The area under cultivation has more or less stagnated over the years, and with coconut oil prices decreasing, it is unlikely to show an improvement in the short-run, traders say. In 2003-04, 1,933,700 hectares were under coconut cultivation and in 2005-06, the area under cultivation improved marginally to 1,946,800 hectares. Kerala is the main coconut growing state, with an area of 897,800 hectares, followed by Tamil Nadu (370,600 hectares) and Karnataka (385,400 ha). Sources say that Tamil Nadu is likely to emerge the largest producer within a short span of time, given that the area under cultivation is decreasing in Kerala. Production has become unviable in Kerala, while productivity gains have helped Tamil Nadu stay profitable despite the lowering of coconut oil prices.
A study by the Kasargode-based Central Plantation Crops Research Institute (CPCRI) forecasts that the nut production will increase by 31.38% in 2007-08 over the base year 2003-04. Production for 2003-04 is recorded at 12.17 billion nuts. Production increased to 14.8 billion nuts in 2005-06, an increase of 21.62% over the base year. Interestingly, the rapidly increasing supply falls short of the long-term demand for nuts. A forecast study reports that the demand for coconut is expected to be 21,795 million nuts by 2025, while the supply is expected to be only 15,734 million nuts. There is a gap of 6,061 million nuts. As there is no scope for area expansion in India given the demand for land for various purposes, there is a need to increase the productivity further. The competitiveness of the sector will largely depend on the productivity of the crop. Today, one ha of coconut produces on an average only 0.6 tonne of oil, whereas one ha of oil palm produces nearly 3-5 tonne of palm oil. There is a need for a high degree of productivity improvement to survive the onslaught of competition when prices fall in the global market.
The Coconut Development Board has chalked out an ambitious plan for re-plantation of the crop and expansion of the area in non-traditional producing states. The objective of the programme is to achieve a level of annual production of 15 billion nuts by 2012.
The main constraint is that the price of coconut is largely based on the prevailing price of coconut oil. Though only 35% of the coconut produced in the country is used for extraction of oil, the entire coconut-based economic activities are dictated by the price of coconut oil. The sector in India provides employment nearly to 10 million farmers, makes a contribution of nearly Rs 7,000 crore annually to GDP and contributes 6% to the vegetable oil pool of the country.
The importance of the crop lies in the fact that it provides a livelihood and sustenance for the millions of small and marginal farmers.
In India, almost the entire production goes for internal consumption in the following pattern: about 47% for edible purpose, 28% for coconut oil, 11% for tender nut and 6% for edible copra. Global export of coconut products exceeds $1.2 billion annually.