Agriculture : Coconut Woes

In the cacophony of voices on how to deal with the dire situation facing coconut farmers in Kerala arising from the glut of raw coconut and coconut oil, the Cochin Oil Merchants' Association (COMA) deserves to be complimented for setting the record straight on one critical issue: the utter futility of seeking a solution to the problem by fixing unrealistically high support prices and getting government bodies to buy all the coconut offered for sale at these prices. The relevance of this piece of wisdom, of course, extends far beyond the difficulties currently faced by Kerala's coconut growers. The folly of trying to solve farmers' problems in finding a market for their produce through purchases by government agencies at politically-dictated support or procurement prices has been established beyond all doubt over a long period and on a gargantuan scale in the case of the two principal foodgrain crops, rice and wheat. This has not, however, come in the way of the same solution in one form or the other being urged for other agricultural and plantation produce such as sugar, edible oils and rubber. This is because, though the unworkability of the solution is well established, it has the merits of providing an immediate palliative and, even more important, of shifting the responsibility for and costs of dealing with the problem to the government. And the central and state governments and politicians on all sides, ruling and opposition, ever anxious to pose as champions of farmers' interests, are loath to miss the opportunity of being seen to be rushing to their rescue.

This farce has been played out times without number at the national level and in individual states without many voices of dissent being raised. So the well reasoned case against higher support prices and purchases by government agencies presented by the COMA deserves attention. The association has pointed out that currently the open market price of copra is around Rs 2,100-2,200 per quintal, whereas the National Agricultural Cooperative Marketing Federation (NAFED) had been made to buy, under political direction, 1.6 lakh tonnes of copra at Rs 3,250 per quintal. Clearly, NAFED's operations had failed to lift market prices. Despite this the demand now was that the support price be raised to Rs 4,600 per quintal and additional quantities of copra be purchased at that price. There was little likelihood of the market price of copra perking up. NAFED would have to offload its large stock in the market sooner or later and there would be the new season arrivals to reckon with. So NAFED is effectively locked into a vicious cycle of having to buy, season after season, large quantities of coconut from growers at unrealistically high support prices to be later on disposed of at a huge loss in the market. COMA deserves credit for exposing this very clearly.