Coconut sugar comes from the coconut tree (cocos nucifera). The coconut tree itself is a wonderful tree and it has literally thousands of uses. Nearly all parts of the tree is useful and has significant economic value. In Malay language, it is called pokok seribu guna ("the tree of a thousand uses"). In the Philippines, where majority of the world's coconut production originates, it is known there as the "tree of life". They use if for culinary and non-culinary purposes, even medicine.
Coconut sugar happens to be one of its many byproducts. It is also not new. In fact, it has been around for generations. No one knows exactly where and when coconut sugar was discovered but it has been used for as a traditional sweetener in the South East Asian regions where the plant is bountiful.
The process of making it is still the same as it was when they made the first coconut sugar. It involves two (2) basic steps - harvesting the sap or "toddy" from the blossoms (flowers) also known as "tapping" the tree and the second is placing the freshly collected sap under moderate heat to evaporate its moisture content. Harvesting the sap or "tapping" the tree involves making a cut on the spadix of the coconut. A spadix has thousands of flowerets in it, but only 10 to 15 develop into nuts. Studies made by the Philippine Coconut Authority (PCA) show that half of the length of coconut spadix can be tapped without significant effect on its production of nuts. With proper management, it is actually possible to have two products from a single spadix, sugar and nuts! A welcoming news to coconut farmers as it does not affect their nut production!
Once the tree is tapped, the coconut sap start to flow from the cut and is collected typically in bamboo containers. This operation is repeated for many days successively to "freshen the cut". The sap continues to flow for about 30 to 40 days from this single spadix but some species have been reported to produce sap for as long as 60 days. The volume of the sap can vary depending to the age of the tree, location, variety of the tree and its general condition. On the average though, a single coconut tree can produce about 288 liters per year. A coconut tree can be tapped for a whole year but it is typically given a rest period of 3 to 4 months per year with some farmers even giving the tree an entire year rest period.
The freshly collected sap is then transferred in giant woks and then placed under moderate heat. The sap that is to be used for sugar making process has to be un-fermented sap with a pH level of 5.9 or higher. It is crucial to use fresh sap because the sap starts to ferment as it ages making it useless for sugar-making. The sap is about 80% water, 15% sugar, and 5% other minerals so heat is used to evaporate the water. Under the heat, a foam starts to float to the top. This foam called a "scum", is removed as these scum are nitrogenous materials that can cause further fermentation rendering the sap useless for sugar production. As more water evaporate, the sap start to change color and form from a translucent liquid to a dark brown syrup-like substance. From this form, it can be further dehydrated resulting in the different forms of coconut sugar we see today. Coconut sugar is sold in syrup, hard blocks, soft paste or crystallized form. The form essentially depends on the moisture content of the toddy. The lesser the moisture content, the harder the coconut sugar.
That's it in a nutshell - no pun intended!
Sheila Simkin from http://www.travelswithsheila.com, shows in her video the process of making coconut sugar.