The Hindu : Business : Better deal for coconut oil sector demanded

Online edition of India's National Newspaper
Friday, Sep 22, 2006
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Business

Better deal for coconut oil sector demanded

Special Correspondent

Government urged to adopt promotional measures

KOCHI: N. Ananthan, former secretary of the Cochin Oil Merchants Association and former chief executive officer of the Kochi-based First Commodities Exchange of India, has demanded a better deal for the coconut oil sector and prudent promotional measures and market intervention by the Government to regain the lost glory for the coconut oil industry.

He pointed out that coconut is an important crop cultivated in around 1.91 million hectares with a production of about 13.00 billion nuts in India. Union Ministry of Agriculture estimates that coconut plantation sector provides employment to nearly 10 million farmers and contributes nearly Rs.7000 crore annually to GDP besides contributing six per cent to the vegetable oil pool. The crop has a significant impact on the national economy besides its influence on the economic, social and cultural heritage of millions of small and marginal farmers who form the backbone of coconut industry.

Such an important sector was beset with various problems that are characteristic of this country, Mr. Ananthan said. Fragmented marketing system, inadequate infrastructure, lack of access to latest technology and credit facility and market intelligence mark the sector.

Weather dependant

The fate of coconut farmers depends on weather to a large extent and on market price of coconut oil to a significant extent besides other factors. When the price of coconut oil, which command the price of coconuts, goes up the farmers are benefited and when the prices decline then farmers are deprived of a remunerative price. Because of the highly decentralised nature of production owing to the predominance of small holders, the producer has very little control over marketing of coconuts. Coconut, though included in the category of oilseeds in 1991, does not appear to carry the same weightage in the official circles like that of other oilseeds. Coconut economy has been adversely affected on account of decanalisation of import of fatty acids, crude palm sterine, palm fatty acid distillate (PFAD) etc., and progressive reduction on import duty on palm oil and polyolefin. Import of fatty acids should be restricted and also further reduction on import duty of above oils.

Adulteration

Rampant adulteration in coconut oil when the prices are high has greatly hampered domestic growth and negatively impacted upon consumer's goodwill.

Volatility of price owing to the unreliable crop estimates in the growing States and speculative forecast by interested sections, have triggered totally perverse movements in prices often benefiting operators in market to an enormous extent.

Lack of reliable information on price trend and demand and supply in different terminal markets are other bottlenecks for proper marketing. Price of coconut oil fluctuate almost daily and are subject to fluctuations in the wholesale markets. However, price-fixing phenomena is very complex. Hence retailers follow discriminatory pricing. Retailers offer different prices to different customers ranging from Rs.50 to Rs.67 a kg. Meanwhile, palm oil is sold at a uniform price without much variation not only in the State but also throughout the country.

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