After soaring high, coconut prices begin to fall in Kerala. Here's why

A thief recently broke into a grocery store in Aluva to steal a priced commodity- coconut oil. Thirty bottles were stolen, each worth ₹600, totalling ₹18,000. Once a humble kitchen staple, bottles of this ‘liquid gold’ are now guarded by shopkeepers like prized possessions and truckloads of coconuts are guarded like bank consignments. But now, after a month of steep rise, there’s relief on the horizon; coconut and copra prices are finally beginning to fall. 

Price correction after record highs
In July, coconut oil prices reached an all-time high of ₹393 per kg in Kochi’s wholesale market, while copra touched ₹261/kg. But this week, oil is trading at ₹379/kg and copra at ₹240/kg, respectively. In Thrissur, coconut oil fell from ₹399/kg (July 11) to ₹386/kg (August 6), and copra from ₹258/kg to ₹242/kg.

Despite the wholesale correction, the drop has not yet reached the end-consumers, explaining thefts like the one in Aluva. Caterers are still buying oil at around ₹550 per litre, a massive leap from ₹220 earlier this year.

“We buy 25 litres a day,” said Shahul Hameed, State Secretary of the All Kerala Caterers' Association. That’s ₹8,250 more a month per caterer. The burden hits at nearly ₹2.5 lakh a month. “There’s no switching to other oils,” Hameed added. “Malayalis' taste buds are fixed on coconut oil. If the flavour changes, the food won’t be accepted. And we can’t pass on the cost due to stiff competition.”

While coconut production dropped by more than 40 per cent due to pest attacks and climatic changes in Kerala, unexpected rain ruined quality copra from Tamil Nadu's Coimbatore. Internationally, increased demand from China for coconuts also hiked prices. 

So why are prices falling ahead of Onam?
The price dip ahead of the festive season has surprised even officials at Kerafed. But traders and market insiders point to several overlapping factors:

Fresh supply from Tamil Nadu
A sudden influx of coconuts from Kangayam, Pollachi, and nearby areas in Tamil Nadu has compensated for Kerala’s reduced yield. This has flooded the market and pushed prices down.

Trader hoarding and panic selling
Traders, who had stockpiled copra expecting a continued price rise, are now offloading inventory. “There was fear that prices would fall further with the new Tamil Nadu arrivals,” said Thalath Mahmood, President of the Cochin Merchants Association. “So farmers and small traders began selling their stock, triggering a temporary oversupply.”

A government meeting last week pushed traders to release inventory. They also agreed to supply copra to Kerafed at rates lower than Tamil Nadu’s procurement cost.

Government intervention
The Kerala government has begun distributing two litres of coconut oil per ration card through SupplyCo at ₹349/litre. This has helped stabilise retail prices, at least temporarily.

Shift in consumer behaviour
With retail prices skyrocketing, many households switched to cheaper oils. Industry estimates suggest a 30-40 per cent drop in coconut oil demand over the last three months. Kerala typically consumes 2 lakh tonnes of coconut oil every month, compared to 3.5 lakh tonnes of palm oil and 1.5 lakh tonnes of sunflower oil, Mahmood said.

Moves by market players like Marico
Marico, the maker of Parachute and Livon, had briefly turned to the domestic market when Indonesia proposed an export ban in May, driving up demand. But with Indonesian supplies resuming, Marico is again importing copra, easing pressure on the local market, traders told Onmanorama. Their current procurement prices have fallen from ₹262–263/kg in July to ₹224–227 now.

What's next?
Experts say Kerala needs a long-term strategy if it wants to remain competitive in coconut production. Tamil Nadu has made strides through organised plantation programmes, while Kerala continues to depend on scattered, mixed cultivation. “Many trees here are over 70–80 years old,” Mahmood noted. “We need high-yielding, younger varieties.”

While Kerala’s coconuts are prized for their rich aroma and superior pulp, much of the oil sold in the state now comes from Tamil Nadu. “The taste and quality here are unmatched,” Mahmood added, “but without policy support, we’re losing our edge.”

The 5 per cent GST on edible oils has added to retail pressure. Traders have urged the Centre to exempt coconut oil. The Cochin Oil Merchants Association has also suggested reintroducing futures trading in copra and coconut oil to boost transparency. The practice was earlier discontinued due to concerns about price manipulation.