Repurposing nature’s waste: Coconut husks as a disruption to the peat moss industry

Written by Adhika Nurul, Lisa Wei, Lara Bekhazi

Somewhere in the world right now, a coconut’s kernel is harvested and the husk is discarded as waste, a dried palm leaf might fall from a palm tree without anyone even thinking of this natural and ordinary event. What if we could breathe new life into coconut husks or dried palm leaves, and extract productive value from them while also phasing out the use of non-renewable goods? In a circular economy, otherwise unused materials are redefined as inputs by breaking them down and making them useful again. Nature produces a multitude of natural ‘wastes’ that we have yet to tap into.

 

In India alone, there are 88 million Areca palm trees, from which 8 billion leaves fall annually, but 93% of these simply become bio-waste. By repurposing these palm leaves into eco-friendly packaging and utensils such as plates, bowls or cups, a new industry was born. Displacing traditional disposable paper or, worse, styrofoam products that cause the destruction of millions of forest acres or are made from non-biodegradable petroleum-based chemicals. Using a renewable resource such as palm leaves takes less energy and water to manufacture, reduces the carbon footprint and is bio-degradable when discarded as compost – which can then be used in farms or gardens . The loop in the circular economy is closed.

 

Now, let’s dig deeper into the sustainable repurposing of coconut husks in particular.

Context and Challenges

Once a coco-kernel or nut harvested for water, oil and pulp, the remaining external husk or shell of the coconut is occasionally used to create canvas materials like ropes, but most frequently discarded as waste. Instead, the husk can be ground, dried, and compressed for use as agricultural substrate in both residential gardening and commercial greenhouse farming applications.

A substitute for soil, agricultural substrates include rice husks, pea gravel, rock wool and vermiculite. Substrates trap or hold water, air, and often nutrients for plants to use as they grow. Currently, the principal source of substrate available on the market is sphagnum, commonly known as peat moss, which is extracted by draining valuable wetlands, swamps, or bogs and strip mining the peat moss from half a meter below the surface.

Peatlands are sensitive environments that serve as a natural, critical store of carbon dioxide and methane. Per Wetlands International Report for the UN, peatland drainage due to peat moss extraction results in emissions of carbon and nitrogen estimated at 2-3 giga-tons of CO₂-equivalent per year (equal to the emissions from 450 million vehicles!).

Most peat bogs are found in Canada, Finland, Iceland and Russia, with only 10-12% of the worlds global peatland resource left undisturbed. Naturally forming since the Ice Age, these bogs are non-renewable and cannot be reclaimed once destroyed. As such, repurposing the coconut husk by-product as an agricultural substrate to offset the use of sphagnum will have widespread positive social and environmental impacts.

The most relevant UN Sustainable Development Goal for our proposal is Goal 12: Ensure sustainable consumption and production patterns, which aims to reduce waste, encourage efficient use of natural resources, better manage chemicals, promote recycling or reuse, among other sub-goals. We align two additional and complementary sustainability goals to the UN targets:

 

1. Increase usage of natural by-products such as coconut husks by creating new value chains to displace the use of non-renewable resources
2. Create increased employment opportunities for coconut farmers and plantation workers in developing countries who form the back-bone of this new value chain and are empowered to share their knowledge/skills widely to scale the impact

 

The industry’s current sustainability goals deal mainly with the reduction of post-harvest waste, more efficient use of water for farming irrigation, and decreased use of harmful pesticides and chemicals on agricultural output. In comparison, our sustainability goals address a gap in the loop – where agricultural by-products are currently being overlooked, but might be employed in a useful and value-adding manner.

 

NEW ALTERNATIVE – COCONUT COIR

As an alternative to the destructive sphagnum industry, we recommend the use of coconut coir – a natural fibre extracted from the husk of the coconut – as a substitute for peat moss.  Coconut coir (also known as coco peat) meaning it can store unused nutrients for release to the plant as required. With the capacity to hold up to 1,000 times the amount of air as standard soil, coconut coir allows plant roots maximum growth and serves as an ideal foundation for strong plants. Furthermore, coconut coir is naturally high in lignins which encourage advantageous bacteria, making it less likely for harmful bacteria to invade the plant growing system. Coconut coir is almost pH neutral which is ideal for plant growth.

