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Dairy Development: Project Write-up

p39026, p39017, p39009, p39043, p39078, p39208, p39034

Commodity: Coconut
Coconut has been a part of the Indian culture and has been produced in India since a very long
time. Currently, India stands third among coconut producing countries of the world. The
southern part of the country literally thrives on coconut, it being a staple food there. It is a
perennial crop which involves high investment when compared to seasonal and annual crops.
Unique features of the commodity:
 Coconut is a large hard fruit which has much higher shelf life as compared to other
 Different parts of coconut fruit have utilities, like the outer husk cover like fiber is used
to make ropes, mat, etc.; meat inside the hard cover is used in various cuisines all over
the world; fluid inside the seed is considered as a healthy drink and is widely consumed.
Hence coconut has high economic value
 Coconut milk extract is nearest alternative to milk, considering nutritional benefits and
organoleptic features like colour, texture, mouth feel, etc.
 Coconut Oil is the major product that is widely used in southern parts of India and
countries like Phillipines, Africa and Europe. Virgin coconut oil is widely used in
various cosmetics
 Coconut, as a fruit, can be used at various stages of its existence. Green coconut water
is highly nutritious. When it turns brown with the husk cover, its thick fresh meat is
used in various delicacies. Mature coconut is used to extract oil. Interestingly, the whole
tree has its own uses. The leaves can be woven to mats, trunk can be used as building
material, shell after drying can be turn to bowls, spoons, etc.

Latest Figures on Area, Production, Procurement

As per Coconut Development Board under Ministry of Agriculture and Famers Welfare report
of 2017-18, Kerala stands to be the largest producer of coconuts in India, with the production
of 8452 million nuts followed by Karnataka and Tamil Nadu. Kerala produces 35.5% of the
total coconut produce in India. However, in terms of productivity, Andhra Pradesh leads with
a productivity of 14038 nuts/ha, followed by Tamil Nadu.
According to the latest estimates of 2017-18, the total area under coconut cultivation in India
is 2096720 Ha, producing 23798.23 Million nuts every year. The average productivity of
coconuts on domestic land is 11350 nuts per hectare. A fun fact is, India, on an average,
produces 95 lakhs of coconuts every day. The major trading center of coconut is in Kochi,
Kerala. Coconut complex is also traded in the Indian commodity exchanges namely National
Multi Commodity Exchange of India ltd and Multi Commodity Exchange of India ltd.

Current status of pricing/returns being realized by farmers

Cost of production in Kerala, largest producer of coconut in India, is ₹8.94 per nut.
Interestingly, 56% of cost is contributed by labor only. Coconut is mainly traded in four states
of India, namely, Karnataka, Kerala, Maharashtra and Tamil Nadu. Following are the latest
average prices per quintal of tender coconut markets in India, as per 2019 season (GOI data):
Karnataka: ₹ 9717, Kerala: ₹ 3932, Tamil Nadu: ₹2221, Maharashtra: ₹ 1660

Dairy Development: Project Write-up
p39026, p39017, p39009, p39043, p39078, p39208, p39034
This broadly shows that the farmers get good returns over coconut produce. Average price
being ₹43/kg is high due to supply constraints. This has come when the production level fell in
major producing states factoring failed monsoon. So, these prices won’t really help the farmers
when they don’t have enough produce to sell.

Issues faced by farmers pertaining to the selected commodity

Coconut growers are exposed to high economic risks due to abrupt price fluctuations. The
change in price can be factored to seasonal variations, cyclical variations. High irregular
variations also occur as the primary produce is characterized by its property of bulkiness.
Coconut, primarily being a small holder’s crop, is sold by the producer immediately after
harvest at prevailing market price. This affects the potential profits earned by farmers.
Groundwater depletion has hit coconut production as well. Less rainfall leads to suboptimal
production, where loss is borne by the farmers. Due to stress of cyclical variations in price of
coconut and copra (mature coconut), farmers have held many protests seeking fixed fare price
for coconut and opening government procurement centers.

Ways by which a farmer tried to safeguard & ensure returns

When farmers do not get fair prices for fresh coconut, they are bound to do primary value
addition to make it copra and then sell as copra, due to coconut oil, has MSP set by the
government. This, in a way, ensures the returns of the farmers. But the process also incurs
processing and inventory costs for the farmers. To deal with such issues, many coconut
producer companies are emerging in South India, especially in Kerala, where they are
producing value added products to get good returns by collective action. Access to market and
procurement inefficiencies can be curbed by small FPCs set up in different districts, like
Palakkad Coconut Producer Company Ltd.

Possibilities of Value Addition in the selected commodity

Farmer Producer Companies are aggressively working to cater the domestic demand of coconut
products. Not just depending on coconut oil for good returns, but the farmers are also looking
into other alternatives for efficient use of resources for good returns. Value added products like
desiccated coconut, coconut milk, coconut milk powder, cream, chips, oil, tender coconut water
based products, coconut jiggery, coconut palm sugar, etc. Coconut palm sugar is a potential
alternate sweetener, where it is estimated to have a $1.3 billion industry. Recently, PCPCL has
launched Neera, a non-alcoholic, nutritional drink under brand name PalmDew. So, it is safe
to say that the market prospects are enormous.

Trade dynamics:
While India is third largest producer of coconut in the world, it is imperative to look at global
scenario. India has only meagre visibility of share in export market. However, total value of
export of coconut products during year 2016-17 was ₹20617 million, which was 42% higher
than 2015-16 exports. Also, imports of the same for 2016-17 were valued at ₹2706 million and
observed to be 29% less than the previous year. Though it is also the fact that India has a large
domestic market with increasing consumption, but it is high time to get into exporting the
commodity. Currently, India’s consumption-production ratio is 0.97, which is highest among
all leading producer countries across the world.