Coconut oil on boil, price crosses Rs 180/kg on drop in production

The production in Tamil Nadu and Kerala has been down 50% due to extreme summer heat

Coconut oil and copra prices are constantly on the rise, thanks to massive drop in coconut production in the last 10 years.

The market on Thursday quoted a wholesale price of Rs 15,900 a quintal, while in   retail trade the price ranged between Rs 180 and 185, depending on the quality.

According to Kochi-based traders, the market would witness a spurt in coconut oil and copra prices in the coming days, as shortage is so serious in Tamil Nadu and Kerala — the two major  producing states in India.

In these states, the production is down 50 per cent  in the last six months, due to extreme summer heat. Traders project the price to cross Rs 200 a kg, as there is an increase in demand from commercial users and household consumers.  

Despite price rise, there has not been much decline in household consumption of coconut oil in Kerala, said Thalath Muhamed, former president, Cochin Oil Merchants Association.

The fall in the production of coconut oil has lead to a heavy shortfall in copra cake, a cattle feed. Cattle feed manufacturers now import copra cake from countries like Indonesia in order to maintain their production.

The prices of cattle feed had gone up  10-20 per cent during last five-six months.

Coconut oil  price increased 165  per cent in just 12 months, as the average price for coconut oil was Rs 6,000 a quintal in May, 2013 and for copra this was Rs 4,275 a quintal. In just five months, 61 per cent rise was recorded for the oil, as the average price in December 2013 was Rs 9,900 a quintal.

The market crossed the Rs 10,000-mark in January. Muhamed said Kerala has been depending on Tamil Nadu for good quality copra. Strict quality check by Kerala Food Safety officials makes this import from the neighbouring state unattractive to traders. The Kankayam market in Tamil Nadu offer oil at Rs 15,200 a quintal. Although palm oil is cheaper compared to coconut oil, consumers prefer the latter.  Retail price of palm of is Rs 75 -80 a kg.

Steep rise in  prices has triggered  adulteration of coconut oil   on a  massive scale.  According to  traders,  almost 70 per cent of the coconut oil, being distributed through unbranded retail network is impure, causing serious damage to lever, heart etc. Produced mainly in Tamil Nadu, the cheaper version is widely  sold in Kerala. Imported palm kernel oil is mixed with coconut oil.  Sources told Business Standard that used edible oils like palm oil and sun flower oil are also mixed up with coconut oil. The production cost of a kg of pure coconut oil comes to about  Rs 150,  but coconut oil is available in the Kerala market at Rs 140 a kg. Because of adulteration the product is offered at much cheaper price, said a trader.