CategoriesPricing
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Effects of Price Increase on Coconut Oil Trade

In exactly one year we have witnessed increase in price of coconut oil, coconut, copra and coconut oil cake from its lowest to highest (so far). We are all talking about it because the growth in price has been whopping 3 times! So, I will try to put across some of the wisdom at hind-sight on its effects on various stake-holders. Not many in this industry including us, would have been prepared for this change that seems irreversible now. Till now inflation has happened on most commodities except coconut.

Farmers
Price increase should naturally bring cheer to the farmers. But this time it didn’t bring along the desired cheer to them. The price increase is not because of the increasing demand but more because of scarcity of the commodity. If the farmer had grown 100 nuts last year, sadly he has only grown 50 nuts this year. So, despite 3 times increase in price, his income has only grown 50%. Farmer has also witnessed similar inflation in the cost of his farm inputs like labour, fertilizers, water and so on.
Farmers generally don’t aspire to grow coconuts as much as they do for other cash crops like Arecanut and Rubber. They only cultivate coconuts for their own consumption and for plant diversity in their farm. Justifiably so, as the coconut price was way below his cost of production. This price increase should re-kindle interest in them to take coconut cultivation more seriously. If they do, this should be a great boon for entire coconut industry.

Usage
Coconut Oil finds widespread use in household cooking, baking applications, soaps, hair oil, body massage and so on. In a few of these applications, there are no easy substitutes and the demand is inelastic. That is why price is continuing to rise unabated.
Coconut from the tree was earlier used mostly for making copra and hence coconut oil. The price of coconut and copra was mostly driven by coconut oil and palm oil. Now the scenario is likely to change. Coconut Oil millers find that the coconuts cultivated don’t come as copra to their factory doors. Instead, Coconut is plucked while it is tender, the yield of coconut tree is also higher when tender coconut is plucked. Mature coconut (many times immature) is used extensively for making Desiccated Coconut. The remaining coconut that is still dried into copra again finds usage as edible copra (good shape and color) at higher price. The residue is available as copra for milling.

Coconut Processor
Profitability-wise it has been a great period for coconut traders and processors. They buy raw materials and when they about the sell the finished goods, the price would have increased. More stock one is able to hold and faster one is able to complete the processing cycle, better were is profits. Earlier the price increase brought with it some caution, what if the price comes down tomorrow? Now it has become highly predictable. But it has not been all that rosy.
Working Capital required has increased proportionally. For those with limited working capital his ability to hold stock has reduced. A certain level of stock is required to maintain quality in production (e.g. Time is required for drying copra, filtering oil through sedimentation). Minimum stock is required to meet sudden demands, ensure supply just in case production has been disrupted. While discussing with a Vendor, he was telling about his customer in Coconut Oil industry. Who were once paymasters when it comes to vendor payments have now been delaying his payments.

Adulteration
Extent of adulteration is directly proportional to the price difference between Pure Coconut Oil and its adulterants. Palm Kernel Oil is the often used adulterant owing to its similarities with Coconut Oil. Many other malpractices also go along with adulteration like Underweight and Sales in Black.

Consumer
It is the consumer who has been badly hit by this price increase. He is obviously forced to pay much more. Also, he has to consume adulterated products. In order to keep his expense on cooking oil within budget, he will try substitutes like Palmolein Oil and Sunflower Oil. Worst thing to happen will be when he has changed his edible oil for good, when he doesn’t buy coconut oil again even when the price has come down.

Coconut Oil compared with other edible oils
Coconut Oil will join edible oils like Ghee, Gingelly Oil and Groundnut Oil as premium, local cooking oils. A place where it rightfully belongs. It should be consumed because people want to consume it and not because it is cheap. Each one of them having a cheaper substitute, Vanaspati for Ghee, Ricebran Oil for Gingelly Oil, Palm Kernel Oil for Coconut Oil. Palmolein Oil, Sunflower Oil, Soyabean Oil, Cottonseed Oil and Rice-bran Oil will be for the masses.

CategoriesCoconut Oil
by 32

Difference between Roasted and Cold Pressed Coconut Oil

Our new factory at Kallarpe (Aryapu Village, Puttur) manufactures Roasted Coconut Oil. Our new customers have instantly liked it because of its enhanced aroma and taste. But our Old customers who have used Cold Pressed Coconut Oil manufactured from our old factory at Parladka (Puttur) have various kinds of doubts about it. I seek to clear those doubts here.

