Embrace the New Year's Spike in Coconut Oil Prices Amid Rising Feed Coconut Costs
- 12-Feb-2024 5:52 PM
- Journalist: Shiba Teramoto
As we step into January 2024, there's a notable rebound in the Coconut Oil , signaling a recovery from the price crash experienced in previous years. After more than two years, the price of coconuts and Coconut Oil is poised for a significant upturn. Traders attribute this optimistic shift to a decline in production, highlighting the reduced supply as a key factor. While this situation presents challenges for coconut farmers, particularly considering the National Agricultural Cooperative Marketing Federation of India (NAFED) preparing to auction stocked copra, the rising prices offer a glimmer of hope even in Coconut Oil market. Furthermore, the World Bank Commodity Market Outlook in April 2023 foresees a promising year for the coconut market, estimating that the price of Coconut Oil could reach nearly around $1300 per ton in 2024. This positive outlook extends to other vegetable oils, anticipating a proportional increase in their prices.
Recent governmental interventions further contribute to this optimistic scenario. The Cabinet Committee on Economic Affairs has raised the Minimum Support Price (MSP) for coconuts in 2024. The MSP for ball copra (dry coconut) has been increased to nearly Rs 12,000 per quintal, up by about Rs 250, while for milling copra, it is now around Rs 11,160, reflecting a rise of about Rs 300 increase per quintal. The central government asserts that these MSP hikes aim to ensure better remunerative prices, motivating farmers to expand copra production and the availability of downstream Coconut Oil. This move comes as a response to protests by coconut farmers in southern states, where plummeting prices led to a severe financial crisis.
While the MSP increases address some concerns, there remains a substantial gap between the MSP and the actual cost of coconut cultivation, pegged at around Rs 16,670 per quintal. This stark discrepancy places coconut farmers in an existential crisis, grappling with the challenges of obtaining fair prices for their produce and its end product Coconut Oil. The coconut, scientifically known as Cocos nucifera, holds immense cultural and religious significance in India. Beyond its aesthetic appeal in spiritual landscapes, coconut groves contribute to nutritional, economic, and ecological security. It is a living heritage, providing selfless service throughout its long life and yielding various products primarily, the Coconut Oil .
The versatile use of every part of the coconut tree underscores its importance as a "Kalpavruksha" or a tree of life. This tree yields coconut water, milk, cream, and oil, supporting local economies through decentralized production. India, the Philippines, and Indonesia are major contributors to global coconut production, with India alone accounting for 72% of the share. The Coconut Oil sector engages around 15 million people, predominantly small farmers in states like Kerala, Tamil Nadu, and Karnataka. Despite government initiatives like the coconut and Coconut Oil Development Board and the technology mission on coconuts, the challenges faced by coconut farmers persist. The reduction in customs duty on edible oil imports over the years has adversely affected the indigenous edible oil sector, leading to a crash in Coconut Oil prices.
The macro-level policies, such as lowered import duties on edible oils including the Coconut Oil , have inadvertently impacted farmers negatively. While MSP increases are a step in the right direction, addressing the fundamental issues faced by farmers necessitates a more comprehensive approach. In essence, the current situation is emblematic of ad hoc policies that may provide temporary relief but fail to address the systemic challenges faced by downstream Coconut Oil Industry. The emphasis on MSP hikes must be accompanied by a broader strategy that considers the macro-economic landscape and ensures the sustainability of the coconut industry, preserving the interests of small-scale farmers and maintaining the ecological integrity of the edible oil including Coconut Oil sector in southern states.