From around the third week of July the farm gate price of coconuts have 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 the lack of monsoon seasonal rains due to climate change. conditions which was the lack of monsoon seasonal rains. The coconut yield dropped by 40-50 % in the coconut triangle area and the nut weight by 30-40%. The farm gate priced peaked at Rs. 55 and 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 short fall of nuts in 2017, coconut processing industrialists lobbied for the importation of frozen coconut kernel.
With much reluctance from the Coconut Research Institute (CRI) and other stake holders including the Coconut Growers Association, by mid June 2018, 1751 metric tons of coconut kernels were imported. This is equivalent to 5.2 million nuts.
As per documentation available on 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 accrues from the derived bi- products, husk, parings, shell and coconut water when local nuts are used.The cost of frozen coconut kernel translated per nut was around Rs 56. Few industrialists ventured into these imports and 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.
It is obvious that if 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 for the nuts must be paid to the grower.
During the period 2016/ 2017 though the prices increased, owing to the low nut weight and reduction of yields, the farmers did not receive an enhanced income. They managed to sustain their plantation by irrigation and moisture conservation practices at additional cost.
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 February 7%, March 17%, April 21%, May 31%, June 22%, July 50% and August 13%.
Due to the negative psychological publicity by the coconut traders with respect to the importation of coconut kernel, increase of nut yields, shortfall in demand , the nut prices from January 2108 has 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 Rs 30 to Rs 35 as determined by the Coconut Cultivation Board (CCB) and CRI.
As per Sunday Observer of 19th November 19, 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 come down 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 withdrawal of fertiliser subsidy
What are the proactive measures that should be taken in the short term and long term to maintain a reasonable farm gate price?
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.
The other strategies that should be adopted are allowing export of fresh nuts without export levy, restrict the import of palm olein and other edible oils, allow industries to produce value added products for export without restrictions and 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.