Stressing that the need for the removal of palm oil imports through Kerala ports, the Kerala Exporters Forum (KEF) has urged the Directorate-General of Foreign Trade (DGFT) to come up with a proper timeline for removing the trade ban on palm oil rather than continuing with unending extensions.
DGFT imposed the ban in 2007 and subsequently, it extended it to protect the interest of coconut farmers, citing public interest.
A study carried out by KEF said the protection of coconut and coconut oil production in Kerala by banning import of palm oil may or may not have been the right policy decision. But 17 years of protection is more than enough for the revival of a sector. If the sector has not been able to be competitive in the international market and faces fluctuations in the prices and production, then the problem lies elsewhere, the report said.
Lack of evidence
There is no evidence to suggest that large import of palm oil has caused the drop in prices of coconut and coconut oil. Rather the decline is the result of the integration of the domestic market with the international market for coconuts. The fluctuations and shocks in the international market is the reason behind the sudden drop in price of coconut and coconut oil, the report said.
The ban, according to the report, resulted in the loss of business for Cochin Port, impacting the development of other minor ports in the State and hit the consumer interest. This has also led to rise in logistics costs as palm oil imported at the neighbouring ports are transported to refineries in Kerala via road, leading to an increase in the price of palm oil for end-consumers due to the tax levied on import to Kerala via road.
Karnataka and Tamil Nadu (two States with coconut production higher than Kerala) governments have not banned the import of palm oil. The report also requested the government to set up an expert committee to study the magnitude of revenue loss due to the trade ban.