The AG Story:

There is good business in sustainable

development of coconut farm communities
Antonino Geniston, AG Founder.

Making a Positive Impact on

Sustainable Development of
Coconut Farming
Communities

Our Story
Many businesses run the conventional way: EARNING
then RETURNING. They strive to earn maximum profit
from opportunities then later return to society part of
its accumulated wealth as an act of generosity or
gratitude. The action of returning excess wealth
somehow mitigates the imbalance in economic
development caused by business amassing more
CVCO factory in Padada. Picture taken on
economic wealth than needed. AG, on the other hand, AGs
March 2006 before its start of operation.
runs by HELPING and EARNING. It takes a business
opportunity like twin to a development gap - developing a business that provide fair returns
to its stakeholders while tackling the gap. It is a business where helping and earning are
simultaneous business responsibilities rather than one step after the other.
AG was organized in mid-2005 by two
Filipino friends, Mason Ang and Antonino
Geniston together with their sisters, to
help tackle the challenge of producing a
premium quality of Virgin Coconut Oil
(VCO)
without
the
rancidity
of
fermentation and the heated aroma of dry
coconut meat oil expelling. Thus the
development of Fresh-Centrifuged VCO
Process technology, making the original
quality of the oil as it exist in fresh coconut
Welcome to AG! The gate is closed to prevent entry of farm
meat commercially available to healthanimals. It is not locked to allow anyone to get in by themselves,
conscious consumers. At that time, the
following rules posted on gate.
VCO product was increasingly becoming
popular locally and in western markets due to new awareness of its amazing health benefits.
AGs founders saw in the Centrifuged VCO (CVCO) not only a good business entry point but also
a suitable tool for development of coconut farm communities. For decades, many Philippine
country-sides that produce copra from coconuts have seen its farmers locked in poverty. Many
farmers were losing lands to copra traders due to deep financial indebtedness that arise from
prolonged periods of low copra market value, and from the inequity to small farmers inherent
in the conventional world trading of agri-based commodities.
From humble beginnings, but possessed with a big
dream on helping establish a sustainable
community-development-oriented
virgincoconut-based
industry-segment
in
the
Philippines, AG has successfully survived its first 7
years in operations, tested by hard times but got
thru strong and able. It survived the sudden glut
of supply of virgin coconut oil in the domestic
Philippine market in the immediate years that
followed its start of operation. It survived the
difficult birthing process of a grassroots allFilipino micro manufacturing corporation,
operating in a country economic environment that

The first vehicle of AG at start of operation - 800 kg cap

2nd hand 4wd multi-cab, modified to trek loaded on
muddy plowed farms and unload its cargo by tilting. Still
in service up to present.

has serious obstacles to manufacturing business start-ups: high costs of electricity,

transportation and capital, and the up-front negative disposition of some export markets to the
Philippines as country-supplier. It survived failures
on product quality and misses on delivery
schedules, ever grateful to its affected customers
for their big-brother-like understanding and
support. Today, AG has emerged to be among the
technology leaders in a coconut industry segment
where process technology is still in a flux, with its
7-year experience in development and use of its
AG's current fleet of trucks and tractors with trekking
Freshcapabilities to pick up coconut in great distances and
accessibility, intending to go out as long as he accepts
the Fair Trade Organic rules.

Centrifuged VCO Process technology. And a very

important milestone on its development efforts, AG
is now on the verge of making a positive impact on
sustainable development of coconut farming
communities, like no other in the country, thru
certification to Fairtrade International standard by FloCert.

The Fresh-Centrifuged VCO Process Technology

is designed to extract coconut oil at its original
fine quality that exists in fresh mature coconut
fruit.

A Growing Centrifuged VCO Factory in Padada

In March 2006 AG started operating its Centrifuged Virgin Coconut Oil (CVCO) factory in Padada,
set-up with a bare bone project cost of Peso
4.8 million (1 US$ = 41 Philippine Peso).
Padada is a town in Southern Davao Region
rich in coconut farm resources but belonged
to the lowest 10% among all towns in the
Philippines at that time in terms of income,
due to recurrent prolonged depression in
first containerized CVCO shipment on December 2008, a
copra prices, the primary agricultural product AG's
half-load 20 footer to the US.
of the town. The factory sits in a location
surrounded by coconut farming communities with daily harvest of
about 200,000 coconuts within 5 kilometer average radius from the
factory, equivalent to 20,000 kg of CVCO per day. AG was the first VCO
producer using the Fresh-Centrifuge Process licensed to operate by
then Philippines Bureau of Food and Drugs, now the Food and Drug
Administration.

AG's first 20 FCL shipment of

CVCO was on March 2012 to
the US.

