The present study analysed the impact of trade policies on coconut economy of Kerala based on the secondary data from Coconut Development Board (CDB) and Export-Import data bank of Government of India. Exponential growth function, Cuddy- Della instability index and Revealed Symmetric Comparative Advantage (RSCA) were used to compute the growth rates, instability indices and comparative advantage, respectively. Though trade liberalization adversely affected the coconut farmers during the initial phase of liberalization, it subsequently increased the opportunities of the Indian coconut sector to compete in the world market. Compared to Period I (1980-81 to 1993–94), a significant improvement in the coconut export was observed during Period II (1994-95 to 2007–08) and Period III (2008-09 to 2016–17). The high growth rates of coconut products together with low instability indices in the export revealed the prospects for Indian coconut sector in the global market during the post liberalization period. The value of RSCA revealed that India lacked any comparative advantage of coconut export in Period I. While in Period II, the export of coconut and copra possessed a comparative advantage from 2002 and 2005, respectively, and maintained the comparative advantage throughout the Period III. The result indicated that India must give much effort to increase the export share of coconut, copra and other value-added coconut products to augment the foreign earnings.
A significant improvement in the coconut export was observed during post liberalization period.
India lacked any comparative advantage of coconut export during the pre liberalization period.
Coconut and copra export possessed comparative advantage during the post liberalization period.
Coconut
The coconut industry in the country was enjoying the privileges of a closed economy until 1995, and significant and sustainable growth in production and productivity was observed during the protected regime. Consequent to India became a signatory to the World Trade Organization (WTO), the domestic coconut market was exposed to international players. The globalization had posed multiple challenges to the future of Indian coconut industry. Indian coconut industry encountered major threats and challenges concomitant to trade liberalisation in the form of import substitution with low price products of similar nature (
The opening of the domestic market for the world players and the global integration of the national markets witnessed a paradigm shift in the domestic coconut economy. The price of coconut oil became uncompetitive due to increased trade openness and the domestic coconut industry lost the premier role played in the pre-liberalisation period (
The impact of liberalization policies was studied by estimating the export growth rate, export instability and comparative advantage of various coconut products. The import and export data of coconut products, both in quantity and value terms were collected from Coconut Development Board (CDB) under the Ministry of Agriculture, Government of India and Export- Import data bank (Government of India). Exponential growth rates were worked out to compare the export of different coconut products from India. For getting a clear picture, the entire study period,
The growth rate was worked out using the exponential growth function of the form
Where,
The exponential growth rate was worked out by transforming the equation to the log linear form as
The method of ordinary least square was adopted to estimate the coefficient (b's). The compound growth rate in percentage (G) was calculated using the relationship
The significance of the growth rates was tested using the student's t- test statistic
In order to study the variability in the export of different coconut products, the formula suggested by
RSCA measures the comparative advantage or disadvantage of a country to another country or group of countries. The value of RSCA ranges from -1 to +1. Positive RSCA value indicates the comparative advantage of the country in export of the commodity and vice versa. RSCA index is calculated using the formula,
Where,
The compound growth rate of different coconut products from 1980–81 to 2016–17 is presented in
Seeds of liberalisation prospered during Period II (1994-95 to 2007–08) and the coconut industry looked hopefully towards the global market and improved its share in the international market through enhanced trade. Among the traditionally traded coconut products, copra fetched the highest significant growth rate of 56.73 percentage in terms of quantity and 65.84 percentage in terms of value. During 1994–95, the export of copra from India was very low and was about 10 tonnes, but the demand of copra from the global market increased steadily from 2004–05, and the quantity exported from India reached about 1617.46 tonnes in 200708. Export of copra amazingly increased during 2008–09 and touched 13578 tonnes and the export earnings reached about ₹ 5,580.70 lakh. Initially, the domestic price of copra was higher than that of international prices and copra export was found to be very meager during this period. Due to the adverse climatic conditions in major coconut producing countries, the global market faced with the shortage of the products during the 2008–09 periods, and the limited availability of the product coupled with increased global demand raised the international price of coconut and copra (
In Period III (2008-09 to 2016–17), significant export growth rates were observed only for coconut and desiccated coconut. However, the computed growth rates were found to be lower than that in the second period. The growth rates of coconut and desiccated coconut were 22.48 and 15.89 percentage respectively, in terms of quantity, and in value terms, the growth rates were 38.17 and 50.64 percentage respectively. Even if the growth rates were comparatively lower than that of the second period, the quantum of export and export earnings of coconut products increased substantially during this period. The export of coconut (fresh and dried) increased from 16608.6 tonnes in 2008–09 to 111255.8 tonnes in 2016–17. Similarly, the export of desiccated coconut increased from 2173.29 tonnes to 14563.26 tonnes. In 2009, the Government of India designated the Coconut Development Board (CDB) as the Export Promotion Council (EPC) for coconut and coconut products except coir and coir products. The action helped the Board to pay more attention to the export promotion activities, and as a result, the export of coconut products has been registering significant growth since 2009–10.
