Palmolein duty cut to hit coconut farmers

By Our Staff Reporter

KOCHI, NOV. 2. The cup of woes of the coconut farmers seems to be full. Despite all the protests against import of palmolein-palm oil and the demand for a hefty hike in their import duty in order to protect the coconut farmers from the heavy fall in prices, the Central Government has reduced the duty by 10 percentage points.

On October 30, the Central Board of Excise and Customs cut the basic customs duty (BCD) on palm oil from 75 per cent to 65 per cent. However, the customs duty on palmolein would continue to be 92.4 per cent (this includes 85 per cent BCD and a four per cent special additional customs duty.).

Obviously, the cut in the CBD on crude palm oil (CPO) is to please Malaysia, which is the world's largest palm oil producer and which is India's largest supplier. India is the second- largest importer of palm oil from Malaysia. (India also imports from Indonesia.)

The cut is a follow-up on the assurance given by the Prime Minister, Mr. A.B. Vajpayee, to the Malaysian authorities during his mid-May visit to Kuala Lumpur. At the time, Mr. Vajpayee, pressured by the Malaysian authorities for a drastic cut in India's import duty on palm oil and palmolein, had agreed to `revise' the rates.

During his visit to Malaysia, the Prime Minister had clinched a barter deal whereby Indian Railway Construction Company (IRCON) will build a huge railway project in that country. The cost would be paid in kind -- in the form of palm oil. The barter deal envisaged supply by Malaysia of $1.8 billion (around Rs. 8,000 crores) worth of palm oil over a five-year period. It meant that about 14 lakh tonnes of palm oil would be dumped on India every year for five years on end.

The deal had struck fear in the minds of coconut farmers in Kerala as well as other oilseeds (like groundnut, soyabean and mustard) growers across the country. To top this dumping is the latest cut in the import duty, which will tremendously benefit the Malaysian and Indonesian palm oil producers.

The woes of the coconut farmers in Kerala, who have lost thousands of crores of rupees in the price fall, have been attributed to the flooding of the Kerala's market with cheap palmolein (edible palm oil) which substituted coconut oil as the chief cooking medium of Malayalis.

Significantly, the cut is despite the scope for massive hike in duty within the World Trade Organisation framework.

Needless to say, the present import duty cut is bound to further depress the coconut prices. And, the future of coconut cultivation is bleak.

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