This paper indicates that copra production in the country has been declining in the past few years and the production of copra for the year 2002 was 685 MT while the export amounted to 460 MT during the same period. There are two processing plants in Phonpei and Chuuk. The plant in Phonpei, namely Ponape coconut products is manufacturing about 12 products processed from coconut oil and shells such as soap, soap powder, santan oil, cooking oil, and charcoal. The major foreign markets are Guam, Saipan, and Palau. The total amounts to an average of US $100,000. The products produced locally are not competitive in price compared to the imported products. The government has taken steps to promote the diversification of value added products through coconut food division established under the Coconut Development Authority. It is to encourage cottage type industries among coconut farming communities. The government has also embarked on expansion program due to begin in August/ September this year to expand domestic and overseas market. Various products will be produced including virgin coconut oil, coconut jam, and cococorns with coconut tender meat. There are also plans for value addition in the processing of residue from virgin coconut oil.