Strengthening the Coconut Industry in Malaysia

Strengthening the Coconut Industry in Malaysia

Published: 2021.11.12
Accepted: 2021.11.11
Former Director
Strategic Planning and Innovation Management Centre, Malaysian Agricultural Research and Development Institute (MARDI)
Malaysian Agricultural Research and Development Institute, Malaysia


Coconut is one of the important food crops in Malaysia in terms of land usage, after oil palm, rubber and paddy. Coconut cultivation provides source of income for more than 100,000 families and generates revenue from the export of coconut-based products. Despite its importance, coconut was perceived as a ‘dying industry’ in Malaysia. Farmers were shifted to other lucrative crops such as oil palm, or were asked to convert their land usage into housing estates or industrial parks. The area cultivated with coconut has reduced to around 80,000 hectares in 2018, from more than 100,000 in 2010. The farmers’ attitude to sustain the old unproductive trees and the difficulty to obtain the hybrid coconut seedlings are two main factors that hindered the development of this industry. The Malaysian government has realized the contribution of the coconut industry and started to revitalize it in 2018. The Ministry of Agriculture and Food Industry has introduced new strategies and initiatives that could strengthen this industry. It is hoped that the coconut industry will shine again and become one of the sources of new wealth in Malaysia.

Keywords: Coconut industry, economy development, technology, coconut-based products


Coconut or Cocos nucifera L. is synonym as a ‘versatile tree’ due to its multifunctional attributes. Coconut can be used for food, cosmetics, and industrial products. From the tree trunk, to the leaves and even to the innermost of the fruit, every single part of a coconut palm can be fully utilized. This is why the coconut tree is being called the “Tree of Life” worldwide. It can grow literally anywhere, anytime and under any conditions, regardless of high salt inflow, soil nutrients depletion or low annual precipitation. Coconut grows in over 90 countries using around 12 million hectares of land. Coconut is widely distributed throughout Asia, in which India, Indonesia, Philippines, Brazil and Sri Lanka are the top five producing countries in the world. An estimated 35 countries utilize coconut commercially. In general, over 90% of coconut farms are village-based small holdings of less than one hectare in size. Malaysia remains as one of the top ten coconut producing countries in the world and coconut is the 4th important industrial crop in Malaysia after oil palm, rubber and paddy. More than 70 billion nuts are produced annually.

Coconut was perceived as a ‘dying industry’ in Malaysia. The cultivation area of coconut has dropped to around 80,000 hectares in 2018, from more than 100,000 hectares in 2010.  Farmers are converting this commodity to other lucrative crops, such as oil palm or are developing the land into housing estates or industrial parks. Many hectares of coconut farms were left idle, and many nuts were left unharvested because of lack of manpower to operate the farms or harvest the produce. Most of the coconut farms are cultivated with Malayan Tall variety that is less productive and difficult to harvest because of its height. Some farmers are ready to change the old trees to more productive varieties, especially the hybrids. However, the main constraint is the difficulty in obtaining the hybrid coconut seeds such as Matag. This is because the production process of hybrid coconut seedlings takes a long time and requires an extensive seedbed, sufficient pollen sources as well as trained and efficient workers to carry out the hybridization process (assisted pollination). As a result, the price of hybrid coconut seeds is more expensive, reaching around RM50.00 (US$11.90) per seedling as compared to other varieties such as Malaysian Reed Dwarf coconut (MRD) or Malayan Yellow and Pandan, which are priced between RM4.00 (US$0.95) and RM6.00 (US$1.40) per seedling.

The cultivation cost of coconut has also increased every year, which includes the cost of land development, maintenance, fertilizers, seeds, labor and contingency costs in the event of natural disasters. The average production cost of Matag coconut has increased from RM5,577.00 (US$1,328.00) per hectare in 2011 to more than RM8,000.00 (US$1,900.00) in 2018. The foremost challenges faced by farmers are the rising cost of inputs such as fertilizers and the difficulty in obtaining manpower to operate the farm. The main source of manpower for agricultural activities in Malaysia are from Indonesia and Bangladesh. Currently, the immigrants prefer to work in the factory or retail business.

