Declining production in Kerala along with global shortfalls in coconut and lauric oil production is expected to keep coconut prices firm this year.

A study conducted by the Agricultural Market Intelligence Centre of the Kerala Agricultural University had earlier predicted that Kerala's coconut production would fall by 15-20 per cent this year.

However, a reassessment of the coconut production scenario indicates that the shortfall will be more than the initial estimates because of area reduction and declining productivity.

In Kerala, the area under coconut has been shrinking continuously from 2001 due to a host of factors such as depressed price for nuts, high wage rates, shortage of labour, high incidence of diseases and pests, land diversion for urbanisation, as well as decline in productivity and profitability.

Quoting from the Asian and Pacific Coconut Community, the study, by Dr Satheesh Babu and Ms Swapna Surendran, points out that global climate change has hit coconut production hard in all the major producing countries, including the Philippines, Indonesia and Sri Lanka.

Drawing a parallel with local production cycles, the study states: “The shifts in climatic patterns due to erratic rains and non-availability of labour in time have affected the crop management in Kerala, with the result that crop seasons are slowly disappearing.”

Lankan output

Sri Lankan production has recorded a 15-year low of 2.533 billion nuts in 2010 against an annual average production of 2.7 billion nuts. The consequent rise in domestic price has compelled the Sri Lankan Government to ban export of coconuts and felling of coconut trees. It had to resort to imports to stem the price spurt.

With the Sri Lankan source drying up, countries such as Bangladesh, Pakistan, Nepal and the Gulf had to source fresh nuts from India. Consequently, the price of coconuts has ruled firm in Indian markets despite the onset of the peak production season in Kerala and Tamil Nadu.

The price of substitute oils such as palm oil have also remained buoyant amidst conflicting reports about the extent of La Nina effect on Indonesian and Malaysian output, the study said.

However, China, the biggest user of cooking oil, is importing more than 7.85 lakh tonnes of lauric oils which could counter possible bearish trend in the coconut oil market.

To add to the woes of the Indian consumers, the area under coconut palms in Kerala, the biggest coconut producing region in the country, has been declining. The area under coconut fell from 9.26 lakh hectares in 2000-01 to 7.79 lakh hectares in 2009-10, a fall of close to 16 per cent.

However, due to certain productivity enhancement measures, the total production grew by around three per cent to 5,667 million nuts, up from 5,536 million nuts in 2000-01.

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