Neera: The failed promise and lost potential of Kerala’s health drink

Neera, tapped from coconut trees, was to be the State’s contribution to the all-natural beverage market. But a decade later, the farmer-producers are in debt, even as the government makes a last-ditch effort to revive the product, finds Sam Paul A.

Updated - February 08, 2024 04:00 pm IST

Published - December 28, 2023 07:31 pm IST

A neera outlet at the Vytilla Mobility Hub in Kochi.

A neera outlet at the Vytilla Mobility Hub in Kochi. | Photo Credit: H VIBHU

By the side of the ill-maintained Pandarapadam-Keloth road near Ayyappanchery in Kerala’s coastal Alappuzha district stands a semi-derelict building with its compound overrun with weeds. A Maruti Omni van with flat tyres and a red-lettered sticker on its windscreen that reads “Karappuram Nalikera Ulpadhaka (Coconut Producer) Company Limited” is left to rust on the porch. On the wall next to the front door of the structure is a granite engraved inauguration plaque of the company’s ‘Neera Plant’ dated July 10, 2015. The names of the dignitaries who attended the launch, including that of the chief guest, the then Kerala Home Minister Ramesh Chennithala, written in bold letters, have gathered dust. A musty smell hangs within the building.   

“These spaces were once filled with busy workers and representatives of the company trying to meet production targets,” recalls T.S. Viswan, one of the directors of the Karappuram Coconut Producer Company.

A decade ago, Viswan, who is a retired agricultural officer, two multi-generational farmers, and seven others, who ventured into agriculture post-retirement from their government jobs, joined forces to establish a coconut oil processing plant. However, it never went beyond an idea. The Coconut Development Board (CDB), under the Ministry of Agriculture, presented to them a “great opportunity” to tap the vast potential of Neera, a nutrient-rich sap from the coconut palm’s inflorescence. 

A neera outlet at the Vytilla Mobility Hub in Kochi.

A neera outlet at the Vytilla Mobility Hub in Kochi. | Photo Credit: H VIBHU

The company set up its Neera processing plant using the initial capital of ₹5 lakh raised from within the group, a ₹1.5-crore loan taken from the Kerala Financial Corporation (KFC) at 14.5% interest, and another ₹80 lakh mobilised from coconut farmers as shares. After a positive beginning, the average daily Neera production touched 600 litres within months. The company was selling the non-alcoholic, mineral-rich, and nutritious health drink in polyethylene terephthalate (PET) bottles of different sizes through over two dozen outlets in the region.  

Good days and bad

“It all started after we tasted Neera during a visit to the CDB office. In one word, it was luscious. After attending a few sessions on Neera, we were gripped with entrepreneurial spirit. Officials promised us a loan to establish the processing unit without collateral security. All these led us to jump into the Neera business without a second thought,” remembers Viswan.   

The good days did not last long as unsold bottled Neera began to return to the mother plant.  Neera has a short shelf-life as it is highly susceptible to fermentation, transforming into toddy within an hour of extraction. When processed and bottled by adding preservatives, its shelf-life will be extended by up to a few weeks but at the cost of its original taste and quality. 

“When (production) quantity increased, quality was affected. Our lack of experience in running a business also played a part in the failure,” says Viswan, sitting along with two other directors K. Kailasan and V.C. Panicker.

The defunct neera processing plant of the Karappuram Coconut Producer Company in Alappuzha.

The defunct neera processing plant of the Karappuram Coconut Producer Company in Alappuzha. | Photo Credit: SURESH ALLEPPEY

In 2016, the company had to bury a Neeraconsignment worth ₹70 lakh, which resulted in the contamination of waterbodies nearby. To save the ship, they tried other value-added products from Neera such as honey, jaggery, and chocolate, but failed to make an impact in the market. The plant downed its shutters in 2017 without fully repaying the loan. The farmers did not receive any dividend. Viswan and his friends, between 71 and 85, are visibly worried as the KFC has issued the company a ₹2.35-crore recovery notice.   

Behind the failure    

Neera was introduced in the State in the last decade with much fanfare with the aim of transforming the ailing coconut sector, reeling under a severe price crash. Touting the drink as a game-changer owing to its huge potential to revolutionise the natural health drinks market, the CDB went all out to woo farmers to set up Neera plants.

According to an estimate given in the Indian Coconut Journal published by the CDB in 2015, if 1% of the total coconut trees in Kerala were used for tapping Neera, the State would get around ₹5,400 crore, including ₹2,700 crore for farmers, ₹1,350 crore for technicians, and ₹405 crore to the exchequer in the form of tax.  

However, around a decade after Neera and its value-added products were introduced with many promises to coconut farmers, entrepreneurs, and other professionals — of a steady income, remunerative returns, large-scale employment, and good market opportunities — it failed to live up to expectations. Many coconut producer companies (CPCs) find themselves neck-deep in debt.

The CDB conceived the Neera project as a farmer-producer company with a three-tier structure consisting of a coconut producers’ society, coconut producers’ federation, and coconut producers’ company. While 29 CPCs were formed in Kerala between 2012 and 2016, only a dozen ventured into the Neera business. Between 2014 and 2016, they set up Neera processing plants. However, within a short time, the majority of the Neera-producing CPCs wound up operations, while a few such as Vadakara CPC and Palakkad CPC continue to produce and sell the drink and value-added products, albeit in small amounts.