Cold Press Coconut Oil
Virgin Coconut Oil is many times referred to as Cold Press Coconut Oil. Virgin Coconut Oil is extracted from fresh Coconut. But, here we refer to oil extracted from Copra (dried coconut).

Copra with about 8% moisture is crushed as it is on Rotary Machine (Chuck/Ghana). Oil is filtered through sedimentation of solid particles for 7 days in settling tanks. The process is extremely simple and requires minimum capital investment.

The resulting oil has crystal clear transparent color, smells and tastes like Copra as it is. Many people like this as it is considered to be natural and local made product.

Roasted Coconut Oil
Copra is cut into small pieces and dried using hot air to about 5% moisture level. This copra is heated for about 1 hour on a multi stage steam-jacketed vessel for roasting. A bit of steam is also added to copra for cooking. This opens up the fat cells and helps in easy oil extraction. Oil is then filtered using Pressure Leaf Filter and Filter Press to remove sediments as and when oil is extracted. This process requires more capital investment for a Steam Boiler, Pipeline, Cooker with Agitator and Motor. Also has higher running cost in fuel for steam generation and power.

The resulting oil has a golden yellow color. It has a stronger smell and taste. It has just the same effect as what roasted Ground Nuts give.

During processing, the temperature of oil and oil cake rise up to 100 degrees, while in cold pressed it is only about 60 degrees. In the process the oil loses moisture and reduces the risk of going rancid. Copra gets sterilized as the bacteria and fungus die, which again prolongs shelf life.

At higher temperatures, triglycerides in other oils start breaking into free fatty acids causing rancidity. But Coconut Oil being mostly Saturated Fat and is quite stable. So, roasting does not deteriorate the quality of oil.

Hair Oil manufacturers prefer Roasted Oil for its stronger smell and longer shelf life. It has a 5% premium in the bulk oil market over Cold Pressed variety. But we are selling at the same price to consumers now. It is something new to them here in Dakshina Kannada market and not yet fully accepted. We have been working hard in educating them about this new variety.

Despite so much of difference they are still the same i.e. Coconut Oil. Both of them are made from same quality of copra, they have the same chemical composition, both have the same miraculous health benefits of coconut oil.

Download Write up of Roasted Coconut Oil FAQ

CategoriesTaxation
by 0

Letter for Revision of VAT Rates

This is the letter that we submitted to the Industry Chamber and hence to the Government of Karnataka to clear many of the anomalies in Value Added Tax for Coconut Oil in Karnataka. Majority of these issues are brought out in an earlier post.

To,

The President
Puttur Chamber of Commerce and Industry

Subject :- Revision of Value Added Tax rates for Coconut Oil as Edible Oil

Respected Sir,

With the Union budget and the State budget coming up shortly. As part of the Coconut Oil Industry, we request the Government to

  • Reduce the Value Added Tax rates for Coconut Oil from present levels (5%)
  • Consider coconut oil sold in all quantities (above/below 200 gms) as for edible purpose and apply same rate (instead of 5% and 13.5%)

The following are the points considered to arrive at the above conclusion

  • Coconut Oil is a prime cooking oil not only in Kerala but also in coastal Karnataka.
  • Neighboring states of Kerala and Tamil Nadu don’t have any taxes for Coconut Oil. While in Karnataka VAT is 5% for quantity above 200 grams and 13.5% for quantity equal to and below 200 grams.
  • Under such high tax regime, business that pay taxes can’t compete with businesses that don’t pay taxes. So the market is flooded with adulterated and lower quality products.
  • Various researches have shown that Coconut Oil is good for heart and health, so it should be promoted for use in cooking.
  • Since the price of coconut oil is higher, other edible oils such as palm oil, sunflower oil and soybean oil are being imported without any customs duty and is becoming a threat to indigenous coconut industries and farmers.
  • While other edible oils are trading with lesser taxes, coconut oil with higher taxes is not having a level playing field.
  • Weaker sections of the society who earn daily wages and have to spend for their daily food prefer to buy their cooking oil in smaller quantities like 50 ml, 100 ml and 200 ml. These are now taxed at a whopping 13.5%!
  • Prices of the essential commodities like coconut oil and coconuts have doubled over last one year and is becoming less affordable to majority i.e. middle and lower class consumers.
  • We manufacture coconut oil for edible purpose, we follow the Prevention of Food Adulteration guidelines and have obtained Edible Oil Packing license for the same. But the products we sell attract taxes that are meant for cosmetic items and not edible items.
  • Being an essential commodity, the market is extremely price sensitive and any reduction in taxes will benefit the farmers and lower class consumers tremendously.

