The Hindu Business Line : Demand for coconut oil declining in Kerala

Following reports of adulteration, many coconut oil consumers have shifted to other vegetable oils, thus weakening the demand for the traditional cooking oil.

Kochi , June 26

THE demand for coconut oil in Kerala is declining due to high prices and availability of alternative edible oils, especially palm oil, at very low prices.

With a per capita consumption of 12 kg a year, the demand for edible oils in the State is estimated at around 3.7 lakh tonnes.

The availability of coconut oil has dropped to around 1.6 lakh tonnes from over two lakh tonnes of production a few years ago, according to market sources. Though the decline in demand has brought down the prices in the terminal market, it has so far not reflected on the retail prices, they said.

Branded products are sold at Rs 75-85 a kg, while loose oil is sold at Rs 62-65. The frequent fluctuation in the prices is attributed for this. The main consumers of coconut oil are the middle class, while the rich prefer other refined oils.

The poor are the main consumers of palm oil, which is available at around Rs 40 a kg. Its demand is estimated at around two lakh tonnes.

In fact, following reports of adulteration, many coconut oil consumers have shifted to other vegetable oils, thus weakening the demand for the traditional cooking oil.

Meanwhile, the demand from the North Indian markets for the oil continues to elude the Kerala market, as their requirements are met through supplies from Tamil Nadu where coconut oil is available at lower prices. Besides, the season in Tamil Nadu begins when it is a lean period here, the sources said.

Prices of coconut oil were languishing between Rs 6,000 and Rs 7,000 a quintal from January to November 2004 and then moved up to Rs 7,425 on December 10. The trend persisted till mid-February and the prices later declined. On May 21, the prices went down to Rs 5,100. Thereafter, it moved up to Rs 5,860 on June 6 and then fell to Rs 5,460 a quintal on June 15.

This kind of artificial fluctuation, market sources said, is detrimental to the coconut farmers and consumers. According to the sources, the speculators are responsible for the wild fluctuations. Some manipulate the prices by taking comfortable short positions in the futures market, they alleged.

However, trading sources attributed the increase in coconut oil prices last year to the sharp fall in coconut production, resulting in shrinkage in commercial availability of copra and the consequent rise in copra prices.

Industrial use of coconut oil includes manufacture of toilet soaps, laundry soaps, surface-active agents and detergents, hair tonics and other cosmetics. But the industry sources coconut oil from outside, as it is available at half the Indian price. The toiletry sector, especially the bathing soap manufacturers, had been using coconut oil for around 23 per cent of their total oil requirements until recent years. Ever since the price started shooting up, its offtake has dropped to around 5 per cent.

Instead, palm kernel oil and other cheap oils and distillates are now being used. This has also brought down the demand for coconut oil, Coconut Development Board sources said.

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