To eliminate the variability, unsustainable supply chain and rising restoration costs in peat moss production, coco peat has a naturally advantageous business model. Over time, we believe it will become the preferred substrate for commercial greenhouses.

1. STRENGTHS

              a) Sustainable supply-chain

Unlike peat moss, which is derived from the most distinctive type of wetlands (only 10-12% of global wetlands contain peat moss), coconut coir supply is more sustainable. There are an estimated 9,600,000 hectares of coconut plantations in the world. Assuming each hectare has 150 coconut trees and each tree produces 75 coconuts annually, there is an estimated 60 million tons of coconut husk grown worldwide each year. This market has been growing by 500% in the last decade due to increase demand for coconut oil, water, snacks and other products.

               b) Better quality

Coir has proven to hold moisture effectively, rehydrate more easily than peat, drain well, decompose more slowly and withstand compression better. In addition, coir dust does not have the small sticks and possible seeds commonly found in peat. At the same time, coconut coir also possesses aeration properties which are important in soilless growing. Because of all these factors, plants grown in coconut coir – or a coco coir mixture –experience stronger root and better plant yield overall.

               c) Lower waste

Currently, around 95% of coconut husk are discarded as waste or burned, creating ground and air pollution. Husks decompose and begin to rot, often in areas with high rainfall, which means the mulch does not stay relegated to a specific dumping location, but might spread and contaminate nearby areas. Additionally, the fumes from burned waste can cause lung and neurological diseases for the nearby communities. A full utilization of the available coconut husk would eliminate all of these social and environmental risks.

 

 

2. WEAKNESSES

               a) Short shelf life

Compressed coco peat has a short shelf life and therefore, need to be used within a few months of its manufacture due to creep. Usage beyond the expiry date will caused coco peat to become difficult to rewet and use effectively. However, storage in a cool, temperature controlled environment can prolong the use-by date.

                b) Salt content

Due to the high level of natural salts that contained in coco peat, only good quality product should be used for most potting mixes. Furthermore, nutrient compositions must be added to the raw product and adjusted to keep salts level at the appropriate concentrations.

3. OPPORTUNITIES

            a) Multiple distribution channels and markets

The increased popularity of greenhouses for growing tomatoes, cucumber, and lettuce farming in the western world represents a significant market opportunity to grow the coco peat business in the near term.

 

Rank	Country	# of Greenhouses	% of World Greenhouses	Estimated Acres in Greenhouses
1	USA	567	27%	320,595
2	Netherlands	377	18%	213,164
3	Canada	236	11%	133,440
4	Australia	103	5%	58,239
5	Mexico	79	4%	44,668

          b) Aligned incentives

With governments imposing heavy regulation to reduce the environmental hazards generated by peat moss harvesting, organizations such as Canadian Sphagnum Peat Moss Association (CSPMA) extend extra precautions and restoration efforts around the whole harvesting process. Continuing to operate in the status quo will only increase the cost of production and threaten producer profitability. The regulatory environment provides an additional incentive for the sphagnum industry to source for more environmental friendly options like coconut coir.

           c) New market, limited competition

Although coconut coir has become increasingly popular in recent years, there are no clear dominant players or differentiation among products in the market. Mills Nutrients and Dutch Plantin are by far the most appealing and competitive businesses for this market; however, their presence is mostly relegated to Western Europe, predominantly operating in the Netherlands. Raw bricks of coconut coir can be sourced at a variety of specialty garden stores and online retailers. There is a clear opportunity for new players to enter with a high-quality product and robust marketing strategy to establish a recognizable and trusted brand (read more under competitors).

4. THREATS

             a) Future competitors

Due to the popularity of coco peat and abundant supply of coconut husks in the world, it is likely that this business model will be quickly adopted by new market entrants. The increase in competition might force existing players to enter into a price war to position themselves more attractively.

             b) High switching cost

Although coconut coir has better quality than peat moss, it comes at a premium price that makes switching cost for end customers to be higher than normal.

              c) Customer education costs

Given the nascency of this industry, investments are necessary to educate peat moss customers about the benefits of the cocopeat and demonstrate that its functionality is the same as the peat moss in the hopes of converting them into cocopeat customers.

