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| Saturday, 13 November 2004 |
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Better way to sell your coconut by C. Nanayakkara If you are a coconut grower you must have glanced through the item on "coconuts" in the "Markets" page of the Daily News. Under this column the auction price of raw (freshnuts) and its various products are published. The raw nut prices are the summary pertaining to Thursday's auction held every week by the Marketing Division of the Coconut Development Authority (CDA) at Duke Street. The price details include highest, lowest and average prices and the quantity traded. For comparison it gives the local market price range too. The local price means the price prevailed during the week in growing areas on sales through individual negotiation. In other words this is the price paid to the grower by the local collector (middleman) or purchased direct by the processor or miller. Here the small quantities of the smallholder as well as large quantities of the private estates are sold. This is the traditional informal marketing channel. The auction is the formal marketing channel arranged by the government to facilitate marketing and get a fair price for the grower. Here the highest price is the best price received for a parcel of coconut because of its superior quality and vice versa. The average price is a calculation after the auction which is the total sale proceed divided by the nuts sold and indicated in price per 1,000 nuts. In most of the auctions the lowest price received is par or slightly higher than the local market price. Hence there is a significant difference between the average price and the local market price. The total nuts sold at the auction in a year exceeds 50 million nuts and are produced in estates belonging to three groups. The first group includes estates belonging to government agencies such as the National Livestock Development Board (NLDB), Coconut Cultivation Board (CCB), Coconut Research Board (CRB) and its share is about 80 percent. The second group is the plantation companies such as the Chilaw Plantations representing a share of 15 percent. The third represents only five percent and are the private estate owners. According to the 2002 census of agriculture there are 4,143 coconut estates (holdings over 20 acres) in the island covering 176,299 acres. Out of this about 3,162 or 76 percent covering 151,342 acres are in Kurunegala, Puttalam and Gampaha which is the coconut triangle. Assuming private estates are in between 20 and 50 acre category because of the land ceiling there are 2,670 private estates covering 76,390 acres of coconut lands in the triangle. At the rate of 3000 nuts per acre this area should produce a minimum of about 300 million nuts per annum. But only a negligible fraction of this production comes to the CDA auction. A major reason for this is the lack of awareness of the auction by most of the estate owners. This is an attempt to explain how this auction works and the advantages of it to estate sector growers. The first misconception among most of the growers is that the Coconut Cultivation Board (CCB) is the only custodian of growers to look after their needs and the CDA is the organisation which deals with the industrialist or processors. No it is not. The CDA's marketing division will assist and facilitate the growers to sell their crop in a better way. The auction is conducted every Thursday at CDA's auction room commencing at 10.00 a.m. Those who want to submit their parcel of coconuts should inform the CDA before 2.00 p.m. on Monday of the week to include it in the week's catalogue. The Catalogue is market information document circulated by the CDA, before the auction which enlists the seller, name of estate, the date of pick and the quantity of nuts in the parcel to be sold. At the auction the Auctiononeer appointed by the CDA puts each parcel to the audience. The buyers bid against one another by open outcry and the parcel offered going to the person who outbids all others. If a seller is not happy with the highest bid he can withdraw his lot and offer it for another occasion. Otherwise he can inform through his broker or CDA the price he is expecting for his parcel. The information in the catalogue is disseminated by the brokers to their clients of various types such as DC factories, normal copra and white copra producers and oil millers. The brokers act as an intermediary to balance the interest of both buyer and seller and a nominal commission is charged for his service. The minimum quantity a seller can submit at a time is 5,000 nuts. After the auction the broker sends an agreement to the seller and the buyer and it has to be confirmed by both parties. The broker sends a 25 percent of the value of the parcel to the seller within 14 days as an advance. Before one month the buyer should remove the nuts with the full payment through the broker. In this exercise there are a set of rules stipulated by the CDA which should be adhered by sellers, brokers and buyers. For different parcels the prices offered fluctuate between highest and lowest prices. The reasons are many. The prices vary according to the agroclimatic zone where the estate is located, the pick of the year, the lot size, the quality of nuts, economic distance to the processor etc. There are some advantages over the informal system against the auction market. The payment is assured because the broker and CDA are two agencies to secure it. The grower may get the best price because of the following reasoning of the two market situations: In traditional informal marketing of raw coconuts the pricing decisions are on the basis of individual negotiations between grower and buyer direct or through a private broker. The individual prices vary and are not in a perfect competitive stage because the seller is less knowledgeable on price fluctuations of products like copra, oil or desiccated coconut (DC) in the local and export markets. |
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