Virgin Coconut Oil (VCO)
Coastal ecosystems dominated by coconut trees in Aruswar have huge potential for market development. As with other coconut-producing regions in Indonesia, coconut in Aruswar has always been integrated to the copra value chain. The price of one kilogram of copra is around Rp 2,500-3,000. People in Aruswar sell copra only to one particular middleman, who keeps the downstream end of the value chain hidden from the community. This creates a dependency of the coconut producers on the middleman.
In order to capture more added values across the value chain, the Aruswar community, especially the women’s group, had been able to process coconut into virgin coconut oil (VCO). This aligns with Papua Home Industry Coconut Oil (PHICO), one of the flagship programs of the Sarmi Regency Government through funds sourced from the APBD and APBN, which aimed to empower the community. The PHICO program operated a processing factory close to Aruswar, which, in addition to their own, also purchased VCO made by the Aruswar community for further manufacturing. Semi-finished VCO from Aruswar was purchased at Rp 13,500/liter by the PHICO company in Sarmi. One liter of VCO can be produced from about 10 coconuts, whereas in one week the women’s group can produce up to 20 liters of VCO, which means that the revenue from VCO itself can reach up to 270,000 rupiah per week per household. However, after the pandemic, VCO-making activities stopped. Lack of transparency of the women’s group leader in distributing the proceeds of VCO oil sales, one interviewee claimed, have eroded members’ trust towards the organization. This was combined with the moving of the PHICO factory further away from Aruswar, which increased the transportation costs for delivery.