Sri Lanka coconut sector faces combo of low prices, low productivity
Sri Lanka’s coconut industry is reeling from a combination of low prices, low productivity and costly fertiliser making it uneconomic for most growers.
Many are considering whether to sell off their properties as costs override profits on plantations.
Coconut Growers Association President Lionel Fonseka told the Business Times on Tuesday that some coconut estate owners were seriously looking at the possibility of selling off their properties in the wake of the rising costs and low farm gate prices.
Coconut prices that growers obtain are currently in the range of Rs.28-30 but in order to cover costs the estates require at least Rs.35 per nut.
Prices have picked up lately as against earlier this year when nuts were selling at Rs.20 as a result of which it was not financially viable to continue the estates.
However, Mr. Fonseka noted that growers need to look at value addition in order to ensure the sustenance of the industry which would enable a higher price of Rs.35 per nut. But the problem here is that the industrialists find these prices too high to ensure competitiveness in the international market.
Mr. Fonseka asserted that the severe drought prevalent this year had affected the crop as a result of which it is estimated that production next year is likely to come down.
Prices in 2015 were at a comfortable Rs.35 but the rates dropped this year while the drought has ruined pollination, he explained.
Sri Lankans consume an average of 2000 million nuts of which an average of 900 million nuts per year is used for processing by industrialist. But this year the crop is likely to be lower by 200 million than the average yield. This is expected to go down further in 2017, Mr. Fonseka noted.
At present there are about 1400 registered coconut growers in the country with the number expected to increase with a further 45,000 acres of new lands in the North and East set to increase the capacity in the industry.
Yields on the estates have dropped due to the drought as a result of which fertiliser could not be used during this period, Mr. Fonseka said.
Moreover, with the fertiliser subsidy removed since last year as announced in the budget due to lack of funds, the growers, assert that this has become a burden since the costs of organic fertiliser is more expensive and without any support they are facing a crisis.
The ban on the weedicide glyphosate has led to a further increase in costs on the estates due to the use of the costly manual labour to remove weeds on the plantations, it was noted.
The fertiliser subsidy at present is provided to only estates with an extent of up to five acres.
Meanwhile the Government says it believes the industry should be able to perform better inspite of the current concerns in the coconut industry. Blaming the growers for their continuous complaints, Plantations Minister Navin Dissanayake said on Thursday that they would not be able to give a guaranteed price.