Drastic decline in farm gate price of coconuts

However the prices at which they are sold to consumers have given rise to the need for the authorities to take immediate action

Commencing from around the third week of July the farm gate price of coconuts has dropped from a high of around Rs 45.00 to Rs 28.00 by August 15. The years 2016 and 2017 experienced a sharp increase in coconut prices owing to climate change conditions, caused due to the lack of monsoon seasonal rains. The coconut yield dropped by 40-50 % in the coconut triangle area and the nut weight reduced by 30-40%. The farm gate price peaked at Rs. 55/= and the retail nut price at Rs 100/=. However the coconut growers did not benefit by these high prices due to sub-standard sizes of nuts and poor crop yield.  

The country needs around 240 million nuts per month for domestic consumption and industry use. Owing to the shortfall of nuts in 2017, coconut processing industrialist lobbied for the importation of frozen coconut kernel. With much reluctance from the Coconut Research Institute (CRI) and other stakeholders including the Coconut Growers Association, by mid June 2018, 1751 metric tons of coconut kernels were imported. What was imported was equivalent to 5.2 million nuts.  

As per the documentation available regarding the imported consignment, the landed cost of kernel when converted to a whole nut works to around Rs 56/=. This excludes the value addition that accures when local nuts are used from the derived bi- products, husk, parings, shell and coconut water, the cost of frozen coconut kernel translated per nut was around Rs 56/=.  Few industrialists ventured into these imports They have now suspended the import of kernel as it was not a viable solution. More importantly, the processed products exported could not be identified as Sri Lankan products 

During the period 2016/ 2017, though the prices were increased, owing to the low nut weight and reduction of yields, the farmers did not obtain an enhanced income

Sustainable price

Its’ obvious that if an adequate coconut supply is to be maintained for domestic consumption and industrial production, a viable coconut growing sector has to exist for which a sustainable price to the grower must be paid for the nuts.   

During the period 2016/ 2017, though the prices were increased, owing to the low nut weight and reduction of yields, the farmers did not obtain an enhanced income. They managed to sustain their plantation by irrigation and moisture conservation practices at additional costs.  

However, with generous rain during the 2017 north east monsoon and the 2018 south west monsoon, the coconut nut yields have improved. The Coconut Research Institute (CRI) predicted a crop yield increase for 2018 as against 2017. In Kurunegala District the increase is as follows Feb- 7%, March 17%, April 21%, May 31%, June 22%, July 50% and August 13%.  

Due to the negative psychological publicity by the coconut traders in with respect to the importation of coconut kernel, increase of nut yields, shortfall in demand , the nut prices from January 2018 have been declining steadily and the present farm gate price is Rs 28/=. (the retail price of coconut in the cities and suburbs is still around Rs 70.00, with no benefit to the domestic consumer).  

The cost of production of a nut is between Rs 30 and Rs 35/- as determined by the Coconut Cultivation Board (CCB) & CRI.  

According to ‘The Sunday Observer’ of 19th November 2017, the Coconut Cultivation Board (CCB) Chairman Kapila Yakandawala said with the crop yield increasing by around 40 million nuts per month, from next month the price of a nut will drop to around Rs. 65. The grower could get a minimum price of Rs. 45 while the consumer could purchase a nut at around Rs. 65.  

“We need to control the price fluctuation which is not good for the industry. We hope to maintain the price range between Rs. 40-60 per nut,” Yakandawala said.  

It is paramount that a sustainable price to the coconut farmer is maintained at Rs 40/= to Rs 50/= per average size nut to enable the farmer to carry out essential agricultural practices with a depleting work force, escalating wages and the withdrawal of fertilizer subsidy.  

What are the proactive measures that should be taken in the short term and long term to maintain a reasonable farm gate price?  

Disproportionate prices 

Proper marketing strategies should be in place to maintain a sustainable price to farmers. The strategies should include domestic consumption and industrial use.  
The disparity between the farm gate price and urban retail price is disproportionate, having provided for transport cost and profit margin.   

Strategies that should be adopted are:  

1. To produce fresh grated coconut packs under refrigeration and grated coconut in dehydrated form to the consumer instead of transporting coconuts to the domestic consumer. This would reduce the price to the consumer as the packing cost would offset the other two by products of coconut water and the shell. The volume & weight of grated coconut pack being less transport cost too would drastically reduce.   
2. Allow export of fresh nuts without export levy.  
3. Restrict the import of palmolein and other edible oil.  
4. Allow industries without restrictions to produce value added products for export.  
5. Formulate mechanisms for forward contracting with minimum price and a formula for price escalation if required.

  
(The writer is an Executive Committee Member of the Coconut Growers Association and can be reached at cryshoja@gmail.co)