The downfall of the sector has been attributed to factors such as launching the product without proper market research, technology, standardisation, changes in the corridors of power at the Centre and State, subsequent lack of government support, COVID-19, inexperience of farmer-producer companies in running a business, among others. In the beginning, the CDB fixed the rate of one litre of Neera at ₹150, with a sales margin of ₹15, which, according to the CPCs, was grossly inadequate. They also say that the well-established toddy industry in the State was against Neera, as a better-paying Neera business could have lured coconut growers and labourers to switch from toddy to Neera.

Looking back  

At the Karappuram CPC’s plant, a few dust-covered empty bottles lie abandoned in a room. Their labels read, “Neera god’s own country’s health drink”. The adjacent unlit Neera processing room (power was disconnected due to unpaid bills) has been taken over by spiders and other creepy-crawlies. The blue paint, dulled by age, has started to discolour and is peeling off from the walls. Tanks and machines that once processed Neera have begun to rust. During its peak, the company extracted Neera from the trees of hundreds of coconut farmers paying them ₹30 per litre and employed some 40 technicians (tappers).

V.C. Panicker, K. Kailasan, and T. S. Viswan, all directors of Karappuram Coconut Producer Company, at the defunct neera processing plant in Alappuzha.

V.C. Panicker, K. Kailasan, and T. S. Viswan, all directors of Karappuram Coconut Producer Company, at the defunct neera processing plant in Alappuzha. | Photo Credit: SURESH ALLEPPEY

At its peak, the Vadakara CPC produced 1,500 litres of Neera a day and exported a portion to Singapore, the U.K., and Bahrain. After it failed to capitalise on the initial success, the company stopped exports and scaled down production to one-fifth with a substantial quantity going into the making of honey, vinegar, and jaggery. “When we look back, I feel Neera was introduced by the CDB without proper research or a pilot project. The pandemic drove the final nail into its coffin. All the CPCs collected money from the farmers to buy machinery. These are left to decay. All the while the CDB and the State government are sitting idle,” says Sasindran E., chairperson, Vadakara CPC.   

The Palakkad CPC is now producing 100 litres of Neera daily as against 1,000 litres a decade ago. Their Neera outlets have come down to four from 40, says Mohammed T.K., chairperson, Palakkad CPC.

To maintain quality and taste they are selling unprocessed, refrigerated Neera through dispensers, which according to him is “highly energy intensive and unsustainable”. Both the CPCs produce other products such as coconut oil and coir, which help them stay afloat.

According to Kerala Consortium of Coconut Producer Companies Ltd, the CPCs made a capital investment of around ₹27 crore, including bank credits and funds raised from farmers, in the Neera business alone and their total loss from Neera operations touched ₹40 crore by 2017.

The consortium criticised the CDB for “abandoning” the sector, while also blaming the State government for not doing enough to help the CPCs. The government earlier announced a subsidy of ₹50 lakh for the CPCs, but at least two Neera-producing companies have yet to receive the benefit.

Reviving the project  

The CDB, which is in the eye of the storm, refuses to take the entire blame for the failure of a project conceived by it. “We came up with the project to help coconut farmers, but Neera as a beverage lost its way in the State. When we look at other failed initiatives in Kerala, the same reasons, such as high labour cost, lack of commitment and decision-making, and shortage of workforce among other things, can be found in the downfall of Neera as well. We provided training, technology, and support for establishing infrastructure. We cannot give them working capital. We still believe Neera has high potential,” says a senior CDB official, who has been associated with the project for the past several years, while adding that Tamil Nadu and Karnataka have established a small but successful Neera beverage industry “after learning from our [Kerala’s] mistakes”.   

Vinod Kumar P., chairperson, Kerala Consortium of Coconut Producer Companies Ltd, says marketing Neera in aseptic packs (a type of thick card and plastic container)  will increase its shelf life by up to nine months without affecting its quality and help turn around the fortunes of the ailing sector. “Neera production in Kerala takes place mostly during the monsoon season. However, the demand for the drink usually goes up from November, before hitting the peak in the summer months. We should be able to pack and preserve  Neera, tapped during the rainy season, at room temperature for selling in summer,” he says.

Setting up a common aseptic packaging unit will cost ₹25 crore. “Though the government announced that such a plant will be funded under the Kerala Infrastructure Investment Fund Board, the project is yet to gain momentum. In the meantime, discussions are on to set up the plant under the World Bank-aided Kerala Climate Resilient Agri Value Chain Modernisation (KERA) project. We don’t know when it will be established,” adds Vinod Kumar.   

The Kerala government has extended some funds to revive the industry. B. Ashok, Agricultural Production Commissioner and Principal Secretary, says the 2023-24 State Budget earmarked ₹1 crore towards reviving the Neera project. The amount, which is yet to be released, will be used to wipe off a part of the interest burden of CPCs and bring viable companies on their feet. The CDB also believes that the Neera business could be revived if proper marketing strategies are implemented.

“The farmer-producer companies should join hands and come up with a single brand to ensure quality. The CDB is in the process of fine-tuning the Neera processing technology,” says a CDB official.   

Despite such suggestions, people who ventured into Neera initially are losing hope. At Kanjikuzhy in Alappuzha, C.B. Anu, 60, who had won an award from the government for his Neera tapping skills, is occupied with tending cattle and growing vegetables to make a living. A toddy tapper, he became a Neera technician with the promise of a higher pay. “In the initial months, I used to extract between 40 and 45 litres of Neera daily and received ₹30 a litre. Things went well for a year until mid-2016 before demand for the drink dwindled. The company first reduced our fees and a few months later we were laid off,” says Anu. 

Sitting with other directors at Karappuram CPC’s defunct Neera plant, 85-year-old Panicker pulls a wry face when asked how the group is planning to settle the KFC loan. “No one should go through an ordeal of this kind in the twilight years of life,” he says crestfallen.

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