Surge in Coconut Oil Prices Amid Global Supply Shortage
India’s retail food inflation dropped to -1.06% in June 2025, the lowest since 2019. However, some essential items like vegetable oils remain costly. Coconut oil prices have surged dramatically, driven by global supply constraints and climatic factors. This article explores the causes, impacts, and market dynamics of this price rise.
Current Price Trends in Edible Oils
Vegetable oils show mixed inflation in India. Palm oil costs Rs 132/kg, up from Rs 95 a year ago. Soyabean, sunflower, and mustard oils have also risen sharply. Coconut oil prices have nearly doubled since January 2025, reaching Rs 460/kg at retail in Kerala. This is higher than sesame oil, traditionally a premium product.
Global Supply Constraints and Climate Impact
The main cause of coconut oil’s price hike is reduced output in the Philippines and Indonesia. Both countries are top exporters. El Niño drought from July 2023 to June 2024 damaged coconut flowering and fruiting. Since coconuts take about a year to mature, the impact is now evident. Aging plantations worsen the supply shortage.
Domestic Production and Market Share
India’s coconut oil production remains flat or declining. Coconut oil accounts for a small share of India’s edible oil consumption. Only 3.9 lakh tonnes out of 5.7 lakh tonnes produced are used for cooking. The rest goes to cosmetics and industrial uses. Imported oils dominate the Indian market, with palm, soyabean, and sunflower oils making up 72% of consumption.
Regional Consumption Patterns
Kerala, once the top coconut producer, now ranks third behind Tamil Nadu and Karnataka. Even in Kerala, coconut oil consumption is about 2 litres per capita annually, less than palm oil at 4 litres. The rise in coconut oil prices may push consumers further towards imported oils.
Policy and Market Responses
Indonesia may restrict raw coconut exports to ensure local supply. The Philippines has mandated blending of coconut oil-based biodiesel in diesel fuel, reducing export availability. No quick increase in coconut oil supply is expected since new trees take 3-5 years to bear fruit. Buyers are stockpiling amid uncertainty.
Future Outlook
High coconut oil prices reflect global climatic and supply challenges. The marginal role of coconut oil in India’s edible oil basket limits consumer impact. However, persistent high prices may accelerate shifts to cheaper imported oils. Supply-side improvements will take years due to the crop’s long gestation period.
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