Helping Coconut farmers from the tyranny of Options

Coconut industry

There is broad feeling, accentuated by low price, enough is not done to put in a mechanism to bring up the price of Coconuts artificially, as the industry is predicted to be in the doldrums. During the beginning of last year, the price of a nut was less than the cost of an egg! But consistent and sustained efforts of the Coconut board resulted in the farm gate price going up to Rs 13/- and retail price touching around Rs 18/-.

With the onset of Coconut season, farm gate prices which were around Rs 10/- has dropped to Rs 5-Rs5.50. February-March of every year see a good harvest season. Government of India has already Minimum support price or “support price” for milling Copra at Rs 5100/quintal and Ball copra at Rs 5350 per quintal. In Kerala, Copra is procured by KeraFed. Since procurement of nuts has not begun, most of the Coconut growers depend upon the big buyers at Pollachi. It is this stream of businessmen who determine the price of farm gate price. The Coconut from Palaghat and nearby areas is purchased by the TN lobby, and Coconut (Copra) Oil is extracted and sends back to Kerala in packs to be sold here. It is also said, the cheap imported palm oil is used to adulterate with the Coconut Oil.

There is also widespread lament by the Kerala coconut grower that enough support is not extended to the Coconut grower to stabilize the price, with the result that many Coconut growers have left Coconut cultivation and have moved to cash crops like Rubber. With the cost involved in maintaining the coconut farms in small land holdings, the productivity in the Sector is abysmally low. Average productivity of Coconut in India is 8,303 nuts/hectare (48nuts per farm) while in Kerala it produces 7365 per hectre (42 nuts per farm). Plans are on the anvil to enhance the productivity to 85 nuts per tree so as to produce 17,500 nts/hectre per annum. Kerala’s production of Copra has also dwindled making its quantitative growth equivalent to 46% of India’s use. Rs 245 Cr Replantation and Rejuvenation was implemented in the XI Plan in select districts of Kerala like Thiruvanathapuram, Kollam, and Trichur and made operational from the year 2008, has seen a large number of Coconut trees being felled and new plant saplings grown so as to increase the productivity by way of return of seeds. The felled Coconut stumps were to be converted as Particle Boards where huge demands exist according to American Particle Board Association. A joint venture is under contemplation between Coconut Development Board, and Kera Fed, which has the technology to produce high class Particle Board which could be a substitute for depleting wood supply for furniture manufacture and house building activities due to ban on wood felling. It will open up new vistas, provide mass employment, and create a new economic opening.

The by-line article by S Sananda Kumar of ET Bureau, Alleppey, feels that the Board’s priority seems to be on corporatisation of Coconut industry, by pushing the product to the global market, and transporting tender Coconut water to Greater Kailash, Delhi where it nets Rs 35-Rs 40 per nut instead of looking at the grass root problem of the industry at the farm gate level. The entire Coconut nut industry is in the hands of hand picked middlemen, who could easily tamper the price of Coconut after the “support price” is announced. Historically, the market prices come down immediately after the announcement of the support price. The
Small Coconut farm holder has to depend upon the middleman, who will buy the Coconuts en masse for negligible amount, and these nuts go to a warehouse and always not to the market. Once the market price falls less than the “support price”, the trade petitions for tinkering of the Minimum Support price which is increased, and the benefit of this seldom goes to the farmer. It is the cat and mouse game that is played out well. The market price is the price created by artificial scarcity. At no point of time, the Coconut Copra Oil’s demand has suffered. It means it is not in short supply. At no point of time, there is inventory of Coconut Copra Oil. That means demand and supply pair. Under the circumstances, the artificial shortage and resultant scarcity are man made. Unfortunately, you cannot use gale force to moderate the market. If demand-supply is manipulated, Economic theory cannot work.

Coconut industry can be compared to the Stone age which did not end because we ran out of stones! When copra is crushed, it produces 65% Coconut Oil, 28% oil meal, 7% moisture. The oil meal’s global as well as domestic demand is growing because of the increase in livestock population. If marketed properly, this product can account for a plum recovery through pricing.

In my view, the Tender Coconut accounts for around 12-15% of the present Coconut production. But, the drink which has been value added through nice packing having a storage life of 90 days in 330 mls., has built a huge demand of around nearly 750 million dollars in America. The Board has planned setting up 5,000 green stalls, all will be franchisees, and the demand driven Coconut water to quench thirst would be sold in London Olympics, Wimbledon, Lords, Flaming Meadows, and other Sports centres, in aircrafts, hospitals, shopping malls, etc as this drink branded tender Coconut water will have an all India presence and overstretch to reach global markets. The entire supply chain will benefit, and the use of other value added Coconut products like Coconut milk, Coconut powder, coconut chips also would become visible. None of the Kerala based products have visibility in the upper India markets. If Rubber which is 93% produced in Kerala can go across India to the various production units and return to Kerala as an end product with an enhanced price, whom do we blame? For rubber market should pick up, the manufacturing industry should buy. They are mostly beyond Vindhyas.

Coconut shell is exported. Coconut shell charcoal has fetched Rs 40 Cr by way of Foreign Exchange. Activated Carbon from Coconut shell charcoal accounts for more than 50% of Coconuts’ exports. We need to facilitate more industries in the Small and Medium sector, if Coconut industry has to grow. Already, value added products are produced by our competitive countries like Philippines, Indonesia, and even Sri Lanka is ahead of us.

Research and development labs like the one Spices Board or Rubber Board has needed to be set up for the Coconut industry. One should remember that the Coconut industry is in the concurrent list, which indeed is a Central as well as State subject. We need refrigerated Warehouses, Vans, and container to maintain the temperature and beget more shelf life for our Coconut products. In order to restrict pollution control like release of coconut water while making desiccated Coconuts, Common Effluent Treatment Plants need to be set up at Coconut production centers. In order to grapple with power failures, captive power plants need to be established. Sanitation, Phyto sanitary certificate issuance, quality checks, etc must be available at production centres. An ambitious plan has been chalked out, with funding required for setting up the above facilities, which will drive value added Coconut industry into its upward path of glory. It cannot be big boom, bubble and… burst.