Dumping cheap palm oil in the Indian market has squeezed the demand for coconut oil mainly from bulk buyers and that in turn has pushed down coconut oil prices to their lowest levels, according to the Chairperson, Coconut Development Board.
Overproduction of palm oil in Indonesia and Malaysia has brought down its price and India, the second largest edible oil market in the world after China, has become an easy dumping place as there is no import duty on this product.
International palm oil prices have dropped sharply consequent to the global recession, whichhas accelerated its imports. Hoteliers and other industrial users, the bulk buyers, have replaced coconut oil with cheap palm oil and palm kernel oil, Ms Minnie Mathew, IAS, Chairperson of the Board, told Business Line.
Household offtake up
According to a recent study on consumption, there has been a growth in household consumption. At the same time, it has shown a sharp fall in industrial offtake, due to availability of palm oil at around Rs 25 a kg, she said.
When the coconut oil price touched rock-bottom in 2007, the Board took up the issue with the Centre which banned palm oil import through southern ports. Consequently, the prices moved up to Rs 6,600 a quintal in 2008. However, since February 2009 prices have been on the decline and are now ruling at Rs 4,750 a quintal as large volume of palm oil is reportedly being imported via Mangalore port. Besides, it is brought in through the Tuticorin port also, she said.
She said the domestic coconut oil production is estimated at 4.5 lakh tonnes and its use as edible oil is mostly confined to Kerala.
Its use in toiletry products too has fallen due to the industry switching over to imported palm kernel oil.
Fall in coconut oil price reflects on price of coconuts and copra, which affects the coconut economy, she pointed out.
Veg oil imports
India is reported to have imported "almost half of its annual domestic demand of about 11-12 million tonnes of edible oil in the form of palm oil from Indonesia and Malaysia and soya oil from Brazil and Argentina".
Lower prices are said to have pushed the country's "January vegetable oil imports up by 78 per cent from a year earlier to 9,12,342 tonnes, the highest level since trade rules were eased 15 years ago. Imports rose 48 per cent in February and 27.5 per cent in March, 2009", a report said.
India, it said, has imported 3.6 mt of oil since November, when the oil year began, 56.5 per cent more than a year earlier. Such imports are against the interest of coconut growers, particularly with coconut production on the rise, Ms Mathew said.
To push up the consumption of coconut oil, she said, the Board is working on blending coconut oil with other oils. It has also sponsored research to study the impact of coconut oil on cardiovascular diseases as there is a misconception about coconut consumption leading to cardiovascular disease, she said.
Output rises
The coconut output in the country has gone up substantially during the past two to three years on increase in productivity and without enhancing the area under the crop, which has been almost stagnant for want of land.
Total production of nuts has risen to 15.84 billion in 2007-08 from 12.83 billion in 2004-05 by increasing the yield per hectare to 8,165 nuts from 6,632 nuts in three years, she said.
"This has been achieved without any significant expansion in the area, as all potential areas have been brought under the crop," she said.
Tamil Nadu is the main contributor followed by Andhra Pradesh. The farmers in the former state adopt more scientific methods including irrigating the area and that has pushed up the productivity in that State by 30 per cent, she said.
Whereas, in Kerala, the farmers depend on the monsoons, both south-west and north-east, and as such there is a long dry spell from December to April/May leading to drop in productivity. Besides, here most of the palms are old and senile, apart from being affected by root-wilt disease. The State has 44.9 per cent area under coconut but its share in production is only 38.22 per cent.
During the current fiscal, the Board would spend Rs 125 crore, including Rs 75 crore for the ongoing programmes, she said.There is an emerging good market for tender coconut water even in other parts of the country, she said. Discussions are on with the Railway Catering Service authorities on selling packaged coconut water in trains besides putting up modern carts on platforms to sell to passengers, the Chairperson added.
Source : Business Line