Coconut Industry Opportunities and Strategies for Export Promotion

1
Coconut IndustryOpportunities and Strategies
for Export Promotion

• Dr K Muralidharan
• Director
• Coconut Development Board
• (Ministry of Agriculture, GoI)
• Kochi
• Food and Agri Exporters Conclave, ASSOCHAM,
• 09-09-2009 at New Delhi

2
Coconut Development Board

• Coconut Development Board was set up by an Act of
  Parliament in 1981 to oversee the overall
  development of the Coconut Industry.
• Initial focus was on improvement of production
  and productivity
• Under Technology Mission on Coconut, the Board
  has started playing a facilitating role to
  promote exports.
• The Commerce Ministry notified Coconut
  Development Board as an Export Promotion Board
  w.e.f 1-4-2009. Since then, the Board has taken
  several measures to understand the problems of
  the Industry and initiated steps to address the
  problems.

3
Coconut Production and Productivity
Source DES, GOI, NEW DELHI
4
Value added coconut products

• Size of the Inland market Rs 83000 million
• Size of the Export Market Rs 3000 million
  (Coconut products) and Rs 6400 million (Coir
  products)
• CAGR 8

5
Consumption Pattern of Coconut
Mature Nut
50
Industrial 10
Domestic 90
10
Tender Nut
35
Copra
Seed Others
5
6
Export prospects for various coconut product

• Copra
• Copra is the dried kernel of coconut. It is from
  copra that coconut oil is produced. Copra
  contains the highest percentage of oil as
  compared to other oil seeds.
• The two broad varieties of copra are milling
  copra and edible copra. Milling copra is used for
  extracting oil whereas edible copra is used in
  condiments and in religious and social functions.
  India producing about 6.5 lakh MT of milling
  copra and 2 lakhs MT of Ball copra. The major
  exports of copra is to Bangladesh and Nepal.

7

• Coconut Oil
• Coconut oil is used for, both edible and non
  edible purposes. It is also consumed in various
  industrial applications, soap, shampoo,
  detergents, etc. A portion of coconut is also
  used in the making of ice creams and biscuits,
  chocolates which can be described as industrial
  purposes though the finished products are edible.
  
• Around 10,000 tonnes of Coconut oil is exported
  mostly to the Gulf Region Consumed by Ethnic
  Population
• Contrary to misconceptions, coconut oil does not
  elevate total blood cholesterol. Instead, it
  increases HDL or the friendly cholesterol, lowers
  harmful LDL cholesterol and serum triglycerides.
  Coconut oil mainly exported to the Gulf region.
• Annual production of Coconut Oil is 4.85 lakh
  tonnes.

8

• Virgin Coconut Oil
• Virgin Coconut Oil (VCO), extracted from fresh
  coconut meat without chemical processes is said
  to be the mother of all oils.
• It is rich in medium chain fatty acids,
  particularly lauric acid and is a treasure trove
  of minerals, vitamins, antioxidants and is an
  excellent nutraceutical. It has about 50 lauric
  acids, having qualities similar to mothers milk,
  thus confirming its disease fighting ability.
  Virgin Coconut Oil finds application as skin oil,
  massage oil, baby oil and consumed in USA /
  Europe for reducing obesity.

9

• Desiccated Coconut
• Coconut has been the staple food of people in
  many parts of Asia and Pacific Islands. The
  dehydrated shredded flesh of coconut known as
  desiccated coconut is often used as a substitute
  to grated coconut in food preparations such as
  curries, cakes, sweets and chutneys.
  Confectionery and bakery units are the main
  consumers of desiccated coconut. Total production
  of DCP is about 50,000 MT mainly concentrated in
  Karnataka and Tamil Nadu. Exports amout to about
  2000 Tones

10

• Spray Dried Coconut Milk Powder
• The Spray Dried Coconut Milk Powder is now
  available in convenient and ready-to-use packs
  with the same freshness of a fresh coconut milk.
  It has longer a shelf life and is convenient to
  use.

11

• Tender Coconut Water
• The water of Tender Coconut is a sterile,
  nutritious, thirst quenching health drink. The
  pure and sweet tender coconut possesses enormous
  therapeutic properties and is a thirst quenching
  refreshing health drink for all age groups. It is
  loaded with natural sugars, salts, and vitamins
  and is low in fat, calories and has no
  cholesterol. It's a highly rejuvenating tonic
  that can ward off fatigue in an instant. Tender
  coconut water has the same level of electrolytic
  balance as we see in our blood.Technology
  available for packing preserving TCW.

12

• Activated Carbon
• Coconut Shell is used for manufacturing a variety
  of products of commercial importance including
  activated carbon. Shell based activated carbon is
  extensively used in the process of refining and
  bleaching of vegetable oils and chemical
  solutions, water purification, recovery of
  solvents, recovery of gold etc. It is used in gas
  masks and a wide range of filters for war gases
  and nuclear fall outs. Coconut shell based
  activated carbons units adopt steam activation
  process to produce good quality activated carbon.

13

• Activated Carbon is made both by the organized
  and un-organized industry
• There are 18 medium sized Companies in India who
  make activated Carbon using state-of-the-art
  machines. The other manufacturers are tiny
  manufacturers in the un-organized sector. The
  total production of Activated Carbon is 45000 MT
  / annum.
• The present exports is directed at United states,
  UK, Germany, Japan, France, and averages around
  Rs 1500 million. There is an enlarged market
  potential for activated Carbon because of its
  unique natural properties.

