Financial Times

C'nut industry wants subsidies for irrigation, replanting, protection against imported oils

A coconut industry task force under the 'Regaining Sri Lanka' programme has recommended subsidies for drip irrigation and replanting, a sliding scale of duty for imported edible oils and tax exemption for value added product developers.
The coconut task force, representing all players in the coconut industry, appointed to examine ways of expanding cultivation and improving product development has also suggested a campaign to popularise domestic consumption and reduce domestic waste.

Its report suggested a drip irrigation subsidy in recommended areas to protect against the effects of drought which has tended to reduce the crop from time to time causing difficulties for related industries.

Efforts should be made to replace annually 4000 hectares to arrest the fall in nut production owing to senility of the current coconut tree stock.

The task force said the industry should aim to achieve optimum coconut production to maintain equilibrium in the raw material availability for fresh coconut consumption, domestic and export-based industries.

The industry should achieve and maintain production at three billion nuts per year by 2005, reach the four-billion nuts per year mark by 2010 by maintaining an annual growth rate of 20 percent and sustain at this level beyond that year.

The industry should also aim to improve productivity from the current level of 2,500 nuts/ac/annum to 4,000 by 2010.

The task force suggested a replanting subsidy to promote replacement of senile coconut trees with high yielding varieties with appropriate upkeep through extension.

Efforts should be made to minimize waste in domestic use of fresh coconuts and promote use of processed kernel products in household cooking. This could help save 600 million nuts for the industry annually.

It also suggested creating awareness on the health benefits of coconut oil and regaining the popularity of white coconut oil as a premier cooking oil and promoting the use of coconut oil in cooking.

A sliding scale of duty for imported edible oil based on the minimum farm gate price of eight rupees a nut as determine by Coconut Development Authority should be introduced.

This was to protect the local oil milling industry as well as growers.

Local oil millers and growers have opposed plans to set up an Indian processing complex in Koggala using imported raw materials.

They fear leaks into the local market could run local oil milling industry which is already struggling against cheap imported edible oils whose production is often subsidized by foreign governments.

The task force also recommended exemption of VAT and other local taxes for coconut milk, cream, paste and powder.

In an overview of the industry, it said that among the plantation crops in Sri Lanka, coconut is one of the most economically important tree crops due to it is versatility of uses.

Coconut is a major component in the Sri Lankan daily diet, providing 20 percent of the caloric intake of the population.

The total area under coconut is about 440,000 hectares and is only second to rice. Coconut is predominantly a smallholder crop with 75 percent of the area consisting units less than eight hectares. About 700,000 are smallholdings covering an area of 309,900 ha.

During the last decade, annual coconut production fluctuated within 2300 - 3080 million nuts.

The production increase experienced in the past seven years was possibly due to the improved varieties introduced since 1960 onwards, marginally improved input use and technology adoption, in addition to the well distributed rainfall experienced in some years.

Sri Lanka has maintained its position as a main producer of coconut-based products such as Desiccated Coconut, Copra, Shell and Activated Carbon, Coir and Coir based value added products.

In 2002 the total contribution from the exports of kernel based products was Rs 3,957 million and from non-kernel products Rs 4,052 million.

Coconut contributed about two percent to the Gross Domestic Product.

According to the recent coconut statistics, domestic household demand remains within an average of 1700 - 1800 million nuts.

When the coconut production decreased below 2500 nuts, it badly constrained the supply of nuts for the processing industries.

"To maintain coconut as a viable industry, it is important to ensure stable production which meets average national household demand of 1,800 million nuts and another 1,200 million or more for various coconut based industries," the task force said.

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