Request you to kindly communicate the matter to the respective government departments for taking necessary steps and actions.

Thanking You,

Yours faithfully,

For Cocoguru Coconut Industries Pvt. Ltd.

B. Keshava Ram

Managing Director

Update on 25th February 2011 – Karnataka Government hikes tax rates for goods presently taxed at 13.5% to 14%

Update on 1st August 2012 – Rate is again hiked from 14% to 14.5% with effect from August 1st 2012 to July 31st 2013

CategoriesCoconut Oil
by 2

Beware of Vanaspati, Margarine, Partially Hydrogenated Oils and Trans fats

Edible Oils are in 3 forms on the basis of processing viz. Crude Oil, Refined Oil and Vanaspati. The uninitiated, based on the terms used, will perceive

  • Crude oil is natural and not yet fit for consumption
  • Refined oil is improved and made perfect for consumption
  • Vanaspati, in Sanskrit means ‘lord of forest’, should be very healthy

This is where consumers are misguided by the names and their literal meanings. The fact though is

  • Crude Oil that is just filtered after extracting oil from the oil seed is the healthiest. Unrefined oils still have healthy bioactive components, Vitamin E, flavour and aroma.
  • Refined Oil is highly processed with the use of chemicals and heat to just retain the oil. Even oils extracted from lower quality oil seed can be refined. So, refined oil though pure is not as healthy as corresponding crude/unrefined oil.
  • Vanaspati is formed by partial hydrogenation of refined vegetable oil is extremely harmful. They have Trans fats which are formed as a by product of hydrogenation.

In India, of the total 13 million tons of edible oil consumed, 10% is in the form of Vanaspati and 45% each in refined and unrefined form. Doctors and Health Departments warn consumers against intake of saturated fats, but the real culprit for all the heart problems and obesity are trans fats. Chemical analysis of trans fats gives a logical reason why trans-fats are harmful.

Chemistry of Fats
Fatty acids are characterized as either saturated or unsaturated based on the presence of double bonds in its structure. If the molecule contains no double bonds, it is said to be saturated; otherwise, it is unsaturated to some degree. A saturated fat has no double bonds, has the maximum number of hydrogens bonded to the carbons, and therefore is “saturated” with hydrogen atoms. The more double bonds in the fatty acid the more vulnerable it is to rancidity, as free radicals attack double bonds.

In most naturally occurring unsaturated fatty acids (and all saturated fatty acids), the hydrogen atoms are on the same side of the double bonds of the carbon chain (cis configuration — from the Latin, meaning “on the same side”). However, partial hydrogenation reconfigures most of the double bonds that do not become chemically saturated, twisting them so that the hydrogen atoms end up on different sides of the chain. This type of configuration is called trans, from the Latin, meaning “across.” The trans conformation is the lower energy form, and is favored when catalytically equilibriated as a side reaction in hydrogenation.

The trans configuration is straighter, while the cis configuration is noticeably kinked. Trans fats have a much higher melting point (45 °C), due to the ability of the trans molecules to pack more tightly, forming a solid that is more difficult to break apart. This notably means that it is a solid at human body temperatures (37 °C).

In essence, hydrogenated oil/trans fats are stable making the food products last longer and are solids at body temperature making it harder to digest.

Why Hydrogenate?
Hydrogenated oils are more stable than corresponding natural oils with unsaturated fats. Saturated fats are mostly found in animal sources (Butter, Ghee etc) which are scarce and hence expensive. Oils from vegetable sources are mostly unsaturated, abundant and less expensive. So, partial hydrogenation of less expensive unsaturated fats from vegetable sources is an attractive commercial proposition. They are not only stable and make the fried food product last longer but also adds to the taste. That is why we find widespread use in commercial cooking in Breads, Cookies, Cream Biscuits, Sweets, fried snacks, chocolates and ice creams.

Health Risks
The primary health risk identified for trans fat consumption is an elevated risk of coronary heart disease. The reason is trans fat increases the level of LDL or bad cholesterol and decreases HDL or good cholesterol. Other ill-effects are Alzheimer’s disease, Cancer, Diabetes, Obesity, Liver dysfunction and infertility in women.

