According to the sources at the Cochin Oil Merchants Association, a major reason for the decline in coconut oil prices recently is the slump in the edible use of the oil. According to the estimates of the Coconut Development Board, the consumption of coconut oil for edible purposes has registered a 50 per cent decline over the year.

The slump in demand from the household sector has had its inevitable bearing on prices. This was evident from the fact that while the prices of all other edible oils had zoomed during the last one year, coconut oil prices alone crashed, following the massive decline in consumption from the household sector. While theprice of groundnut oil firmed up to Rs 5,000 per 100 kg this month from Rs 3,400 per 100 kg in December 1996, coconut oil price crashed from a peak of 6,500 per quintal to Rs 40.50 per quintal during the same period.

Sources said the consumption of coconut oil by local consumers (Kerala and Karnataka) had declined, following a stiff competition from the cheaper substitutes like palm oil in the past and the adverse propaganda by certain quarters. They said to overcome the slump in prices, the promotional agencies should unleash a positive propaganda not only in Kerala and Karnataka but also in other parts of the country.

They said the consumption by upcountry users was now mainly for industrial purposes, especially by the toiletry industry. However, in this segment as well, the consumption had shown a declining trend. Considering the annual growth of 20 per cent in output, the industrial consumption is estimated to have declined to five per cent from 15 per cent. This is because the toiletry industry,except for the premium segment, is substituting coconut oil with other cheaper substitutes, they said.

Another factor that hit the prospects of coconut oil prices was the heavy import by industrial users. Sources said industrial users imported 10,000 tonnes of copra this year compared to the 3,000 tonnes last year. This 10,000 tonnes of copra could be converted into 7,000 tonnes of coconut oil, they said.