Part I | How Neera turned bitter for coconut farmers in Kerala

Neera is a coconut produce that easily ferments to become toddy. If packed in Tetra Pak after adding preservatives, this sweet organic drink would remain edible for up to three years. The selling of such a product made sound business sense and it was with much fanfare the Kerala goverment promoted Neera as a nutritious natural beverage. But the efforts to provide an income supplement to coconut farmers lost vigour after the initial euphoria generated by its organised production and marketing.

As per the Coconut Development Board's project the estimated cost to produce 10,000 litres of Neera per day was Rs 3.48 crore. This was to be met through a loan of Rs 2.78 crore, and Rs 50 lakh subsidy of the state government. The subsidy was initially released on the same day that the bottling plant was inaugurated. This is no longer the case.

But what went wrong? When the Chairman of the Coconut Development Board who had worked tirelessly to implement the project got transferred, his successors didn't give due attention and the fledgling industry suffered.

The entrepreneurs, who had invested in the project based on the several promises that were made, were left in the lurch. The agricultural department too, that had showed enthusiasm in the beginning, slowly distanced itself from the project.

The Neera project in Kerala was conceived as a farmer-producer company. Though the agricultural department makes bold claims of starting farmer producer company for every other agricultural produce, unfortunately little attention is paid to the nascent Neera sector.

Coconut farmers had contributed Rs 53 crore as capital investment. They eventually paid a price for venturing into the project without assessing the likely odds that might crop up when a new product is bottled and sold.

What all went against the nascent industry

Limited quantities of Neera was sold in bottles and through kiosks at the Secretariat and crowded places in cities. Up to 40,000 litres of Neera was produced daily in the early days of the industry, but the production output often varied. But the extraction of Neera became nearly impossible during the summer and the scarcity of tappers too also had a bearing on the production. Crucially, the marketing of Neera as a popular beverage too lagged behind.

Experts at the Coconut Board now concede that the technology adopted for producing Neera was also not right. Instead of the authentic Neera, what was packed and sold in the state was mostly mild toddy!

There were other critical issues that put paid to the hopes of making the Neera extraction and sales a sunrise industry. The farmer companies that came to be established did not have adequate working capital. Wages could not be paid to the Neera tappers.

Moreover, there were little returns from selling the drink through kiosks. The Neera producer got only Rs 10 if one pack was sold at Rs 20 at the shops as another Rs 10 went as commission. But in reality the producer stood to gain little if the production and transportation costs too are counted.

Though the producer companies formed a consortium and tried to resolve the issues, these attempts did not succeed due to the lack of interest from the Coconut Board and government departments.

Desperate measures

A few alternatives to cut losses and increase value were also looked into by the producers. Some attempts were made to manufacture sugar from Neera as the option of producing wine or other related products was ruled out without the official permission.

But sugar production was not financially viable. Seven litres of Neera is needed to manufacture 1 kg of sugar. If the cost of 1 litre of Neera is estimated at Rs 150, the sugar produced would cost over Rs 1,000 per kg and at such insane costs it cannot be sold.

Finally, attempts were made to implement a revival package for the Neera industry. However, the package amounted to nothing more than a concession on interest and a moratorium on the loan advanced by the Kerala Finance Corporation.

The early promises for the farmers and Neera producers sounded sweet. It was bandied about that the daily production of Neera would be 20,000 litres and 200ml would be sold for Rs 20 through kiosks. If 1 lakh bottles were to be sold in a day, the entrepreneurs would get Rs 20 lakh daily. However, at the end of the day, the coconut farmers, lured into investing their hard-earned money by these empty promises, today find themselves in dire straits. 

Neera producers need to emulate the successful Milma model | Part 3