Dive Brief:

Cargill said it is the first company to source Rainforest Alliance Certified coconut oil through a mass balance model for use in its coatings and fillings. A mass balance model means the company purchases a certain volume from certified farms equal to that used in those products.

Cargill did not provide a volume figure, but said production would increase along with awareness and demand, according to Food Ingredients First. "The demand for coconut products is growing faster than supply, with consumers in industrialized countries increasingly favoring sustainably sourced products. However, coconut production is restricted by a number of factors," Inge Demeyere, managing director of Cargill’s chocolate activities in Europe, told the publication.

This move is one way of responding to growing demand from consumers for sustainably sourced ingredients, according to the company. It can also help to protect forests and make sure that more sustainable jobs are possible, particularly for small coconut farmers and their families in the Philippines and Indonesia.

Dive Insight:

Food manufacturing firms are taking steps to source more sustainable coconut oil as the demand for the product begins to exceed the supply. Coconut oil prices climbed 20% in a month at the beginning of 2016 as suppliers in India, Indonesia and the Philippines struggled to keep up with demand. From October 2016 to January 2017, prices reportedly soared another 27%.

Cargill's move positions the company with a high-growth product while showing concern for the environment and the workers on small coconut farms. Cargill touted the sustainable coconut oil as a way for manufacturers "to create more ethical ice cream, bakery and confectionery products."

Since Cargill claims to be the first to source Rainforest Alliance Certified coconut oil, which could be a big advantage versus its competitors. According to survey data from Nielsen, about 48% of U.S. shoppers are likely to change their purchasing behavior based on the foods' environmental attributes. Innova Market Insights also listed "Green Appeal" as its No. 4 trend for this year.

Cargill has been working on these more sustainable practices for a while. According to Food Ingredients First, a partnership between Cargill, Procter & Gamble and the Deutsche Gesellschaft für Internationale Zusammenarbeit to set sustainability standards for coconut a few years ago has yielded impressive results.

Coconut producers on Rainforest Alliance Certified farms in the Philippines experienced a 15% income jump from 2011 to 2015. Additional net income goals were set for the end of this year. With already proven results from coconut producers, Cargill's plan could help producers boost bottom lines.

The mass balance model also benefits Cargill by eliminating the need to fully segregate its supply chain. While companies are encouraged to maintain fully segregated supply chains whenever possible in order to achieve maximum traceability, The Rainforest Alliance said the Mass Balance Sourcing Program was created to help them get as close to it as they can without the need to change manufacturing processes.

Cargill also may experience increased interest from manufacturers in its coatings and fillings made with more sustainably sourced coconut oil. Although other manufacturers such as Barry Callebaut have backed efforts to make coconut more sustainable, the Rainforest Alliance certification could help attract more producers. Product manufacturers using these ingredients could advertise the sourcing policy in their labeling and marketing to enhance consumer appeal.

While doing so may not silence the dispute over the healthiness of coconut oil, increasing the amount of more sustainably produced ingredients in the market could be a shrewd move for Cargill.