From kitchen essential to premium commodity: The coconut oil story

Coconut oil prices across Asia have surged to record highs has now become a luxury for many households in India. Prices have shot up nearly three times in just two years, both in India and abroad. The main reasons are falling production, unpredictable weather, old plantations, and the growing popularity of coconut water.

The impact is being felt in households, FMCG boardrooms, and even international trade corridors. This article explores the reasons behind the spike, the countries most affected, and what it means for the future of this once-humble commodity.

Coconut oil, long cherished as a kitchen staple and cultural essential across Asia, is undergoing a dramatic transformation. What was once an affordable product used daily in Indian households, beauty routines, and wellness practices has now slipped into the category of luxury. Prices have soared to unprecedented levels—nearly tripling in just two years—creating ripples that extend from family kitchens to FMCG boardrooms and global trade corridors.

Behind this surge lie a mix of long-standing structural weaknesses in coconut farming, intensifying climate shocks, and shifting consumer preferences. The result is a market caught between stagnant supply and unrelenting demand, leaving millions to grapple with the rising costs of a product that was once considered indispensable.

Coconut oil prices reach record highs

Coconut oil prices, which started rising in late 2024, went up further as bad weather, long heat waves, and pest attacks disrupted supplies in key producing countries. As a result, consumers in India have seen prices nearly triple in less than two years, touching a record ₹423,000 (US$ 4,840) per metric ton, while global prices climbed to an all-time high of US$ 2,990 per ton. This stagnation is due to aging plantations, lack of replanting, and limited improvements in seed varieties. With coconut trees taking years to mature, output has failed to keep pace with consumption.

Climate change has further squeezed supply—El Niño-related droughts, erratic rainfall, and storms have cut yields in key producing regions, from the Philippines to India. Because coconuts have a long growth cycle, the effects of these disruptions appear with a lag, keeping supply chronically tight.

The International Coconut Community (ICC) projects that strong demand coupled with constrained production will keep global coconut oil prices in the range of US$ 2,500 – US$ 2,700 per ton in the second half of 2025, significantly higher than the 2023 average of US$ 1,000 per ton. Although seasonal output in Southeast Asia may ease record highs, industry experts note that prices are unlikely to fall below US$ 2,000 per ton in the near term.

On the demand side, coconut oil continues to enjoy strong consumer loyalty. In Asian kitchens, it’s valued for flavor and health associations; in cosmetics and skincare, it’s an irreplaceable ingredient; and in wellness markets, it’s a staple of the “natural products” movement.

Farmers are also diverting coconuts to meet booming demand for coconut water, reducing the share available for oil. Together, these forces keep demand robust even as prices climb, pushing global benchmarks close to $3,000 per tonne in 2025 compared to around $1,000 just two years earlier.

Trade policies, market barriers and India’s acute crisis

Policy decisions have amplified the squeeze. Indonesia and the Philippines—major exporters—have restricted coconut oil shipments to protect domestic markets. India, while a large grower itself, continues to impose import duties above 100%, limiting its ability to make up for shortfalls through imports. As a result, the domestic market faces both supply shortages and inflated prices, deepening the crisis for consumers.

India offers a vivid snapshot of the broader Asian story. In Andhra Pradesh, erratic rains and pest infestations have slashed yields by 30–40%, pushing coconut oil prices up by 100–200%. In Kerala, shortages have sparked hoarding and illicit trade, creating what some describe as a “coconut oil mafia.” Nationally, leading FMCG brands like Marico and Dabur have raised coconut oil prices by nearly 40% over the past year to cope with rising raw material and production costs. For households, this means a kitchen staple now feels like a luxury purchase.

Conclusion: Rising costs beyond the farm

Even beyond raw coconut supply, costs of production and distribution are climbing. Rising fuel, fertilizer, labor, and packaging expenses have inflated input costs. Weak logistics and infrastructure in Southeast Asia have led to delays, creating bottlenecks that push consumer prices even higher. This cascading effect ensures that coconut oil inflation is not just about crops, but about every link in the supply chain.

The sharp rise in coconut oil prices across Asia reflects deeper structural challenges rather than a short-term fluctuation. Years of underinvestment in plantations, combined with climate volatility, rising consumer demand, and restrictive trade measures, have created a sustained supply–demand imbalance. Unless the industry accelerates replanting, adopts climate-resilient practices, and pushes for more flexible trade policies, coconut oil is likely to remain at elevated price levels. For FMCG companies, cosmetics brands, and food processors, this shift means reworking sourcing strategies, managing higher input costs, and preparing for a long-term reality where a once-basic commodity has become a premium-priced resource.

Coconut oil’s price surge it signals long-term structural stress in the industry. For businesses, this means higher costs, the need for diversified sourcing, and investment in sustainable production, while consumers must adapt to coconut oil shifting from a staple to a premium product.

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FAQs

1. Why are coconut oil prices soaring in India and Asia?
Coconut oil costs have nearly tripled in the last two years, driven by shrinking supply due to aging plantations, climate shocks like El Niño, pest outbreaks, and strong demand for coconut water and wellness products.

2. How high have coconut oil prices gone, and what’s the market outlook?
Prices in India reached up to ₹423,000 per metric ton (~US$ 4,840), while global rates hit a record US$ 2,990/ton. The International Coconut Community forecasts sustained prices of US$ 2,500–2,700/ton for the rest of 2025, with a floor above US$ 2,000/ton in the near term.

3. What’s causing the supply crunch in coconut oil-producing countries?
Countries like Indonesia and the Philippines face volatile weather, underinvestment in replanting, and export restrictions. These factors, combined with export curbs and growing demand in markets like China, are tightening global supply.

4. How are these price hikes impacting consumers and FMCG companies in India?
With costs rising sharply, brands like Marico and Dabur have raised retail coconut oil prices by around 40%. Families are feeling the strain as a once-basic staple becomes expensive—even sparking hoarding and illicit activity in some regions.

5. What are the long-term solutions to stabilize coconut oil prices?
Industry experts recommend replanting aging groves, adopting climate-resilient farming, diversifying raw material sourcing, improving supply chains, and updating trade policies to allow flexible imports and ease export bottleneck