 

NEW BUSINESS MODEL INNOVATION

Key changes that made this new business model innovation game changing:

1. Step 6 – Negotiate demand (Resequencing)

In order to avoid having to forecast demand and the potential overage/underage that might occur, demand will be negotiated with partner greenhouses prior to blending and packaging coco peat. As greenhouse production is not affected by the elements, and thereby quite stable and predictable, it is possible to forecast customer growth cycle far into the future.

2. Step 7 – Blending with nutrients (Modular)

As mentioned previously, raw coconut coir is an attractive growth medium due to its relative pH neutrality, natural protection against bacteria, and high cation exchange between nutrients and plant roots.  For this reason, nutrients can be added according to individual customer crop requirements, allowing for customization between different customer segments, and premium pricing.

3. Step 9 – Feedback from customer (Continuous Improvement)

Building a strong relationship with customers is key. Via established customer relationships and regular feedback, one can learn from the success or failures of coco peat nutrient mixes to realise improvements that provide maximize benefit to customers.

 

CHALLENGES ADDRESSED WITH THE NEW BUSINESS MODEL INNOVATION

1. ENVIROMENTAL CHALLENGES

              a) Less impact on climate change

Peat moss production causes considerable and permanent damage to the environment where it is extracted. In sharp contrast, coconut husks are often waste products – their useful repurposing as coir is of great benefit to the sustainability cycle of the coconut industry.

               b) Decrease in land asset dependency

Peat moss producers experience weather-dependent risk during the harvesting season every year. If, due to rainfall, the water column in the swamp is too high, harvesters must wait until the swamps drain, as peat cannot be mined when it is very wet. Some producers are looking to purchase land in Western Canada, for example, as some areas are drier during the summer months. Yet, with land acquisition in different regions comes new logistical and infrastructure costs. Using coconuts to produce substrate shifts the risks away from weather dependency and land footprint. With coconuts grown in abundance all over the world, product sourcing is diversified against weather and supplier risks.

2. SOCIAL CHALLENGES

Coconut coir production will allow businesses to create new employment opportunities for those living at the bottom of the pyramid in rural areas of leading coconut producer nations such as the Philippines, Indonesia, India and Sri Lanka. Further, processing coconut husks into a useable agricultural product for export acts as demonstrative training, educating the general population in the importance of recycling as an alternative to disposing waste without thought of alternative uses.

 

HOW FINANCIAL GROWTH AND SOCIAL/ENVIRONMENTAL IMPACT FORM A FEEDBACK LOOP

In agricultural business, where innovation is limited, economy of scale is key. Farming on a larger scale is more efficient than farming on a smaller scale. Thus, from the business perspective, the higher the demand for cocopeat, the cheaper it would be to produce it, allowing for a more affordable price for end costumers. Similarly, as the demand increases, coconut farmers would become involved on a wider scale, creating improved social economic condition for their families and communities. Lastly, the more coconut husks are used for coconut coir production, the ground and air pollution that results from coconut husk burning would eventually be phased out.

RISK ANALYSIS

 

IS ANYONE IN THE WORLD IMPLEMENTING THIS?

CONCLUSION

With global peat bog environments being depleted year after year and the environmental damage only magnifying, the time is ripe to find alternative substitutes that can address the problem with renewable resources. Given the abundance of coconut plantations and continued growth driven by increasing customer demand for coconuts, a massive pipeline of coconut husks is waiting to be exploited, ground into coco peat and used as agricultural substrates to in greenhouses and hydroponic farms around the world. Over time, as demand volume increases, the price of producing and distributing coco peat will fall as economics of scale are realised, which makes its widespread adoption likely in the foreseeable future. In the process, a circular economy comes into existence, whereby the ‘waste’ portion of a coconut is put to its most productive use, while creating jobs to supply the new value chain and demonstrating real support of UN Sustainable Development Goal 12.

 

REFERENCES

https://www.coco-peat.com/info/advantages

http://www.canna-uk.com/growing_on_coco_busting_the_myth

http://mills-nutrients.com/substrates/

http://www.growthtechnology.com/growtorial/what-is-hydroponic-growing/

http://www.efymag.com/admin/issuepdf/Coconut-Jan08.pdf

http://www.dutchplantin.com/en/organisation/profile/

https://www.shutterstock.com

https://www.muccifarms.com

http://awakeningwillow.com/2010/07/27/eco-friendly-options-for-disposable-plates-bowls-utensils-cups/