Kochi: An increase in the minimum support price (MSP) of copra, or dried coconut without shell, will not benefit the farmers much as the government agencies are not buying enough of the commodity, forcing the farmers to sell the produce in the open market at lower rates.

The Union government recently raised the MSP—the floor price it sets for acquiring agricultural commodities—for copra to Rs3,660 from Rs3,640 per quintal.

In the domestic market, the commodity is priced at Rs3,560 per quintal, Rs100 below the MSP. Copra is used for extracting coconut oil. India produces around 800,000 tonnes of copra every year.

“The MSP is announced to help farmers get a fair price when agencies procure the commodity,” said P.V. Alexander, a leading coconut oil merchant and former president of the First Commodities Exchange of India. “But this is meaningless unless the government buys because in the open market the prices are still ruling lower than the MSP.”

A higher MSP will be meaningful if at least 50% of 800,000 tonnes of copra, the country’s annual produce, is procured by agencies such as the National Agricultural Cooperative Marketing Federation (Nafed), the apex organization of farmers’ cooperatives.

The Kerala Kerakarshaka Co-operative Federation (Kerafed), the apex body of co-operatives in Kerala involving around 2.7 million coconut farmers, had launched its raw coconut procurement nearly two months ago. It had purchased 150,000 cut-coconuts, draining out the water in them, at Rs11 a kg until end of December. But the programme had to be temporarily stopped due to non-availability of green coconuts.

N.P. Ravikumar, managing director of Kerafed, said purchases by the apex body lifted the prices slightly.

He said the agency will start buying green coconuts again once the farmers return to their centres. Around 1,000 coconuts need to be dried and shells removed to fetch 150-175 kg of copra.

Other coconut-growing states in south India—Karnataka, Tamil Nadu and Andhra Pradesh—have demanded that an MSP be also fixed for coconut, from which copra is produced.

But the demand has not yet been accepted, Ravikumar said. There was indeed a plan to procure raw coconut in Kerala and there had been similar demands from other southern states, said Sibi Monipilly, director of Nafed. But since forward linkage facilities, such as drying of coconuts, removing the shell and storing the copra, are not in place, the federation has decided to put the plan on hold.

The government is expected to direct Nafed to buy copra at the revised minium support price. During 2007, Nafed had procured around 43,000 tonnes of copra in south India. Karnataka, with 19,000 tonnes, was the biggest contributor. There is also a proposal to buy copra in Goa this year, Monipilly added.