Whole Food Center
How much does that $5 jar really cost?
Coconut oil is all the rage these days. You can find article after article about what it’s good for and a million ways to use it for cooking or in body care. You don’t need another article about that.
What never gets written about is where it comes from and the people behind the oil. Sure, you might find an occasional fluff piece with some pretty pictures, but never something more in depth than that.
Five dollar coconut oil seems like a wonderful thing! It's great for consumers, increasing availability and accessibility. However, we want to look at all of the steps to see just how that coconut oil can be made for such a low price.
The costs of making unrefined coconut oil:
(I’m sure I may be missing a few steps in the process, so it may cost even more)
Growing and harvesting the coconuts
Any farming inputs needed to grow the coconuts
Pay for the farmers and laborers.
Making the oil
Transporting the coconuts to the manufacturing site
The cost of running the facility
Extraction of the oil (There are a few different methods such as centrifuging, fermentation and a couple others, but all add a cost)
Pay for the workers who make and transport the various parts of the manufacturing process
Packaging the oil
Some products are hand packed, others are machine packed, but both ways cost money.
The container (glass or plastic will cost different amounts) and lid (plastic or metal will add different costs) and the product label
The cardboard boxes that the cases of oil are packaged in
Paying the workers who package the oil
The top three coconut oil-producing countries are the Philippines (number one by a huge margin), Indonesia and India.
That oil must then sent to the port for shipping to the US or other countries
Pay for the workers who load the oil onto the ship
Pay for the people who work on the shipping vessel
Pay for the workers who unload the oil at the port of entry in the US
Pay for the drivers who transport the oil to the stores
Company Mark Up
The company selling the packaged oil will then have to put their mark up on it
Paying for advertising
The store or online retailer will then put their markup on it as well
That is a lot of steps and inputs that go into making a jar of coconut oil. Somewhere along the line, costs have to be cut to achieve that great price. How is that done?
Efficiency: Buying large quantities at a time, improving computer systems, private labeling, improving fuel economy of trucks and shipping methods
Cutting back on the label, advertising, and marketing costs.
Using plastic instead of glass cuts on container cost and shipping cost.
Paying employees less, benefit cuts or reduced work hours.
Paying farmers and laborers less.
One thing we do know is that companies and stores are not going to be selling the product at a loss. They will get their markup, the cost-cutting is not going to come from there. Companies like Amazon and Walmart can achieve a good amount of efficiency savings from their buying power and logistical networks. However, it gets down to a certain level, where it just costs a certain amount to grow a crop. While some savings may be achieved on the farm using more efficient equipment, the vast majority of the work done on coconut farms is still done by people. People need to feed their families, have a house to live in and have other needs that simply cannot be made to go away or pushed aside like improving shipping costs or buying a different container for the oil. The farmers need to make enough money to pay for their land and pay their workers.
So to get to five dollars a bottle of coconut oil, who is getting the short end of the stick? As happens all too often, it is the farmers, farm and factory workers, the people who work the hardest and can least afford it. The coconut farmworkers in countries like the Philippines average income is less than four dollars a day, despite working long hours of hard labor each day.
It’s pretty dark, but in order to get things really cheaply, there has to be a lot of looking the other way many times.
Some companies claim to be trying or have pretty pictures on the website, but do we actually know whether those are real efforts or just great marketing? Some terms often found in coconut oil bottles or marketing pieces are:
Organic - Organic does not mean farmers were paid a fair price or that there is no child or slave labor, it just governs the use of certain inputs and farming methods. It does not protect laborers, workers or farmers.
Fair Trade - Fair trade seems like a great thing, but there really is no regulation of the term. There are certain organizations that have their own fair trade seal that companies can get certified with, but that only covers their seal of approval, not the actual term. Many of those organizations are simply "pay a fee and get our seal" organizations as well. You can read more about direct trade and fair trade here.
What can we do to make sure that the coconut oil we are getting is ethically sourced?
If the price is too good to be true, it probably is. If a 16 oz or larger jar of unrefined coconut oil can be had for 5 or 6 bucks at the store level, odds are no matter what the marketing or labeling, it simply cannot be ethically produced. It does not mean that you need to pay 30 dollars a pound, but there is usually a reason why things are so cheap and it certainly is not because the company is losing money or selling it cheaply out of the goodness of their heart.
Truly know the source. Don’t just accept pretty website pictures or vague label claims. We know that sorting through all the marketing and propaganda and getting a straight answer out of companies can be hard and not everyone has the time or know-how. You can also look in our shopping guide and see which companies are truly selling ethical coconut oil. We did the work for you! After extensive research and going through over 100 brands and manufacturers (many manufacturers make dozens of brands labels) we found one company in particular, who exemplified the values of ethical, truly organic, environmentally friendly farming, transforming a community and giving a sense of dignity to people who had so much taken from them. That company is Dignity Coconuts. There is so much that they do differently than any other company, it would take us a long time to write about all of it. Luckily they did it for us.
One big thing that Rooted Nutrition (that's us) and Dignity Coconut have in common (besides all the obvious ones) is that we both are extremely unsatisfied with the rate of change in the world. There are lots of amazing people and non-profit organizations around the world, doing amazing work and they should be commended for their actions. However, the truth is that without bringing business and economic models into the fold, the change will be slow and much more difficult.
If every company and person who used coconut oil switched to only buying truly ethically produced coconut oil tomorrow (besides a short term shortage), it would quickly improve the lives of millions of people around the world and slash rates of poverty, child and slave labor. This would happen at a massively faster rate than any government or non-profit organization could ever achieve.
You can make a huge difference in the lives of so many, just by changing the brands of products that you buy. If everyone of us just changed even one or two brands for more ethical ones, the change would come like a flood rather than a trickle.