While the impact on rubber prices may be lagged, working through a series of trigger-offs from the sluggish automobile sector demand and the consequent slowdown in tyre industry, the copra business in south India is more directly vulnerable. Gujarat milk industry has been the biggest support to the copra cattlefeed segment in coconut business, next to Tamil Nadu.

"This has been the worst time for cattlefeed orders from western India to fade out," C Alagappan, a Tamil Nadu coconut oil dealer with a coconut farm in Kangayam and a solvent extraction unit in Pollachi, told The Financial Express. This has come too close to the end of Sabarimala season. In the face of sudden demand fall from pilgrims, the market has been facing a surplus of coconut arrivals.

Trade volumes are already down in the Kochi market. Even the lifting up of import tariff on palm oil from 44 per cent to 71 per cent has not salvaged the coconut oil market. The palm oil importers are clinging to their market share by reportedly resorting to means like under-invoicing and book-adjustments with the buyers through their overseas offices. Coconut oil prices have not picked up beyond Rs 28.60 per kilo.

Last week, trading took place only on Tuesday. In cattlefeed copra, only 30 quintal changed hands. Although Tamil Nadu cattle business has remained the biggest client of the copra-based cattlefeed from Kerala, Tamil Nadu, Andhra Pradesh and Karnataka mills, it has been Gujarat that better patronised the upmarket rotary processed copra. Over the expeller cattlefeed, the rotary processed copra usually has a mark-up of about Rs 50 per quintal. The question that niggles the rotary process solvent extraction units is whether Gujarat cattle business will allow itself this little luxury, in the wake of other bleeding priorities.

Although there are little firm statistics on the quantity of copra cattlefeed shopped by Gujarat co-operatives, P Krishna Pillai, who heads a Kerala copra co-operative, made a guess estimate that taking into account the sourcing from Tamil Nadu, Kerala and Karnataka, this could come to over 50,000 tonne per year. Considering the fact that the entire coconut oil output from Kerala is only 1.5 lakh tonne, this is a whopping figure.

Of the new coconut producing trio, Tamil Nadu, Karnataka and Kerala, it is obvious that Kerala has been the worst hit. For Kerala coconut industry, especially throughout the last year, it has been the cattlefeed margins, that too often cross-subsidised, helped offset the losses in coconut oil trade.

Even while the coconut oil prices had taken a rollercoaster ride in the last five years, the price of rotary copra has been more or less steady in a Rs 700 to Rs 750 band.

Unlike Karnataka or Tamil Nadu, Kerala is battling with the problem of high cost of production in coconut. According to the report of the Agriculture Prices Commission in December, Karnataka has the lowest production cost at Rs 2.52 per nut. At the same time, the cost of production of coconut in Kerala, the land of coconuts, is Rs 3.73 per nut. The ruling wholesale price is Rs 2.50 per nut.