14

• Coconut Based Handicrafts
• Coconut Handicrafts made out of the wood shell,
  fibre/husk and leaves of the coconut tree have
  high decorative value and serve as a value
  addition bringing with it the aesthetic touch and
  exquisiteness wherever it is used
• The timber can be converted into doors, windows,
  wall panels, banisters. Coconut fibre is used to
  make coir products such as bags, table mats,
  sandals, wall hangings etc. Coir mats and carpets
  are also made out of the coconut fibre.

15
Direction of Exports

• Coconut oil has an excellent potential in Gulf,
  Europe, and America, the user being the ethnic
  population
• Activated Carbon has been increasing its market
  share and demand from USA, United Kingdom,
  Germany, France, Japan etc.
• Processed and packaged tender coconut water has
  been bagging orders from Gulf and UK.
• China, is a growing market for coconut and its
  various products, Russia is emerging as one of
  the major buyers of Coconut oil and Virgin
  Coconut oil, Germany is an emerging market
  particularly for desiccated Coconut powder,
  coconut milk powder etc.
• Handicrafts, Ice cream cups spoons etc made from
  coconut shell is exported to European countries
• Indian Coconut products are rated as premi
  quality products.

16

• Coconut growing countries like Malaysia,
  Philippines, and other ASEAN countries are
  concentrating on manufacturing Palm oil, other
  Coconut value added products with new
  technology, Government support, high level RD
  Intervention.
• Their brands have premium clientele.
• India can outreach them only by increasing the
  present range of products, increasing its value
  addition, look at new markets, penetrate and
  establish a niche presence, with cost effective
  pricing.
• Indian products should be visible in the Retail
  stores with attractive packing, and should match
  the pricing of competitive products from ASEAN,
  Sri Lanka and other Coconut value-added product
  manufacturing countries.
• India should record presence by participating in
  the world renowned international trade fairs
  across the globe by utilizing the Market
  Development Assistance and Market Access
  Initiative Scheme of the Foreign Trade Policy
  enumerated in Para 3.2 of the FTP.

17
Current status of exports

• Strengths of the Indian Coconut Sector
• One of the largest producers of coconut in the
  world Sufficient raw material surplus.
• Quality of Indian coconut product enjoys good
  reputation.
• Access to good technologies (Virgin Coconut Oil,
  Packed Tender Nut Water, minimally processed
  Tender Coconuts, Activated Carbon)
• Dominant ethnic population in the Gulf, UK and US
• Being a natural and eco friendly product, coconut
  has a future and potential for earning carbon
  credit

18
Weakness

• Lack of big players from the coconut sector in
  the international market
• Lack of exposure to the international market and
  its specific requirements
• The weak financial status of the small and tiny
  exporters who cannot take up effective export
  promotion programmes
• Price disadvantages Cost of production is high.
  INR appreciation vis-à-vis SLR.
• Lack of market penetration
• Competing countries of South East Asia have
  already an established presence in important
  international markets and have cost advantages
• Supply side is highly disorganized and fragmented
• Coconut products occupy large volume and has low
  unit value (.) Tariff freight is against volume.

19
Opportunities

• Coconut shell based Activated Carbon is an
  agricultural and environmentally friendly
  products. Its classification under ITC Code
  under Miscellaneous Chemical Products deprives
  this product of the benefits due for an
  environmentally friendly product.
• Board has proposed to the Ministry of Finance to
  reclassify it under Chapter 44 as an Agriculture
  product.
• Since coconut industry is labour intensive and
  generates rural employment coconut and its value
  added products should be provided benefits under
  Vishesh Krishi Udyog Yojana, FPS, Duty draw back
• Increased exposure to international markets
  through regular participation in important fairs
  and exhibition
• Restore DEPB Scheme for Copra
• Allowing exports of Coconut Oil from all southern
  ports in India
• Harmonising national standards with international
  standards for coconut products

20
Threats

• Rupee appreciation vis-à-vis the dollar
• Freight disadvantages
• Geographical distance from end markets
• Competitive advantages of South East Asian
  Countries in the world market

21
Conclusion

• So far adequate attention has not been given to
  promoting exports from the coconut sector
• The strength of being a natural product has not
  been properly leveraged.
• Coconut Sector needs to be incentivised.
• If proper stimulus is given to coconut which is
  an agricultural product generating employment in
  rural area there is a distinct possibility of
  taking exports to a high level.

22

• In order to assist the Industry, Coconut
  Development Board has requested Commerce Ministry
  to include Coconut and its value added products
  for sizable concessions under Duty Entitlement
  Pass Book Scheme, Duty Drawback Scheme, Focus
  Product Scheme, Vishesh krishi Gram Udyog Yojana,
  approval of MAI grant for participation in 4
  international Trade Fairs in Germany, China,
  Florida and Dubai during 2009-10. Board was also
  moved Customs authorities to reclassify the
  Coconut based products under the head of
  Agriculture products so that activated Carbon,
  Coconut handicrafts and other products can be
  classified as Agriculture products and brought
  under Environment Product tag to enable claim
  Carbon credits under Kyoto Protocol.

23
Thank You