Trade performance of copra and desiccated coconut in India: A time series analysis

Introduction

India is the largest coconut-producing country in the world and accounted for about 31%of the world's total production during 2021, with a production of 20,736 million nuts. India produced 20,535 million nuts during 2022-23, (CDB-2023) [1] . The crop contributes around Rs. 30,795 cr to the country's gross domestic product (GDP) during 2022-23. (indiantradeportal.2022) [2] . Indonesia, Philippines and India are the leading coconut growing countries and they jointly accounts for 75%of the global production of coconut. In India, coconut is cultivated mainly in the coastal states viz., Kerala, Tamil Nadu, Karnataka and Andhra Pradesh and southern states account for 90 per cent of country's coconut production, viz., Kerala (27.41%), Tamil Nadu (26.40%), Karnataka (28.97%) and Andhra Pradesh (8.31%) (CDB 2022-23) [1] . In spite of being the global leader in coconut production, the export of coconut and its value added products from India constituted only 3469.44crores (CDB 2023) [1] Desiccated coconut is a well-established product from coconut. World production of desiccated coconut is around 4, 53,847 tones. In the recent years, export from India is showing a downfall ( Fig 1). India is the the second largest exporter of copra to world with share of 30.70%of total world export of 112,854 tons. (UN COMTRADE-2023) [3] . The trade dynamics of copra and desiccated coconut in India have evolved over time, influenced by various factors such as global demand shifts, domestic production trends, changing consumer preferences, and policy interventions. The sector faces challenges related to fluctuating prices, climatic conditions affecting yields, and increasing competition from other coconut-producing countries. Coconut Development Board (CDB), technology development and dissemination have given a boost to coconut processing and value addition. Many value added products complying with international standards have been introduced into the domestic market through different programs (Thasnimol & Prema 2017) [4] . India is not able to fully take the advantage of the global market. The study makes a attempt to investigate the performance and competitiveness of Copra and Desiccated coconut trade of India.

Methodology

The study focused on the trade aspects of export and import of Copra and Desiccated coconut. It aims to provide a brief explanation of the sample selection process, the nature and sources of data collection, and the analytical tools employed.

The information was primarily gathered from secondary sources, including the ITC Trade Map and DGFT statistics for exporting and importing from 2011 to 2023 with HS code of 08011100 and 12030000 for Desiccated coconut and Copra respectively.

Compound Annual Growth Rate (CAGR):

The analytical tool used in this study is the Compound Annual Growth Rate (CAGR), as the analysis involves continuous data. Using the average annual compound growth rates for exports and imports is considered more appropriate for analyzing the movement of Copra and Desiccated coconut than linear growth rates.(Thasnimol & Prema,2017) [4] . The following exponential formula was applied:

Instability Analysis

Instability in export and import of Copra and DC was examined by using two different measures of instability such as Coefficient of Variation and Cuddy-Della Valle Index. A low value of this index indicates low instability in export and import and vice-versa. Coefficient of Variation (CV) is the simplest measure of instability (Cuddy and Della, 1978) [5] . CV can be calculated as follows:

The Cuddy-Della Valle Index is as follow:

Where, CV is the Coefficient of Variation in per cent, R² is the coefficient of determination from a time trend regression adjusted for its degrees of freedom. The ranges of CDVI are given as follows Where,

• Xij and Xwj are the values of country 'i's exports of product j and world exports of product j and • Xit and Xwt refer to the country's total exports and world total exports.

A value of less than unity implies that the country has a revealed comparative disadvantage in the product. Similarly, if the index exceeds unity, the country is said to have a revealed comparative advantage in the product.

