per month.
From eight coconuts one can produce 1 kg of fibre with an average value of coconut fruit production of 15 million grains per year. With this calculation, Indonesia can produce 1.8 million tons of coco fibre and coco peat annually.
While coco peat has a wider market, in Japan, South Korea, America and European countries with a demand level of up to 24 thousand tons per month, coco peat is used as a modern agricultural planting medium and also used for Animal Bedding.
Indonesia still lags behind Sri Lanka and India in terms of utilization of coconut waste as an economically valuable commodity. Sri Lanka and India are able to meet the world’s export needs of up to 50 percent, while Indonesia can only produce 10 percent. Until now, the selling price of coco fibre and coco peat is estimated at USD320 and USD240 per ton, but it is much more expensive in Europe.
In Indonesia, the processing of coconut fibre is a potential business opportunity to be developed for Small and Medium Industries (SMIs), especially enterprises or companies located in the countryside that are already processing coconut waste.
However, the limitations of rural SMIs —in terms of capital and technology— results in very minimal processing of coconut waste. Most villages still lack information related to export markets that can only be accessed by certain parties, hence rural SMEs are left behind.
To address the problem of coconut waste production in rural areas and how to increase the production of coco fibres and peat, there is a need for the government to overcome the problems faced by SMEs.
One of the ways to address the problem is to provide guidance in product processing using the latest technology. In addition, the government should open up export opportunities by making information on foreign distributors easily accessible to rural SMIs.
This will encourage rural SMIs to innovate in improving the quality and volume of production of products based on coconut waste.
Date: October 12, 2020