Most of the farms in the coconut industry in Malaysia are run by small holders who own farms of between 1.0 and 2.5 hectares. The majority of farmers grow tall type coconuts like Malayan Tall and have already matured or become old. Older trees produce low yields and generate low income as well. The average production from Malayan Tall coconut is 7,000 nuts per year. Therefore, the income from one hectare of Malayan Tall coconut is around RM500.00 (US$120.00) per month. To increase income, farmers need to change their coconut crops to new varieties that can produce high yields. For example, Matag and Pandan coconut crops can produce up to 25,000 nuts per hectare per year. This can generate income of up to RM1,500.00 (US$375.00) per month.

Currently, the development and management of the coconut industry is the responsibility of the agencies under the Ministry of Agriculture and Food Industry as follows:

  • Department of Agriculture (DOA) is the agency that is responsible in producing seeds, provide extension services and farm development to farmers. The DOA produces all variety of coconut seedling and contract-out the production of hybrid seed coconut to one company. In general, the production of hybrid seeds is insufficient to supply the demand by the farmers; and
  • MARDI's role is to conduct research and development (R&D) of coconut comprehensively covering upstream activities to produce the conventional and hybrid varieties that are high yielding, fast fruiting and characterized by dwarf trees. MARDI also developed coconut DNA fingerprint technology for variety verification, fertilizers for coconut crops, machines and machinery for the purpose of peeling the coconut husk and coconut fiber processing machines. Food and non-food processing technologies are also being developed. Currently, one of the main products developed by MARDI is the virgin coconut oil or VCO which has been accepted in the global market. The VCO has been proven as a ‘super natural functional food.’

To drive the development of the coconut industry, the government has targeted to increase the coconut production by 1.2 million tons (1.2 billion seeds) per year. The increase in production is aimed at increasing productivity from 4.8 MT per hectare to 15.1 MT per hectare with a project growth of 8.7% per annum. This paper discusses the coconut industry in Malaysia, and highlights some issues, challenges and strategies on empowering this industry to be a source of new wealth in Malaysia.


 The coconut industry is one of the oldest agro-based industries in Malaysia. The coconut industry, however, still remains as one of the traditional smallholder crops, which supports around 100,000 families as the main source of income. While the estate sector supports about 8,000 families, the smallholding sector remains dominant in the coconut industry, comprising about 90% of the total area.

The area planted to coconut has increased to 85,630 hectares in 2020, from 84,609 hectares in 2016. Malaysia has progressively increased production of coconut. The production has increased to 542,000 MT in 2020, from 504,780 MT in 2016. The small-holding farms contributed around 87.0% of the production, while the balance is supplied by the estates. At the same time, the value of this commodity has also increased due to higher demand from local and international markets. The value of coconut commodity has increased to RM666,626.00 (US$158,720.00) in 2020, as compared to RM555,250.00 (US$132, 202.00) in 2016 (Table 1).

Based on current production and the increasing demand from both traditional and newly emerging industries, the production is still insufficient to accommodate the needs of the industry. It is estimated that 200,000 MT more coconuts are needed to meet the demand. One of the main constraints is the declining acreage of cultivation area for coconuts from 105,658 hectares (Y2010) to 85,630 hectares (Y2020). One of the reasons that contributed to the decline in the area cultivated with coconut, is the competition with lucrative activities. Farmers shifted their interest to other commodities such as oil palm and housing development. As a consequence, Malaysia imports coconuts from neighboring countries valued at RM231.79 (US$55.20) million in 2020.

Currently, there is a rising health consciousness, and increasing number of people who are aware of the health benefits of consuming coconut-related products, especially as a substitute for dairy products. From 2011 to 2020, the market value of the coconut and related products grew at a CAGR of 13.6%, from an estimated RM259.9 (US$61.9) million in 2011 to RM823.3 (US$196.0) million in 2020. The growth was attributable to the increasing popularity of coconut and related products in the global market. The market value of the coconut and related products from 2016 to 2020 is presented in Figure 1.

