Financial Times

Coconut growers worried about growing palm oil imports

By Quintus Perera

Sri Lanka’s coconut industry is once again raising concerns with the government over the haphazard import of palm oil which they say will seriously impact the development and survival of this sector.
But this time too, they see their attempts failing – like what has happened in the past – although representations were made to President Mahinda Rajapakse before the budget.

Parakrama Jayatilleke, President, Coconut Growers Association of Sri Lanka (CGASL) told The Sunday Times FT that until the government intervenes in an appropriate and concrete manner conducive to the coconut industry in Sri Lanka, this crisis will go on. He said that they have made representation to several ministers, including the Minister of Plantation Industry, D. M. Jayaratne, but “there is nothing concrete on the horizon.” He said earlier the tax imposed on the import of palm oil was 28 % and it was subsequently dropped to 5 %; then again it was increased to 15 %. World market prices of palm oil have now dropped by half to $500 from US$1,000, adding more problems to the local trade.

Adding to this adverse effect, Mr Jayatilleke says that palm oil importers are ‘making hay when the sun shines’ by stocking up four months’ requirements of the product. He says adulteration of cheap palm oil with coconut oil is also happening resulting in nut prices hitting rock bottom.

Mr Jayatilleke lamented that selling prices are now falling below the cost of production causing a major crisis. The adulteration of food products is an offense but he says the government is doing nothing to nab the offenders. Mr Jayatilleke suggests two solutions to tackle this problem -- import all palm oil in packed and properly labeled form and in the same manner, all local coconut oil marketed to consumers to be issued in packed and properly labeled form. As another step, coconut growers are suggesting that palm oil imports should be banned for three months as there are enough stocks for four months.

The CSASL has also made the following suggestions to the government – that the Ministry of Plantation should trigger a pricing policy linked with the tariff adjustment of palm oil acceptable to coconut growers; prevent exploitation of tariff adjustments by palm oil importers by regulating the quantities that can be imported; have an inventory of all palm oil storage facilities in the country and to monitor and regulate quantities held in stock; the Cess fund collected for the development of the coconut industry must be equitably distributed with active participation of coconut growers in the allocation process; institute measures which will reduce the high margins retained by middlemen on retail sales in times of scarcity; directly channel nut production from state-owned estates to the city centre in time of scarcity and immediately formulate government policy to cover the future of the coconut industry and make this policy known to growers.

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