Period I- 1980–81 to 1993–94 , Period II- 1994–95 to 2007-08, Period III- 2008–09 to 2016–17 and Overall Period -1980-81 to 2016–17.
The instability indices are used by policymakers to formulate appropriate export promotion and investment policies. A high instability index value discourages investment in the production and the export of the commodity. The estimated instability indices in the export of different coconut products are reported in
The low instability of coconut export observed in Period III was mainly due to the effort made by the Coconut Development Board. The interventions of CDB as Export Promotion Council (EPC) had contributed to the high stability of coconut export during the Period III which is very well reflected in the attractive export growth rate during the regime and thereafter (
Revealed Symmetric Comparative Advantage (RSCA) measures the comparative advantage or disadvantage of a country with respect to another country or group of countries for a specific commodity. The value of RSCA ranges from -1 to +1. A positive RSCA value indicates the comparative advantage the country holds in the export of the particular commodity.
A substantial improvement in the RSCA value of coconut products, especially coconut (fresh and dried) and copra could be observed during the Period III. A progressive improvement in the value of RSCA was observed in coconut, which increased from 0.68 in 2008 to 0.88 in 2016. In copra, a large increase in the export was recorded during the 200708 period, and thereby RSCA improved remarkably from 0.44 in 2007 to 0.89 in 2008. The RSCA value more or less remained stable during the subsequent years. But in 2015, RSCA value sharply declined to 0.05 due to the scanty export of copra from India due to the cheaper availability of copra from our competitors. Later in 2016, India could regain its substantial share in copra export and is reflected in the RSCA value (0.75).
The period wise analysis of the comparative advantage of India on the traditional coconut products expressed in terms of RSCA indicated that India possessed comparative advantage for coconut (fresh and dried) and copra alone. The RSCA value of desiccated coconut, coconut oil, and the coconut oil cake was found to be negative throughout the period which depicted that India does not possess any comparative advantage over the other competing countries in the export of these items, given the present level of value addition and processing facilities in the country.
As an outcome of liberalization, India extended trade ties with other countries and significant improvements in the coconut export was observed during the post-liberalisation regimes,
In view of the above findings, the following implications have been drawn from the study:
Even though India's share in world coconut export was very less, the high growth rates of coconut products experienced during Period II and Period III together with low instability indices in the export revealed the prospects for Indian coconut sector in the global market. So, the finest arrangement should be taken to streamline the production to meet the export requirement also.
The study reveals that coconut oil and desiccated coconut did not possess any comparative advantage in global trade, while coconut (fresh and dried) and copra has comparative advantage. Hence, to enhance the export earnings through the trade, it is imperative to concentrate on the trade of those commodities that have a comparative advantage in export.
I am thankful to Kerala Agricultural University for the technical and financial assistance for pursuing my study and research work and sincerely acknowledge University Grant Commission for providing me the Moulana Azad National Fellowship during the entire course period.