About 63% of coconut production is for domestic consumption, and 37% is for export and industrial processing. The domestic demand for coconut products takes in the form of fresh coconut, tender coconut, coconut oil and processed cream powders. In terms of exports, the country has seen an increase in the export of end-products of coconut such as desiccated coconut, coconut milk powder and activated carbon.

The demand for coconut is increasing every year. In average, the domestic consumption for coconut is around 625,800 MT per year. The domestic production is only able to supply around 88.8% of the demand. The total domestic production is still unable to meet the needs of consumers, which is amounted to 19-20 nuts per person per year. Consumption of coconuts per capita is expected to increase to 21-22 nuts per person in 2025. To cover the shortage of the coconut supply, MAFI has allowed the import of coconuts subject to the Plant Quarantine Act 1976 and the Plant Quarantine Regulations 1981. On average, Malaysia imports 120,000 MT of coconut a year. Import of coconut is expected to increase further, especially with the development of the downstream industries for coconut products such as coconut milk powder, activated carbon, coco-peat and coconut water, as well as new products such as virgin coconut oil and yogurt.


The Malaysian coconut industry has gone through numerous economic challenges in the past. However, recently, this industry has shown greatest potential to be further developed and strengthened to fulfill the rapidly expanding demands from the consumers, particularly from downstream coconut-based industries. The government is starting to see the potential of the coconut industry as a new source of wealth because they can double the income of farmers. However, some of the issues and challenges related to the coconut industry in Malaysia are as follows:

  • The local coconut farmers cannot compete with imports in terms of price and scale. The higher demand has led to the higher market price. The high price of local coconuts has deterred manufacturers from relying solely on domestic supply. The food-processing industry import coconuts from neighboring countries such as Indonesia, Philippines and Thailand. The influx of cheap coconuts has hampered the business. In order to compete with the imported commodities, farmers harvest young coconut for fresh consumption;
  • The lack of competitiveness and perceived insufficient supply is due to many farmers choosing to plant the more lucrative oil palm. Farmers can harvest oil palm after three years, as compared to coconut that takes up to five years. In general, the lack of competitiveness is due to low productivity. The old traditional variety produces fewer nuts and thus, is unable to generate more revenue for the farmers. Other factors contributing to the low productivity are the low natural soil fertility which needs fertilization, poor agricultural practices and farm management;
  • Farmers are still using the old variety, the Malayan Tall that produce less yield per hectare. The major variety grown is the Malayan Tall (92.2%) followed by the hybrid MATAG (4.3%), MAWA (1.7%), aromatic type (Pandan) (1.7%) and the Malayan Dwarfs (0.2%). The Malayan Tall takes time to grow, and its heights made it difficult to harvest. On the other hand, farmers are reluctant to change the crops to new varieties such as Matag, Malayan Yellow Dwarf (MYD) and Malayan Red Dwarf (MRD) because of not easy to obtain the seedling. They are also more expensive than traditional varieties, which may be a challenge because most of the small holders have limited budgets; and
  • The price of Matag seedling has gone up to RM60.00 (US$14.30) as compared to RM10 (S$2.40) for MYD and MRD. The three varieties produce a similar number of nuts per tree, but the Matag variety has thicker flesh, which is good for coconut oil, virgin coconut oil and coconut milk. The seedlings of the new varieties are currently insufficient for all the coconut farmers in the country. It is not easy to produce seedlings. Someone has to climb the tree and induce pollination to get the required variety. In Malaysia, there are not many people who has the skill. Furthermore, most of the coconut farmers are old, and they are not ready to do the job.