From a daily production of 20 kg CVCO, when it started with 5

employees and one 1 mini-truck to haul coconuts from farms stonethrow away from the factory, the factory has now an installed capacity
of 3000 kg per day of premium quality CVCO operating 24 hours a day,
a several-fold increase of production capacity over 7 years, providing
direct employment to 130 employees. Supporting this production

capacity is a strong fleet of mobile all-terrain vehicles for hauling of coconuts even from very
remote farms which are more in need of sustainable development intervention.

High Trust Level is Essential

AGs growth is aided by a high trust level prevailing in its
operations and among incorporators since its inception.
This trust is embedded in employees work systems,
community
interfaces,
and
its
costumer
transactions. The norm in the company is that farmers
entrust harvesting of their coconuts to AG, oftentimes
not seeing the coconuts taken from their trees as the
nuts are brought to the factory to be immediately
processed second into CVCO. People in the community
The election of officers of AG's coconut farmers
enter the factory like it is their home, except into
cooperative during its 2nd General Assembly on
secured areas of the factory. More than 80% of AGs
March 2013.
production is pre-paid by its customers. AG and its
community values trust, and strives to enhance its being a beneficial element in its
undertakings.

Inclusive Growth thru Organic

Coconut Farming
Since the beginning, AG has set out to use only
organic coconuts for its operations. AGs
founders saw in organic coconut not only an
essential assurance for safe and healthy food
products for world consumers, but also a driver
for inclusive community growth. Aside from
enhancing the sustainability of farms, organic
farming, which includes the development and
husks is trenched two meters around the coconut
use of natural methods for farm productivity Coconut
tree to retain moisture and survive drought.
improvement instead of convenient use of
chemical fertilizers, herbicides, pesticides, GMOs, etc., increases the economic activities and
value of the farm enterprise at the farm level. More farm-level technologies are developed,
and more financial resources are generated and circulating in farm communities serving like
bedrock and lifeblood for development, respectively.
AG partnered with local government offices like, Philippine Coconut Authority, Department of
Agriculture, Department of Trade and Industry and the Local Government Unit of Padada , AG
in promoting awareness on organic coconut farming practices by providing trainings and
demonstrations. AG has also included in its requirements firm understanding and acceptance

of organic farming practices in order to become a

coconut supplier of the company. From an initial pool
of 5 coconut farmer-suppliers AG has now 162 coconut
farmer-suppliers under its organic-certified coconut
program covering 680 hectares of coconut farms, the
pool expanding faster. Despite being a small company
AG has become the main economic driver for certifiedorganic coconut production in Davao Region.
The coconut trunk is bonded with GI sheet to
prevent rats from climbing, using a spooked
design to reduce material cost by at least 30%.

Growing Fairly and Within Means

Farm workers at Brigoi farm interviewed

about farm work conditions and practices by
Cooperative members as fair-trade-organic
internal auditor. First time in the life of farm
workers to be part of the center of attention.

Through functional and prudent spending, AG has been

able to finance its learning curve and growth through the
birthing years by internally generated funds, supported
largely by continuing CVCO orders from its customers, with
deep gratitude for the orders being almost fully prepaid. AG in turn shares this funding by supporting financial
needs of farmers thru advance payments of coconuts
during their times of dire needs, a typical need in poor
farming communities that often screws the conventional
trading system to the financial disadvantage of the
farmers, when the low value of farmers produce are
further squeezed off due to financial indebtedness to the
traders, many times irreversibly swallowing farmers into
financial sinkholes.

Since its start of operations, and even thru the difficult birthing years, AG buys coconuts at
prices intended to support sustainable coconut farming. Previously AG had its self-imposed
minimum price, sometimes 100% higher than prevailing farm-gate prices during extreme
industry downturns. With Fairtrade certification, AG currently follows the Minimum Fairtrade
Price for coconuts under the Fairtrade International standard, established under the more
scientific concept of Cost of Sustainable Production.

Company Growth through People Growth

AG Employee trained to operate the

CVCO vacuum evaporation drier.
The beginning of her possible longterm employment with the
company.

AG does not follow the prevailing practice in Philippine

manufacturing industry on labor contractualization as means to
control labor cost and labor relations. AG hires workers for training
and regularization. It has a Factory Worker Development Program
that help workers transition from a low skill and laid-back behavior
which is typical in farming economies, to competent, motivated
and involved workers necessary in a highly competitive

manufacturing industry for the export market. AGs busy

factory, operating 24/7 in many instances, doubles as
learning laboratory for its employees on personal and job
competencies.
What used to be occupied by worn-out
bicycles, AG's factory frontage is now
fully occupied by employee's
motorcycles.

