The current situation facing the coconut industry will not be solved by higher support prices, warned the president and secretary of the Cochin Oil Merchants' Association (COMA), Ram Bahadur Singh, and N. Ananthan.

Speaking to the Coconut Development Board (CDB) and the state government, they revealed how the political compulsion to raise the minimum support price (MSP) is ultimately detrimental to farmers, because it means increased losses for the nodal agency and higher profit only for the intermediaries.

Essentially, what is happening now is that the increased quantities of coconuts available are leading to expectations of a lower prices.

Bahadur Singh and Ananthan commented that the measures taken to deal with this situation must be pragmatic in the long term and worked out in consultation with growers and trade representatives within the industry.

They argue that farmers' interests could be protected to some extent if the import duty is increased to maximum level of bound tariff allowed under regulations by the WTO. As it is, however, imports into India of coconut oil and copra are likely to be cheaper than domestic stock when restrictions on import quantities are removed in April 2001, which will aggravate the current situation.