Results and Discussion

Table 1 revealed that the major export destinations for Indian copra in 2023 is the United Arab Emirates (UAE-56.81%) as the leading market, followed by Iran (15.72%) and Nepal (10.25%). The exchange rate influenced the value and quantity of copra exported among the developed and developing countries. The UAE's dominance is due to favorable trade agreements and demand for coconut products, and the trend of copra export is moving in same direction of increasing agricultural exports to Gulf countries (Singh, 2024) [6] (Soundaravalli, 2024) [7] . This reflects the trends in agricultural exports, influenced by trade policies and market dynamics. While the UAE remains the largest market for copra, there is a need for India to explore and diversify new market destination for export of copra and to reduce the risks associated. This would help protect exports from market fluctuations. [8] . The Fig. 1 primarily due to a gap between domestic coconut production and the growing demand, often driven by cheaper imports from countries like Sri Lanka, where the cost of production is lower and leading to increased dependence on imported desiccated coconut. Efficient drying methods, such as infrared drying, improve product quality and reduce energy consumption, making Indian desiccated coconut more competitive internationally (Yahya et al., 2024) [9] . The Table no. 3, growth of desiccated coconut exports and imports from 2011 to 2023 reveals significant trends in international trade, characterized by varying growth rates and instability. The export quantity have shown a negative compound annual growth rate (CAGR) of -3.439 percent, indicating a decline in exports, while showing positive growth of 5.32%in term of value is due to the exchange rates of the importing countries. While imports have experienced a substantial positive CAGR of 92.97%which is highly significant (1%), suggesting a growing demand for desiccated coconut in domestic market as production cost is lower in imports. The instability of Indian desiccated coconut in both export and import markets are influenced by various factors, trade policies, and production challenges. India holds a small share in the global desiccated coconut export market, with limited competitiveness against other producing countries (Jayasekhar et al., 2019) [10] . High instability in export (131.57 in quantity and 110.82% in value indices in coconut production, particularly in states like Tamil Nadu and Karnataka, contribute to variations in exports (Narmadha, 2022) [11] . The import instability, 55.54%and 50.67%in quantity and value respectively, is due to sudden increase in import only to particular period 2018-2020 due to production cost variation among domestic and international market (Thasnimol, 2020) [12] . The Fig. 2 shows that copra exports and imports from India reveal significant fluctuations over the years, reflecting trends in international trade. The highest export value was recorded in 2022-23 at Rs. 21,385.78 lakh crores, indicating a strong market demand for copra. Export quantities varied significantly, with a notable drop in 2017-18 and increased in 2021-22, indicating the volatility in production in major growing states. Imports began in 2014-15, with a steady rise, peaking in 2020-21 at Rs. 9,587.11 lakh crores, the import quantity also increased, particularly in 2018-19 and 2020-21, indicating supply shortages. 4 shows that copra exports have a negative Compound Annual Growth Rate (CAGR) of -3.44%in quantity due to limited domestic supply. However, export value has grown at a positive CAGR of 3.15 Percent, influenced by exchange rate with importing countries. Imports of copra, which began only in 2014-15, have shown a strong positive trend with a high CAGR of 71.26 Percent. As importing copra from Indonesia is considered cost effective due to its large production capacity and competitive pricing (Ella et al.) [13] . Export instability is significantly high, with 145.82%for www.extensionjournal.com quantity and 142.69%for value, mainly due to low productivity and high domestic demand. On the other hand, imports show better stability compared to export, with a CDVI of 96.88%for quantity and 98.46%for value, suggesting more predictable import trends (Singh, 2024) [6] . Although exports have declined, rising imports highlight India's dependence on copra. There is need for policy changes to boost domestic production and stabilize the market. [12] . The import unit value has fluctuated but remained around 1.00 to 1.59, suggesting stable demand for desiccated coconut in India. The relatively high import values compared to export values indicate that India may be importing lower priced product. While the export unit value has improved, challenges such as low productivity and market volatility persist, impacting the overall competitiveness of the Indian coconut sector. [11] . India's RCA is lower than that of major coconut exporters like Indonesia and the Philippines, which dominate the market with higher RCA values. (Jayasekhar et al., 2017) [14] . Despite being a leading coconut producer, India's share in the desiccated coconut export market remains limited, indicating a need for strategic improvements (CDB 2023) [1] . The need for strategic improvements in marketing and production is evident to enhance India's competitive advantage in coconut products (Bedi, 2016) [15] [13] . This indicates that India must continue to innovate and enhance its export strategies to sustain and improve its market position.

Conclusion

India remains a global leader in coconut production, yet its trade performance in copra and desiccated coconut faces challenges. Despite the country's highest production, export growth has been inconsistent, and imports have surged in recent years, particularly for desiccated coconut. The study reveals that India's copra exports are concentrated in a few markets, primarily the UAE, Iran, and Nepal, highlighting the need for diversification to mitigate market risks. Although the export value of copra has grown, export volumes have declined due to domestic supply limitations. Copra imports have increased, suggesting growing dependence on external countries, particularly from cost-effective producers like Indonesia. For desiccated coconut, exports have shown instability, with declining quantities but increasing export value due to fluctuating exchange rates. However, rising imports, particularly between 2018-2020, depicts the competitive pricing, which affects domestic producers. India has the potential to enhance its competitiveness in the global coconut trade. Strategic diversification, improved processing infrastructure, and supportive trade policies will be crucial in overcoming existing challenges and utilizing India's strong production base for better trade performance.

References

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