Prevention of Food Adulteration Act specifies that the melting point of Vanaspati be strictly less than 41 °C. That means manufactures must ensure that hydrogenation is stopped before melting point reaches that point. Also, the labels in packed food products must show the amount of trans fats in the food sample. ITC, Britannia and the likes who are branded manufacturers of such food products clearly mention that Trans fats are bad for health just like Cigarette packs mention ‘Smoking is injurious to health’.

It is highly advised that consumers avoid all commercially prepared foods (Bakeries, Hotels and Packed foods) to the extent possible. One should also carefully read the labels for its ingredients and nutrition values. Food items containing Edible Vegetable Fat or having Trans fats value more than 2% should be avoided.

Sources – http://en.wikipedia.org/wiki/Trans_fat

CategoriesCoconut Oil
by 2

Book Review – “The Coconut Oil Miracle” by Bruce Fife

If a 250 page book has to be written exclusively on one product, without much repetition, making full sense with understandable logic, by veteran nutritionist, then this should suggest how miraculous the product (Coconut Oil) should be. Now, why isn’t there a similar book that talks about the so called healthy and widely used oils like Sunflower Oil, Soyabean Oil or Hydogenated Oils (Vanaspati)?

Book is smartly organised because the author understands that readers have been misinformed so far. In the first chapter he works on dispelling the deeply held myths. In the next he builds the foundation by discussing about the basic of fats and human body. In each of the subsequent chapters he discusses each one of those benefits giving scientific reasons and examples. To conclude he guides the reader on how one can buy and use coconut oil.

Summary of the book
The truth about the miraculous benefits of coconut oil has been hidden by the western companies to protect their business interests. Tropical oils like Coconut Oil and Palm Kernel oils used to be popular in America and was a threat to their domestic soyabean oil industry. In order to popularise their products they had to somehow prove that tropical oils were bad. So they funded a research to say that coconut oil contains saturated fats and saturated fats are the cause for heart related diseases. They proved this by testing using a hydrogenated fat on rat. Later the went on a massive campaign against tropical oils and promoting their oils. The domestic edible oil companies made their monies but with it went the health of average american. He has acquired obesity, heart disceases and many others.

Saturated fats are highly stable as all the carbon atoms have formed bonds with hydrogen atoms and carbon atoms bond with each other through stable single bonds. Unsaturated fats have a few double bonds between carbon atoms and they are free to break down into toxic free radicals and oxidation causing rancidity. Oxidation and free radical formation are accelerated when heat, light and pressure is applied. That is why Coconut oil can be stored conveniently for 2 years while other oils hardly last 6 months.

Fatty acids have chains of varying length of carbon atoms ones with less than 12 carbon atoms are medium chain and more than 12 atoms are long chain. Shorter the length easier it is to digest. Fatty acids found in coconut oil are medium chain and they are quickly digested by lever to get energy while other fats are stored. That is why replacing other oils by coconut oil can promote weight loss. Also coconut oil is used by athletes who need quick burst of energy.

Coconut Oil has excellent anti-bacterial, anti-fungal and anti-viral properties with no side effects. That is why it is among the ultimate natural medicine. If people come to know of this the pharmaceutical companies will lose business big time. Coconut Oil is used in most Ayurvedic therapies and ancient Indians were aware of the benefits. AIDS has no cure and AIDS patients are advised to consumer coconut oil as it gives them immunity that they severely lack.

Coconut Oil is a great anti-oxidant, removes dead cells and gives complexion to skin and hair. It is very good at preventing premature aging of skin.

Coconut Oil can be Virgin or refined(RBD – Refined, Bleached & Deodorized). Virgin is one which is extracted by least amount of processing, it has the natural coconut smell and taste. In Refined version it is subjected to about 200 degree heat and chemicals, it is bland and will not overpower the taste of food on which it is used. Author recommends the Virgin Coconut Oil.

This is just a summary and the book contains a lot more interesting facts and analysis to make for a fascinating reading. I personally am both delighted and angered on reading the book. Delighted because I have grown up (still continue) consuming coconut oil for all purposes (edible and cosmetic). Never knew such wonderful properties of coconut oil. Angered because the american companies, doctors have maligned people from consuming coconut oil into unhealthy refined and hydrogenated oils. The author or I don’t suggest that Coconut Oil is the only healthy oil. Other healthy fats are Butter/Ghee, Olive Oil, Til Oil and Palm Kernel Oil in raw form. But Virgin Coconut Oil is the healthiest of all.

Read the book online @ Google Books

Buy the book @ flipkart.com