Introduction
India is the fourth largest edible oil economy in the world and more than half of the nation’s total edible oil requirements of around 10 million tones are met through imports. Palm oil and Soya bean oil comprise of most of these imports. The domestic production of palm oil can meet just one percent of the requirements. India imports about 3.8 million tones of palm oil and 1.2 million tones of soy bean oil (Government of India, 2005). The nation has become the world’s largest importer of palm oil, followed by China and the EU. More than 95 per cent of India’s palm oil imports are from Indonesia and Malaysia. 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
In the edible oil sector, imports of crude edible oils are gradually replacing the imports of refined edible oils. Amongst the total import of edible oil, palm products namely RBD palmolein, crude palm oil, Crude Olein and Crude Palm Kernel Oil (CPKO) form 77 per cent amounting to 1,20,041 tonne. CPKO currently being imported for edible purposes appears under edible oil category. Imports of soft oil categories like soybean oil, safflower oil and other form 23 per cent of the total imports of edible...(The Financial Express 2009)
In recent years 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. This changes and the fall in coconut oil price reflects on price of coconuts and copra, which affects the coconut as well as the agricultural economy.
The Paper Discusses the major problem related to fall in prices of Coconut due to the Emergence & Import of Palm Kernel Oil
Features and Problems of Coconut in India
Coconut is an important horticulture crop in India, grown across the states/Union territories of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh Goa, Maharashtra, Gujarat, West Bengal, Orissa, Tripura, and Islands of the Andaman and Nicobar and Lakshadweep. It supports the livelihood of millions of small and marginal farmers. It is interwoven in to our national heritage. Being a versatile crop, coconut has religious and social values and has impacted on the cultural life of the people. Most of the religious rituals and social functions require coconut. It is also a nutritional food, health drink and source of raw material for a number of industries. In Kerala coconut provides livelihood to as many as 3.5 million families and the entire farming community of Andaman and Nicobar and Lakhshadweep Islands depends on it.
Table-1
Area , Production & Productivity of Coconut in India
Year Area
('000 ha) Production
(Million nuts) Productivity
(Nuts per ha)
1995-96 1830.9 12952.3 7074
1996-97 1890.8 13061.0 6908
1997-98 1861.0 12717.3 6834
1998-99 1754.5 12535.9 7145
1999-2000 1768.1 12129.0 6860
2000-2001 1823.91 12678.4 6951
2001-2002 1932.3 12962.9 6709
2002-2003 1921.8 12535.0 6523
2003-2004 1933.7 12178.2 6298
2004-2005 1935.0 12832.9 6632
2005-2006 1946.8 14811.1 7608
2006-2007 1936.8 15840.4 8179
2007-2008 1903.19 14743.56 7747
Source: Coconut Development Board, India
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.
I .Issues related to cost of Coconut & Minimum support prices
• The cost of labour is 30 % higher than the last year. This is because of the central government scheme by NATIONAL RURAL EMPLOYMENT GUARANTEE ACT. Though the workers get assured work the productivity in the field of agricultural sector is nil. This scheme has shaken and affected the agricultural productivity to a greater extent. In India the society is weaved in such a way that local agricultural activities in a village is taken care by the families living there. Now the local agricultural labourers are enrolled in the above said scheme and they are involved in the works other than farming. So there is a heavy shortage of labourers which leads to low productivity.
• Also the cost of inputs like fertilizer, micro nutrient, diesel for tractor etc., has gone up considerably. Further the scarce availability of DAP, potash etc at the time of the application affects the yield.
• 70% of the coconuts produced are used for production of edible oil and hair oil. Also the bulk export of Coconut oil is banned in our country. So all the oil produced must be consumed locally. In such a situation any activity that affects quantity of consumption will cause a serious damage to the farmers. Thus the import of palm oil fuels the problems faced by coconut producers.
• For over two decades, edible coconut oil prices have not increased in proportion to the increased labor, input costs and the cost of living. It is one of the very few food products that is selling for a much lesser price than what it was selling a decade ago which is a clear indication that the prices will never go up in the near future. When a producer is not able to increase his selling price of his product for over a decade in proportion to his production cost, than it is a failed crop.
• The minimum support price given for Copra is appreciated but the support price has not even made a marginal impact on the grower’s profitability because hardly 1% of the growers convert their coconuts into copra.
