State procurement fails to pep up copra prices

Procurement of copra by the state agencies has not helped in stabilising the market of coconut oil as prices dipped by 5% within a week. Increased supply from Tamil Nadu and influx of inferior grade oil from Karnataka is said to be the cause of the sudden downswing, traders said.

?Market is likely to ease further by another 5% as the supply of coconut oil remains steady and unaffected due to rain and procurement,? Talat Mehamod, a trader at the terminal market of Kochi told FE.

Traders and consumers were caught unaware as they were expecting the market to firm up due to the procurement effort and arrival of monsoon.

Onset of monsoon in Kerala lowers the supply of copra into the market as societies in Kerala depend on sun-drying for conversion into copra. Before the entry of Tamil Nadu into large-scale coconut farming, the price for coconut oil used to appreciate significantly during the monsoon.

Production is in full swing in all the southern states and demand is seen steady but not encouraging as palm oil availability is good.

?Inferior grade oil from Karnataka made from the waste of ball copra is coming in large volumes. Copra is used for religious purpose and in preparation of sweets. The waste is collected and converted into oil to be smuggled into Kerala,? Talat said.

Traders and farmers also allege that the volume of procurement has been negligible and not enough to make an effect on the market. ?Farmers and societies have built up huge stocks in anticipation of the procurement following the government announcement and lower volumes of procurement have hurt the market sentiments,? a trader said.

The support price offered by the government agencies (of Rs 44.50 for a kg of copra) is equivalent to the oil price of Rs 67-68. While the current market price for coconut oil is only Rs 47.50 per kg (Kochi wholesale).

Kerafed, the state agency entrusted for procurement by Nafed insists that the procurement was on the right track and the selling pressure was a good indication that the government assistance was reaching the farmers. Kerafed procures copra only from genuine farmers and not traders.