Adulteration takes toll on coconut oil prices, traders

Coconut oil, believed to be one of the purest oil types and, hence, free from health hazards, has come under the scanner of the authorities concerned, as the commodity has fallen a prey to adulteration by some unscrupulous producers and traders. And given the trend, health of millions of consumers is definitely under threat.

The wide spread adulteration and use of substitutes have caused a fall in prices of coconut oil from Rs 7,400 a quintal in the beginning of 2005 to Rs 4,800 a quintal now.

Experts believe that extracting oil from coconut and selling it below Rs 5,000 a quintal is not affordable, but traders are doing exactly that and seem to be running their shops smoothly. Prices rule below the profitable level especially at copra centres in Kerala "" at Rs 4,700 a quintal in Trichur, Rs 4,900 in Alappuzha and Rs 4,775 a quintal in Kozhikode.

An adulterator typically blends mineral oil "" liquefied light paraffin (LLP) "" or some other non-edible oils with coconut oil. Solvent oil extracted from cheaper imports is also used for adulteration. Traders allege the paraffin content sometimes go up to the level of 70 per cent.

Removal of husk and shell and drying the coconut in sun or over a mechanical heater to produce pure copra do not need any industrial activity and, hence, no adulteration is expected at this stage, but when the coconut goes for value addition by the industry or while it is being stored by dealers in DC (desiccated copra or copra powder), adulteration takes place, said P B Alexandar, chairman, First Commodity Exchange of India.

Coconut oil is an easy adulteration target because of its premium price vis-a-vis other edible and non-edible oils, he added.

Adulteration has its impact on prices too. An adulterator, who usually saves on taxes, does not mind paying a higher price to procure copra, as he still manages to rake in good profits.

At First Commodity Exchange, the difference between the settlement price and the market price for pure coconut oil is ever widening, and now up to Rs 350 a quintal. However, market leaders with established brands are not affected as they have better margins.

But again, the share of the branded product in the country's entire coconut oil market is only 25 per cent, while over 75 per cent of oil is marketed loose. Moreover, many local brands too are given to adulteration, but go scot free as these are sold for external use only, Alexandar said. These activities have been in force for the last eight years, and villagers have remained the most badly hit.

Traders argue that no quality standards are set for copra and coconut oil and, therefore, unscrupulous traders are just taking the advantage.