Kerafed rejects overpricing allegation, explains facts behind price hike

Thiruvananthapuram: Kerafed has dismissed allegations of irregularities in its copra procurement for the upcoming Onam season. Two weeks ago, Manorama News reported that with no copra available, Kera oil production is running on a minimal scale, leading to a shortage. According to Saju Surendran, Managing Director of the agency, the accusations overlook critical facts and ignore the challenges beyond the agency’s control. He also emphasised that these allegations fail to acknowledge the steps taken to ensure transparency and sustainability in Kerafed’s operations. Here are excerpts from his statement:

Clear and transparent stock statistics
The claim that Kerafed has not procured enough copra for the festive season does not align with actual data. From January to June 2025, the agency maintained an average copra stock of 912.2 metric tonnes, which is significantly higher than the 618.2 metric tonnes recorded in 2014. This volume also stands close to the 998.8 metric tonnes maintained in 2023, which was one of the agency’s best-performing years. Despite market instability, Kerafed also maintained an oil stock of 818.5 metric tonnes. These figures demonstrate that copra and coconut oil stocks were responsibly secured in advance.

Supplier lapses
The core problem, according to the MD, lies in the failure of suppliers to fulfil their contractual commitments. In May 2025, Kerafed had placed an order for 2,000 metric tonnes of copra from four suppliers. However, with a sudden spike in market prices, most of them reneged on their agreement. As a result, only 200 metric tonnes, just 10 per cent of the ordered quantity, were delivered.

This indicates that the shortage in copra stock was not due to any lapse on Kerafed’s part, but rather due to the failure of suppliers to honour their commitments.

Why private traders instead of farmers? 
Kerafed was initially envisioned as a farmer-centric cooperative model on the lines of MILMA.  The aim was to procure copra and coconuts directly from farmers through affiliated Primary Agricultural Credit Societies (PACS) and marketing federations. To support this vision, the government provided financial aid in the late 1990s and early 2000s to develop storage, processing, and logistics infrastructure for these societies. While many utilised the funds, much of the infrastructure eventually became outdated and non-functional.

However, for the past fifteen years, these cooperative societies have not supplied even a single kilogram of copra to Kerafed. Due to their continued failure, Kerafed was forced to turn to open tenders and private traders. Although representatives of these societies are part of Kerafed’s board, no efforts have been made to revive the system, Surendran alleged. In 2024, a meeting was held for the first time in two decades to gauge their interest in restarting procurement, but not a single society responded. A complete understanding of the current issue is possible only when the inaction of cooperative societies and their structural decline are also taken into account. Most media outlets, however, have taken a one-sided stance, placing the blame solely on Kerafed.

Kerafed’s procurement process
Kerafed follows a transparent, structured, and accountable procurement system. Copra is procured through three distinct methods:

• Open Tendering: Used for bulk procurement; open to all suppliers.
• Limited Tendering: Empanelled suppliers participate in this process daily; each tender is limited to 20–250 metric tonnes.
• Direct Procurement from Farmers: Copra is purchased directly from farmers at the Coconut Development Board's daily price, plus ₹2 per kg as transport support.

For the first two procurement methods, an Earnest Money Deposit (EMD) is mandatory. Failure to supply can result in blacklisting and forfeiture of the deposit. The third method, designed to support genuine farmers, does not require an EMD or impose penalties. Unfortunately, this route is now being widely misused. Some who failed in past supply contracts are re-entering under new names to bypass rules. As most real farmers have stopped copra production due to high cultivation costs and lack of processing facilities, less than 1 per cent of those using this method are actual farmers.

Allegation of procuring copra at an excessive price
A recurring accusation against Kerafed is that it purchases copra at inflated prices, a claim the organisation dismisses as baseless. All procurement is carried out through competitive tendering to ensure market-based pricing. Anyone who meets the legal criteria can participate in these tenders. The main allegation is that Kerafed ignores lower-price offers and opts for higher bids. Kerafed invites those making such claims, including the media, to disclose the names and addresses of lower-price suppliers so they too can be considered in future tender processes.

In recent times, Kerafed has introduced several measures to ensure transparency in its operations. As a result, many who previously profited through unethical and illegal means are no longer able to do so. In the past, supply loads were arbitrarily rejected and later accepted following ‘negotiations and commissions’. Today, however, all procurement is carried out under camera surveillance with strict quality checks. This has eliminated any room for malpractice. Those people who once exploited the system are now trying to discredit Kerafed’s transparent framework through false propaganda and media manipulation.

Market conditions drove up coconut oil prices
The rise in coconut oil prices is directly linked to the sharp increase in copra prices. In 2024, the price of copra was just ₹90–100/kg, which has now risen to ₹280–300/kg in 2025. It is in this backdrop that he price of coconut oil has risen to ₹529 per litre from ₹210 during the 2024-25 period. As a commercial enterprise that operates without government subsidies, Kerafed needs to price its products in line with market realities to stay financially sustainable. Still, the price of Kera coconut oil is not much above he price of other leading brands. Hence, the allegation of overpricing by Kerafed is economically and factually unfounded.

The truth about ₹299 copra tender
The allegation that the new tender for procuring copra at ₹299 per kilogram is part of a scam or conspiracy is misleading. In reality, the earlier suppliers who were contracted to deliver 2,000 metric tonnes of copra had supplied only 200 tonnes (just 10%). This led to a disruption in production and even forced the factory to shut down temporarily.

Due to sharp daily fluctuations in copra prices, it is difficult to procure large quantities in one go. That’s why Kerafed has adopted a new strategy of inviting tenders for a consistent supply of 50 tonnes of copra per day for 50 days. The current rate of ₹299 was fixed for this type of consistent supply. This new system is designed to ensure a total supply of 2,500 tonnes and aims to provide a long-term solution to maintain uninterrupted production. Comparing this rate to the price of small-scale copra purchases is both unreasonable and misleading.

Actual reason behind rise in coconut oil prices
Some have questioned Kerafed's increasing the price of its coconut oil from ₹419 to ₹529. However, this move is neither for profit nor a case of overpricing.

• Current price of coconut: ₹77/kg
• To produce 1 kg of copra, 3.5 kg of coconuts are needed. Cost: ₹269.50
• To produce 1 litre of oil, 1.56 kg of copra is required. Cost: ₹420.42
• Additional costs, including GST: ₹25.19

Based on this, the MRP of ₹529 offers only a minimal margin. Kerafed is offering the product by compromising on its profit. While opting for cheaper brands, there are some things to consider. Many brands provide only 900 ml instead of a full litre. Some oils may be adulterated. Lower prices often come at the cost of quality, hygiene, and safety.