Why are Coconut oil prices soaring at ₹410 per liter? The main reason
Why Prices Are Soaring
Thalath Mahmood, president of the Cochin Oil Merchant Association (COMA), attributes this surge to a decline in copra production (dried coconut kernel used to make oil). This price hike has significantly impacted local demand, with sales reportedly dropping by 10-20%. Consumers in Kerala, the only state where coconut oil is a primary cooking oil, are now opting for cheaper alternatives like palmolein (₹130 per liter) and sunflower oil (₹150 per liter).
Copra prices have also increased, reaching ₹231 per kg in Kerala and ₹227 in Tamil Nadu. Also Read | BJP’s farmers’ wing BKS demands MSP for coconut and asks for PDS
Adulteration Concerns and International Impact
The Israel-Iran conflict is expected to further drive up the cost of imported edible oils due to anticipated increases in freight rates. Mahmood also claims that the rising coconut oil prices have led to a rise in adulterated and inferior oils in the market. These low-quality products are reportedly made using solvent extraction or from fungus-infected copra. He urges the government to take action against the sale of such adulterated oils.
COMA plans to approach the central government to lift import restrictions on coconut oil and copra to address the severe raw material shortage faced by the industry.
Future Outlook and Market Dynamics
K.K. Devraj, an industry consultant, supports the recent ban on 42 brands of coconut oil, calling it a welcome step against rampant adulteration. He predicts that the shortage of copra and coconuts could push coconut oil prices to ₹500 by Onam. However, he also notes that the recent reduction in import duty on crude vegetable oils might help control this upward trend.
Devraj also suggests that a downward trend in palmolein prices could create a ripple effect, potentially lowering coconut oil prices. The significant price difference between coconut oil and other vegetable oils is likely to deter consumers from returning to coconut oil, even if its prices drop. Ultimately, he believes this could harm the coconut oil industry, which heavily relies on edible oil consumers.
Raw Coconut Prices and Exports
Official sources confirm that raw coconut prices have reached ₹70 per kg due to decreased production. Despite this, exports of coconuts and value-added coconut products are increasing, driven by rising demand fueled by new Free Trade Agreements (FTAs).
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