The reason for a farmer not being able to profitably convert his coconuts into copra is mainly because the only low cost economical method to convert coconut into copra is by sun drying. Many large coconut growers are mainly situated in good rainfall areas and the changing pattern of rains does not allow him to convert coconut in to quality copra. Thus the minimum support prices given for copra as usual does not benefit the farmers and helps the middle men and merchants make more money exploiting the situation.
II. Issue of Palm kernel Oil
The other most important issue is the import of palm kernel oil to our country which is about 5000 tons per month. Majority of this is used for adulteration. Even on assuming that 50 % goes for adulteration, it substitutes about 2500*10000 nuts i.e. 25 million nuts per month or 300 million nuts per annum or production of 35984 hectares of coconut garden in India.
Palm-kernel oil is extracted from the seeds of the oil palm, a tree native to Africa and widely cultivated in Africa and parts of Asia. The fruit which surrounds the seed can also be pressed for oil. Depending on where one lives, it may be easy or difficult to obtain pure palm-kernel oil, but products which contain this oil are often abundantly available.
This oil is not healthy. It is extremely high in saturated fats, and low in essential fatty acids, making it a poor addition to the diet. Straight palm oil extracted from the fruit around the seed is actually healthier, but palm kernel oil is cheap and readily available in many regions, making it an attractive alternative to the healthier and often more expensive palm oil. Like other oils which are very high in saturated fat, palm-kernel oil is typically solid at room temperature, and it can withstand very high heat. Many cosmetics manufacturers utilize palm-kernel oil as an inexpensive substitute for things like coconut oil and shea butter. While palm-kernel oil certainly gets the job done, it has less cosmetic benefits than more expensive ingredients, and some people find that it adds a somewhat greasy texture.
Issues related to Palm Kernel Oil
Palm oil and palm kernel oil are the two primary substitutes of domestic coconut oil. The former competes with coconut oil in the edible oils segment and the latter in the non-edible oils segment officially and edible oil segment unofficially of the consumption base. As a matter of fact, palm oil is a major competitor of all other edible oils. Being of foreign origin, domestic prices of palm oil and palm kernel oil depend heavily on the prevailing world prices, which along with the applied tariff rates determine the volume of imports. Although subject to wide fluctuation, palm oil prices are globally cheaper than other major edible oils. As a consequence, palm oil not only dominates the Indian import scene, but also tends to transmit the price signals to the domestic edible oils/oilseeds prices. Although the behaviour of world prices of palm kernel oil is similar to that of palm oil, its influence on the domestic market is rather insignificant due to limited demand and
consequently low volume of imports. In order to evaluate how world prices of palm oil and palm kernel oil have influenced the domestic prices of coconut oil in the past few years. The major issues of palm kernel oil are listed below
• In our country palm Kernel Oil is imported as industrial oil without any duty. This oil is diverted unofficially to coconut oil process and is blended or adulterated with coconut oil. This adulteration spoils the native qualities of coconut oil and creating health hazards. The consumers except in Kerala use coconut oil as hair oil rather than edible purpose. When they put this adulterated coconut oil to their hair they find fall in hair, unknowingly the quality of the oil they use they think that application of coconut oil is injurious and they shift to some other oil for consumption.
• About 40 per cent of the coconut produed is used for production of oil and oil prices are a decisive factor in determining price of copra and coconut. Tamilnadu and Kerala account for 90 per cent of oil production. The usage of coconut oil as a cooking medium is confined to Kerala. There are some misplaced fears about the level of cholesterol present in the oil, which in turn increases the consumption of Palm oil.
• Palm / kernel oil prices are globally cheaper than other major edible oils. They not only dominate the Indian import scene but also tend to transmit price signals to domestic edible oils and also oilseed prices. The large imports of palm oil in recent years, has dampened the domestic prices of edible oils and oilseeds,
• The major problem in edible oil is the prices of palm group of oil are very low compared to last year. Now it is about 60 % level than that of the last year due to two reasons:
1. One is the import of edible oil at duty free condition ( from a peak of 90% duty reduced to 0% duty)
2. Reduction in edible oil prices at international arena.
• There is a surplus of one lakh tonne of coconut oil in the market today. Demand has not kept pace with supply as the industrial bulk users are shifting to the cheaper palm kernel oil. The problem is compounded due to huge imports of palm / kernal oil, which has a definite correlation to the coconut oil prices. Kerala is the only state to use coconut oil for cooking purposes. The huge surplus production in Tamil Nadu also worsens the situation for the demand of coconut oil. (Financial Express ,Nov 19,2007).
