India is an agrarian country where 65 % of the population depends on Agriculture for their livelihood. Coconut is one of the perennial horticultural crops grown in 1.93 million ha, supporting more than 10 million people across the country. Coconut Production has been increasing in tune with the domestic demand arising from the rate of growth in the population of the country. The production of coconut reached 12159.6 million nuts in 2002- 03 from the level of 5940 million nuts in 1980-81 recording a compound growth rate of 2.9 per cent per annum. Similarly the area under coconut increased to 1.919 million ha from the level of 1.083 million ha recording a compound growth rate of 2.3 per cent per annum over the same period. The productivity of coconut has also recorded a marginal increase of 0.61 per cent despite the fact that coconut plantations in the country were affected by recurring drought and the outbreak of endemic and epidemic pests and diseases.

Consequent on the liberalization of the Indian economy and the growing impact of globalization, the domestic coconut industry has to gear itself to counter the threats in the changing trade environment and also seize the new opportunities in the emerging world order. Coconut is subject to threats from various quarters. The basic structure of the coconut industry itself is a major threat to the survival of this important crop. The homestead nature of coconut cultivation, the fragmented holdings and the very low investment made by the resource poor small and marginal farmers who dominate the coconut sector have severely affected the productivity of the crop. Coconut therefore cannot match the productivity of large-scale organized plantations in other competing edible oil crops like oil palm and soybean. The stagnation in coconut oil production in an otherwise growing vegetable oil market and the phenomenal growth in the production of vegetable oils like palm oil and palm kernel oil is a grim reminder about the precariousness of the coconut sector. The very high cost of production has led to a situation where the international prices of coconut oil are always lower than the domestic prices in India. Apart from the internal threats caused by the higher productivity of other competing oils and slackness of demand for coconut oil on account of the availability of cheaper substitutes both in the edible oil sector as well as in the industrial sector, there are external threats caused by the propaganda about the ill effects of coconut oil on cardio vascular health, lowering of tariffs and the increased access to the domestic market for trading partners of the country. Disappearance of the comfort provided by high ta riff walls would allow cheap imports to flood the domestic market, which would hurt the interest of domestic producers.

The opening up of the economy however is not without a silver lining. The new trade environment will compel the producers to consolidate and overcome the disadvantage of smallness of scale by forming themselves into cohesive and manageable association of growers, which can borrow, invest and adopt technologies for improvement of production and productivity. The realization that the present subsistence level farming has to be transformed to remunerative farming by enlarging the scale and size of operations and by reducing production cost, will motivate the stake holders to focus on input management and making adequate investment for better yield and increased returns. Adoption of appropriate management practices will lead to a substantial increase in production and productivity, which will enhance the competitiveness of this important crop. The increase in productivity offers an opportunity to the coconut industry to bridge the wide gap existing between the domestic price and the international price of coconut oil and become cost effective producers capable of competing in the world trade. The compact area approach will help farmers to attain significant quantities of marketable surpluses, which will enable the producers to trade from a position of strength and achieve better price discovery. Instead of disposing their produce locally at prices determined by the copra converters, the producers will emerge as well informed participants in the process of On Line Trading and realize the best price in the given market conditions.

The jump in production and productivity will trigger changes in pattern of consumption and marketing. Although the versatile coconut palm has an astonishing variety of uses and applications, product development and product diversification has been lagging in India. While the other producing countries in southeastern region have made significant advancements in developing a wide range of coconut based products, copra and coconut oil dominate the market in India. The excessive dependency of coconut on coconut oil, coupled with the slack demand has created high volatility and consequential price uncertainties for the producers o f coconut.

There is a huge opportunity available in the country for achieving product diversification. The uniqueness of the coconut tree in being a provider of a healthy nutritive drink in the natural form has to be leveraged to the advantage of the producers. Promotion and marketing o f the tender nut water as a healthy drink so as to make it available in distant locations in portable and convenient packets will help to bring about a sustainable increase in income for the producers of coconut.

New product development w ill take center stage. Other value added products like processed Neera, palm jaggery, coconut granulated powder, frozen coconut meat offer great opportunities for utilizing the increased production. The consolidation of fragmented holdings through the cluster approach will be conducive for taking up farm level processing, practicing organic farming and other innovative agro techniques.

While traditional coconut oil has not shown any growth, there is an emerging niche market for Virgin Coconut Oil, which is widely acclaimed as very healthy oil having a wide range of uses in Pharmaceuticals, Neutraceuticals and Cosmoceuticals. The full potential for the utilization and application of Virgin Coconut Oil w ill have to be exploited as these products offers a new window o f opportunity to the farmers and processors in this sector.

The emerging world order also paves the way for achieving a quantum jump in quality standards. The quality consciousness among the consumers and the availability of a very wide range of quality products w ill necessarily drive the Indian producers not only to achieve the quality standards acceptable in the developed world, but also emerge as a leader to set quality standards. This would call for concerted efforts in bringing in quality awareness right from the stage of selection of planting materials, adoption of good agricultural practices, grading and post harvesting technologies, which will help to enhance the returns to the farmers.

The new world order therefore provides a great impetus to move coconut from the level of a subsistence crop to a highly remunerative crop by enlarging the scale and size of operations, reducing production cost and replacing the present practice of minimum management with optimum management. In view of the growing health consciousness and the preference for natural products, there will also be an opportunity for promoting tender nut water as an international drink and achieving price stability and increased returns by diverting at least 20 -  25% o f the total production for value added products other than copra and coconut oil. In short, there is an opportunity to enhance the competitiveness of the coconut industry by focusing on the natural goodness o f coconut and its amazing nutritive and therapeutic values.