12/04/2008 (Commodity Online), Kochi - The progress of the Indian coconut sector during the last two decades can be classified into three distinct categories.

First is the progress achieved in extending the cultivation of the crop in more areas both in traditional and non-traditional areas.

Second is the increase in area, production and productivity of coconut in the country warranting need for the development of broad-based processing technologies for the sustainable growth of the industry.

Third is problems of low income from the coconut holdings due to price fluctuations, decline in the prices of coconut and its products which necessitated the need for the development of appropriate coconut based farming systems to enhance the farm level income.

The coconut sector has not been able to realize its true potential mainly because of the market is oil driven.

However realizing the imperative need to become competitive, the industry is now focusing on product diversification and byproduct utilization.

Consumer demand for varied high value coconut products are tremendously increasing and hence the domestic industries have become vibrant. This in turn will help make the industry globally competitive.

As a result of all this, coconut oil prices crossed the psychological barrier of Rs 6,000 a quintal this week paving the way for a new bull phase.

The supplies of both ready coconut oil and copra are extremely tight owing to heavy summer showers and upsurge in the demand for the oil.

The withdrawal of import duty on palm oil has not triggered a fall in prices of the oil. Hence, an immediate shift towards palm oil is not expected by traders. Prices of other edible oils, like sunflower oil, remain bullish in spite of government intervention.

The abnormal rainfall in Kerala and Tamil Nadu has also affected the drying of coconut and the supply of copra has fallen by 30 per cent this year.

The production season in Tamil Nadu will begin by mid May and will be in full swing by June, followed by Andhra Pradesh. Till then, a tight supply condition is expected.