In order to accelerate the growth of the local coconut industry, the government has to play a big role in ensuring that consumers get a consistent and affordable supply of coconuts while also improve the livelihood of farmers. Efforts to revive and empower the coconut industry started in 2018 when the Ministry of Agriculture and Food Industry presented a Cabinet Paper on the strategies to strengthen the coconut industry. Presently, there is an urgent need to revive the coconut industry even though coconut may not be the number-one crop in Malaysia. However, the description of the coconut as a ‘tree of life’ cannot be disputed due to its many different uses. Malaysia has to make an effort to give the coconut industry a new breath of life because for several decades, this industry has been taken out of the limelight due to an effective campaign and propaganda which discredits the beneficial effects of the coconut products, especially coconut oil. For a long time, the public has been made to believe that the coconut oil causes many human health problems. As a result, the coconut industry became non-competitive and demand for coconut oil significantly declined.

Comprehensive strategies that covering the entire value chain from production of seedling and increasing the number of plantations to education to improve farm management was established. The MAFI has outlined five strategies on how to revive the industry as follows:

  • Replanting and rehabilitating of coconut farm;
  • Seed production program;
  • Centralized management model;
  • Development of technology for coconut industry; and
  • Cultivation of coconut on large scale/estate

Replanting and rehabilitating of coconut farm

Efforts to develop and expand new areas by replanting and rehabilitating abandoned lands as well as maintaining existing areas are aimed at ensuring increased coconut supply in the long run. Old and unproductive coconut areas need to be replanted with selected high-yielding coconut vines. The coconut area rehabilitation program focuses on increasing yields through fertilization assistance, improvement of drainage systems and integrated pest management to increase productivity.

In order to increase farmers' production and income, the farm model project needs to be expanded. The program aims to introduce and promote the application technology and good agricultural practices (GAP) and inter-cropping practices. The farm model can also be used as a field school training ground to enable the sharing of technological expertise. A total of six farm models involving an area of 20.15 hectares were implemented, in 2018.

The government allocated RM50.00 (US$11.90) million of its budget in 2020 to help farmers purchase seedlings and replant. The money was also aimed at helping farmers improve the maintenance of their plantations and use fertilizers to increase productivity.

Replanting and rehabilitation scheme will also provide extension services to assist farmers to fully utilize the land resources. Essentially, the plan, which covers over a ten-years period, will be emphasized on increasing the productivity of small holders and improving the quality of their production.

Seed production program

The seed production program is very important to ensure the success of the replanting program and rehabilitation of coconut areas. Due to the lack of high-yielding hybrid coconut seeds, there are many sellers of non-genuine hybrid coconut seeds in the market which result in losses to farmers when the yield and quality of the crop are low. In this regard, the government targets 1 million hybrid coconut seeds to be produced by 2020. However, this program needs the cooperation of the Malaysian Department of Agriculture, MARDI and private companies involved in producing high-quality hybrid coconut seeds and can verify the quality of coconut authenticity with DNA molecular marker technology.

One of the efforts to increase the production of hybrid coconut seeds that are high yielding, fast fruiting and characterized as dwarf coconut is to expand the seed gardens. The Hilir Perak MARDI Research Station has a 3.1 hectare seedbed that is capable of producing more than 30,000 seeds annually. The orchard is capable of providing coconut seeds for an area of more than 500 hectares which in turn can produce more than four million seeds a year after 2023.

Centralized management model

The Farmers Organization Authority (FOA) and the Department of Agriculture have implemented a centralized management model in Bagan Datuk and Hutan Melintang in Hilir Perak district covering an area of 187.5 hectares since 2009 involving 123 participants. This model aims to produce and market coconut products in a centralized and integrated manner through lands owned by members of the Area Farmers Organization. This model is seen to be able to increase coconut production, and as a result it can be expanded to other potential locations such as in Selangor and Johor.

