KOCHI: The ban on import of palm oil via ports in Kerala has had no impact on its entry and consumption in the state. The only effect of the ban, imposed in May 2007, is the huge loss in the revenue of the Cochin port and other minor ports in the state, say experts.
Palm oil imported via neghbouring Tuticorin or New Mangalore ports enter the state throgh roads. Tuticorin is in Tamil Nadu and New Mangalore in Karnataka. The ban was imposed to “protect 10 million coconut farmers” in Kerala. Interestingly, Karnataka produces more coconuts than Kerala and Tamil Nadu nearly the same quantity. Moreover, the number of coconut farmers in Kerala has dwindled in the last two decades.
“If the palm oil that arrive in Mangalore and Tuticorin ports have no impact on coconut farmers in Karnataka and Tamil Nadu, which are now bigger players in coconut industry, what’s the need for Kerala to continue with the ban?” wonders Munshid Ali, secretary, Kerala Exporters’ Forum. “There is hardly 50km from Mangalore port to Kasaragod. And Tuticorin is not far from Thiruvananthapuram either. Palm oil come into the state easily from there through the road network.
Kerala is estimated to consume over 2.5 lakh tonnes of palm oil per year and the price difference between the coconut oil and palm oil make the road transportation an attractive option for importers. While the palm oil price ranges between Rs 120-170/litre, the coconut oil price rules in the range of Rs 230-300/litre. The wholesale price of palm oil is about Rs 100/litre compared to Rs 150/litre for coconut oil.
“The ban to protect coconut and coconut oil production in Kerala may or may not have been the right policy decision in 2007. But 17 years is more than enough for revival of a sector. If the sector has not been able to be competitive in the international market and faces fluctuations in the prices and production, then the problem lies elsewhere,” says M S Raunaq, assistant professor, Department of Economics, University of Kerala, who along with three others in the department conducted a detailed study on ‘Palm oil import ban through sea ports in Kerala’.
Palm oil is used largely in the food processing, as well as hotels, restaurants and catering segments, which account for 45-50% of the overall consumption. The household and industrial segments consume the rest, according to Crisil Ratings, a research firm. India depends on the world’s largest producers -- Malaysia and Indonesia -- for over 90% of its crude palm oil.
Ali says the figure of one crore coconut farmers in Kerala mentioned by the Coconut Development Board (CDB) to press for a ban on palm oil imports is an exaggerated number. “It seems the CDB has taken those persons, who have even two or three coconut trees in their backyard as coconut farmers. An overwhelming majority of tender coconuts that you see along the Kerala roads for sales come from Pollachi.”
Anand Venkitaraman, president of Cochin Chamber of Commerce and Industry, says there is a huge demand for palm oil in the Kerala market. “The import ban came when coconut farmers were struggling after the coconut oil prices declined to Rs 47/kg. Now it’s Rs 200/kg and Keralites, with increased purchasing power, now prioritise quality,” he says.
Ali points out that besides Cochin and Vizhinjam, minor ports such as Azhikkal are losing huge revenues due to the ban. “A tanker of 50,000 litres capacity at Kochi and another with 20,000 litres in Azhikkal had been idling empty for the last several years after the ban,” he says.