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Why Coconut Oil is Expensive?

Coconut oil is used in everything, starting from hair care to cooking. Although coconut oil is used almost daily in our lives, many people have no idea how expensive coconut oil is. The market price of 500 ml of coconut oil is around BDT 325; therefore, one liter of coconut oil costs BDT 600 or more. On the other hand, a liter of mustard oil, which is used in cooking as well as skin and hair care, costs between BDT 250 to BDT 290. On the other hand, a liter of Extra Virgin Olive Oil costs from BDT 1,100 to BDT 1,500. In contrast, a liter of extra virgin coconut oil can cost from BDT 1,800 to BDT 2,000. This means extra virgin coconut oil is more expensive than extra virgin olive oil. But why is coconut oil so expensive?

Overview of Coconut Oil

Since about 4,000 years ago, people have been using coconut oil for cooking and skincare. Even in 1500 BC, people used coconut oil for Ayurvedic medicine. From 1890 to 1940, as demand for edible oils and oils for soaps making increased in Europe and the USA, Europeans began large-scale coconut plantations in the Caribbean, Southeast Asia, and the South Pacific. After World War II, coconut oil began to be commercially sold in the UK and USA as “Margarine” and “Coconut Butter.” Besides being used in skincare, hair care and oral care, coconut oil is widely used in cooking due to its health benefits. Coconut oil has gained popularity in Europe and the United States in recent years due to its benefits and potential uses. Coconut oil is mainly divided into two categories, refined and unrefined, depending on its effectiveness.

Also, there are different types of coconut oil available in the market depending on the use and nutritional value. Currently, coconut oil is widely used as a food ingredient in India, the Philippines, Sri Lanka, Malaysia, Polynesia, and Indonesia. In 2021, globally, about 3.51 million metric tons of coconut oil were produced. Of which more than 47 percent, or 1.7 million metric tons, is produced in the Philippines, and the rest in other countries like Indonesia, India, Malaysia, and the Netherlands. In addition, 1.93 million metric tons of coconut oil were exported worldwide that year. With the Philippines being the top exporter of 950,000 metric tons of coconut oil, several other exporters of coconut oil are Indonesia, Malaysia, Papua New Guinea, and Sri Lanka.

Why Coconut Oil Expensive?

Cultivation Process

Coconut trees grow mainly in tropical coastal areas. However, commercial cultivation of Coconut is mainly in the Philippines, Indonesia, India, Vietnam, Sri Lanka and Thailand. However, commercial cultivation requires a lot of space. Each coconut tree can grow from 60 feet to 100 feet in height, depending on the species. Each tree is equal in height to a six-story to a ten-story building. As a result, commercial cultivation of coconut trees requires a lot of space which is quite expensive.

Time Consuming Harvesting

It takes about 6 to 10 years for a coconut tree seedling to reach maturity. Although a coconut tree produces many flowers every month at the age of fruiting, it takes another one year for the Coconut to reach the mature stage of producing oil from that bunch. Although the average lifespan of a coconut tree is about 100 years, a single tree can bear fruit up to a maximum of 80 years. On the other hand, a healthy coconut tree can initially produce 50 to 80 coconuts on average per year, but the yield decreases when the tree’s age is 40-50 years. Coconut oil production is also limited because it takes so much time to harvest coconuts, and only a tiny number of coconuts can be produced in a year.

Low Yield of Oil

According to Business Insider, it takes about 250 coconuts to produce 10 liters of coconut oil, which means 20-25 medium-sized coconuts are required for every one liter of coconut oil production. Since only this much oil is produced from so many coconuts, the production challenge of coconut oil is also high.

Production Process

The production process of coconut oil is quite time-consuming and labor-intensive. Fruit picking from coconut trees is done manually, which is risky and labor-intensive. After that, removing the shell from the coconuts and separating the coconut water and shell was also done by hand. Then getting oil from the squash after processing it a few times is very labor-intensive and time-consuming.

Demand & Supply

According to a report by prnewswire, the market value of Coconut Oil Global Coconut Oil has been estimated at 5.7 billion in 2022 and will reach 7.4 billion by 2027.

One of the reasons behind the ever-increasing demand for coconut oil among consumers is the high acceptance of coconut oil as an organic oil. Although there is no conclusive evidence on the health benefits of coconut oil, most health-conscious consumers worldwide, including Europe and the US, believe that coconut oil is beneficial for skin and hair care, ranging from weight loss to diabetes and heart disease. As a result, various products made from coconut, including coconut oil, such as coconut water, coconut milk, and coconut butter, have become commonplace. Therefore, despite an increase in demand for coconut, the supply is not going up in proportion.

Michael Walker
Michael Walker
Michael Walker has made a name for himself as an independent journalist and economist. He is a Stanford University graduate and has built a career as a contributor for MSNBC and The New York Times. Now, he spends his time writing articles for several renowned publications and primarily focuses on the on-goings of different companies, businesses, and the general happenings of the world.

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