AGs Role in the Market-Driven Development-Anchored Coconut

Supply Chain
AG finds its manufacturing role in the challenge of producing coconut food products that are
competitive in the market while supporting at least threshold conditions for farm community
development. AG is
committed to strive
as hard as necessary
to make this kind of
business
work
profitably.
The
company designs its
own
processing
technology, looks at
the market for
available machines
with the closest fit
to
its
function
design,
modify
these
available
machines
as
necessary,
or
fabricates
the
equipment itself. AG invests
much attention and energy
on learning to innovate its
process
technology.
Through persistent effort on
innovation and continual
improvement, AGs coconut milk
expeller
achieves
an
extraction rate of 72%, the
highest
rate
in
the
industry.
Its
battery
of
centrifuges achieves an oil
extraction rate of at least 10%,
which is among the
highest, if not the highest, for
fresh
and
wet
VCO
extraction methods. Its VCO Lower picture, a grate-grinder under
vacuum drier employs
thermal-gradient
stirring development to perform coconut meat
mechanism which avoids
fine particle size reduction ideal for
the
use
of
mechanical milk expression.
components that could
introduce contaminants into the
oil. Its drum-contained
method of handling, transporting and staging of dehusked coconuts from farm to factory
protects and preserves the quality of the nuts as freshly harvested until being processed within
48 hours from harvest, and reduce losses to absolute minimum.
AG has dug deep in the effort of developing suitable process technologies for a fully-integrated
virgin coconut processing factory that will bring to health-conscious consumers world-wide
more coconut products that are not only healthier and safer, but also more profitable to its
business stakeholders, and more durable in supporting farm community development. The
company has now the capability to produce the three types of VCO supplied to the markets: its
flagship fresh-centrifuged VCO, the cold-pressed VCO, and the fermented traditional VCO,

improving its flexibility to meet consumers needs and preferences while enhancing overall
factory efficiency on VCO production.

Fairtrade Certification
For more than 2 years starting in 2010, AG organized its pool
of coconut farmer suppliers into a Cooperative of small coconut
producers, the Fairtrade Farmers Credit Cooperative, in order
to pursue the difficult process of certification to Fairtrade
International standard. AG sees in Fairtrade International
certification a noble mechanism with which consumers in rich
countries can directly and effectively participate in the
development of coconut farm communities, by their
Opening meeting of the 2nd Fairtrade
Certification audit on January 25,
consumption of coconut food products that are not only safe
20013 between Flo-Cert auditor and
and healthy but also are produced under fair-trade conditions,
Cooperative officers, reviewing critical
meeting requirements on social development, economic
issues about Fairtrade International
Certification.
development, and sustainable environment - the imperatives
for helping sustain humanity on the shared planet earth. Awareness training were conducted
to farmers and farm workers, and systems were implemented to integrate fair-trade practices
into farm practices, In
February
2013,
the
Cooperative, after two
attempts,
finally
acquired
its
certification making it
the worlds first fairnone 8 years ago, the town center of Padada now has 5 food shops that are open
trade certified producer From
24/7. AG helps bring to the local economy an estimated Peso 0.5 to Peso 0.8 million per
of coconuts processed month from incremental fair trade organic coconut prices.
into CVCO.

Sustainable Environment
Even before the Fairtrade program, AG has implemented
practices for sustainable environment. The company has
zero solid waste policy, and a program on increasing
energy efficiency and renewable energy use. AGs first
step in equipment fabrications involves sourcing of
materials from scrap yards. About 30% of materials that
make up AGs equipment are made of materials from the
scrap yard, like stainless steel sheets, bars, rods, shafts,
pipes, wires, wheels, nuts, bolts, washers, nails, springs,
Coconut milk centrifugal filter under
screws, machine components, structural components and
development, made of perforated stainless
steel drum recovered from the scrap yard. assemblies, plastic materials, rubber, electric motors, etc,.
This practice not only generates sizable financial savings
but also lessens release of greenhouse gases. Up to now, one of the weekly routine of AGs
General Manager is to take a trip to the scrapyards to scout for any latest materials someone

else has disposed but could be of use to AGs process technology development program. AGs
CVCO is produced with about 50% less greenhouse gas emission than that of conventional
coconut oil.

Moving Forward
With strong confidence of its capabilities and awareness of its weaknesses AG sees in the future
many possibilities to work with others to do what is good. AG will seek suitable opportunities
to extend its business and development undertakings to other needy coconut farming
communities
in
the
country. The company will
further
develop
and
strengthen its channel for fairtrade
organic
coconut
products to key markets under
its Fairtrade International
certification program. AG wish
to enhance its partnership
with existing customers, and
develop new ones as necessary
to advance the business
philosophy: There is good
Above is AG Factory door, where motorcycle service of factory manager is parked
business
in
sustainable
in front: a fuel-efficient and feasible transport equipment that could bring
factory management even into remote farms, where absence of roads is not an
development
of
farm
obstacle to finding business opportunity in its twin development gap.
communities.