• The palm kernel oil is imported in India as industrial oil, Vanaspathi and biscuit industries which were using the oil extracted by solvent method from coconut oil cake has shifted to this palm kernel oil which has led to fall in consumption of coconut oil
Suggestions for curbing the menace of Palm Kernel Oil
• Import ban for this oil or import can be done with import duty at a rate of 50 %, which can lead to better price realization for coconut farmers as well as revenue to the government.
• Strict vigil by the government to curb the adulteration of coconut oil
• Coconut Development Board should call for setting a time limit for re-exporting of coconut oil brought to the nation under the advance license scheme
• The demand for coconut oil should be increased; this can be done by the speculative interests of large number of buyers and sellers.
• Fall in coconut oil price reflects on price of coconuts and copra, which affects the coconut economy. The sluggish demand at existing prices of coconut oil would necessitate augmentation of the demand base for tender coconut and raw copra based products.
How the Coconut Board could help farmers?
• Helping in the Value addition to the by products of the coconut, which is gaining more value & demand in today’s domestic and international market
• An economical copra dryer with a capacity of drying 5000 nuts / day has to be developed. The board could form a team of talented farmers and engineers and support them financially to spear head the R&D to develop the same.
• An economical De fibering Machine with a capacity 5000 husks / day has to be developed. The board could form a team of talented farmers and engineers and support them financially to spear head the R&D to develop the same.
• An economical Shell Carbonizer with a capacity of drying 5000 shells / day has to be developed. The board could form a team of talented farmers and engineers and support them financially to spear head the R&D to develop the same. The waste heat recovered from the Shell Carbonizer could be used as the heat source for the Copra dryer.
• An economical rotary oil crusher with a capacity of drying 5000 copra / day has to be developed. The board could form a team of talented farmers and engineers and support them financially to spear head the R&D to develop the same
• Once the above Machines are developed, these machines could be distributed to framers at subsidized cost and a farmers group or society can be formed to market the products into the domestic market. Apart from helping individual farmers to values add to their products, the board can support Farmers groups of 25 to set up a society which can have a high capacity dryer with a shell Carbonizer, a defibering unit & a coir pith processing unit.
• The board could also use its influence with the state governments to try and get a farm end support price for the coconuts by giving a minimum support price based on the weight of the fresh dehusked coconuts which can be in proportion to the copra that can be obtained.
Submitted to the chairman costing committee govt of india at Coimbatore meet with farmers. And to coconut board on 28/12/09 by O.v.r somasundaram and P.Sekar. contact mail b...@eth.net
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References
• Government of India (2005) Economic Survey-2004-05, Ministry of Finance, New Delhi
• Imports of edible Oil climb, Non-edible Imports Decline, The Financial express, November 19,2007
• G.K Nair” Palm Oil imports hurting coconut oil demand, The Business Line , January 12, 2009.
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Dr Rethinam raises many core issues to do with coconut in India. Many of these apply also world-wide. The poor price for coconut oil is a result of the poor demand. What is the poor demand due to? We can only point out that health professionals world-wide are still recommending that coconut is a health hazard. This is remarkable in view of the positive stories that are coming out and have been for some time. Perhaps with the great community of coconut farmers in India and the publishing power of the media in India the good news stories can be more widely known.
Sincerely
Mike Foale
From: coc...@googlegroups.com [mailto:coc...@googlegroups.com] On Behalf Of Rethinam P
Sent: Saturday, 26 December 2009
8:27 PM
To: coc...@googlegroups.com
Subject: RE: [Coconut:2944] Fwd:
of interest?
Dear All,
Dr Rethinam raises many core issues to do with coconut in India. Many of these apply also world-wide. The poor price for coconut oil is a result of the poor demand. What is the poor demand due to? We can only point out that health professionals world-wide are still recommending that coconut is a health hazard. This is remarkable in view of the positive stories that are coming out and have been for some time. Perhaps with the great community of coconut farmers in India and the publishing power of the media inIndia the good news stories can be more widely known.
Getting too many emails? The abridged email option (no more than 1 email per day) gives a summary of new activity each day; the digest email option (approximately 1 email per day) gives up to 25 full new messages bundled into a single email. For more options, go tohttp://groups.google.com/group/coconut/subscribe
To unsubscribe, send an email to coconut-u...@googlegroups.com
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