Farmers are encouraged to integrate the cultivation of coconut with other crops. Based on a study conducted by the Malaysian Cocoa Board (LKM), for every hectare of integrated coconut and cocoa cultivation will be able to produce approximately one MT of cocoa and 20,000 coconuts per year. The estimated income for cocoa crops is RM8,280.0 (US$1,970.0) per year with an average monthly income of RM690.0 (US$164.3). Meanwhile, for coconut, it is estimated at RM12,680.0 (US$3,020.0) per year with an average monthly income of RM1,057.0. From that amount, a farmer can earn an income of RM20,960.0 (US$4,990.0) per year or RM1,747.0 (US$436.8) per month for each hectare of integrated coconut and cocoa crops.

The integration of coconut and cocoa crops will provide a social safety net for coconut and cocoa growers. If one of the commodities experiences a fall in price, the integration crops can guarantee the farmers income.

Good farm management practices are especially important today as the trees are facing threats from pests such as the rhinoceros beetle and red palm weevil. The red palm weevil is actually from the Middle East and could have come when people brought in date palms for ornamental purposes. The Department of Agriculture is monitoring these threats very closely.

Development of technology for coconut industry

To address the challenges of the coconut industry in the future, research and development (R&D) will be enhanced to produce hybrid coconut seed varieties that are resistant to climate change. MARDI has generated new hybrid coconut varieties that can compete with Matag coconut in terms of size, fruit quantity per tree and fruit quality.

To address the challenges of the coconut industry in the future, R&D efforts need to be further strengthened and expanded. MARDI's function as a research and development institution will be enhanced to conduct coconut R&D along the chain, starting from the production of hybrid coconut seeds that are high quality, fast fruiting and short tree. MARDI also generated the DNA fingerprint technology for variety validation. Farm management will be enhanced by using precision agricultural techniques, the development of environmentally friendly pest control, early warning systems (EWS) will be enhanced. The use of farm automation and mechanization will also be enhanced.

MARDI has produced six hybrid coconuts that can produce over 30,000 nuts annually. MARDI has also opened a 20 hectares seed garden in Hilir Perak that is capable of producing hybrid coconut seeds. The production of hybrid coconut seeds using an assisted hybridization process will be able to produce over 150,000 seedlings in five years starting from 2022, and over one million seedlings in ten years.

 The research and development on coconut has been conducted at MARDI for more than three decades. For the last ten years, MARDI has put extra efforts on research to develop new technologies to value-add the coconut-based products. Until recently, MARDI has successfully commercialized three coconut-based products, i.e. VCO, activated virgin coconut oil (AVCO) and coconut water vinegar. MARDI has also established a few proofs of concepts (POCs) for coconut-based products that are needed for up scaling at the industry level. MARDI believes that continuous R&D, especially on value-added and high-value products from coconuts such as VCO and other health products, must be enhanced for the industry to prosper. Besides planting technologies and new markets, priority should also be given to technology transfer and product quality. It is very important for Malaysia to take advantage of these high-value products and by doing so, it could strongly revive the overall coconut industry in the country.

Encourage large-scale coconut cultivation

Large-scale coconut cultivation covering a large area of land requires the establishment of special estates for coconut cultivation. Establishment of estates can increase the efficiency of farm management, guarantee production productivity and more efficient marketing methods. Based on economic analysis, it is estimated that each hectare of farm can produce more than 25 metric tons (25,000 seeds) of coconut per year. To reduce imports by more than 100 million coconuts a year, Malaysia needs an additional area of about 5,000 hectares.

Large-scale private-sector involvement is essential to ensure the sustainable development of the coconut industry. In this regard, steps need to be taken to increase the involvement of the private sector not only in the upstream industry, but also in downstream aspects such as seed production and coconut cultivation.


The coconut industry has great potential and bright prospects in Malaysia’s economic development. Currently, the upstream sector of the coconut industry is an important economic activity for more than 64,000 farming families. The implementation of strategies to strengthen the development of the country's coconut industry will be able to reduce dependence on imports and further develop the downstream industry as well as help increases the income of small holders and reduces poverty in the country. It is timely for the local coconut industry to shine. Coconut is still very much needed by Malaysians and definitely will continue to be developed in five years time and possibly be the number one industrial crop in Malaysia.


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