Prospect of Coconut By-Product ProcessingCoconut meat is the main component of coconut, while the coconut husk, shell, and water are considered as by-product. With the coconut production in Indonesia at average of 15.5 billion coconuts per year, the total by-product is accumulated to 3.75 million tons coconut water, 0.75 million tons shell charcoal, 1.8 million tons coconut fiber, and 3.3 million tons coir dust. Business in coconut by-product processing is condidered to be prospective as long as it is planned and managed properly. Based on the financial analysis in 2004, the B/C and IRR of coconut husk processing into coconut fiber and coir dust for 10 years were 3.58 and 76%, coconut shell into shell charcoal for 5 years was 1.11 and 23%; and coconut water into nata de coco for 5 years was 1.32 and 32%. The industry of coconut by-product processing should be supported by technical feasibilty, mainly the raw material availability, market, and appropriate coconut husk machinery. To provide sufficient raw material for coconut husk processing, it needs about 300 ha of coconut plantation. Furthermore, to abtain additional farmer's income the coconut husk processing should be integrated with coir dust processing into compost, so that it can earn additional income. To produce one ton of coconut fiber will produce 5 tons of coir dust. It suggested that the location of coconut by-product processing is better closed to the raw material source, and to secure the continuity of rawmaterial supply and product marketing the business should be run in the form of cooperation.