“Oil Palm cultivation will be banned in Sri Lanka”. This statement made during the throne speech of the President of Sri Lanka who is strongly advocating implementation of national development programmes targeting increasing national production with the objective of achieving a healthy trade balance shocked all the stakeholders of the industry. Obviously, the stakeholders of [...]

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Oil palm ignored as a partner for economic development


File picture of an oil palm nursery.

“Oil Palm cultivation will be banned in Sri Lanka”. This statement made during the throne speech of the President of Sri Lanka who is strongly advocating implementation of national development programmes targeting increasing national production with the objective of achieving a healthy trade balance shocked all the stakeholders of the industry. Obviously, the stakeholders of the industry view this as a complete U-turn of the President’s thinking to control loss of foreign exchange through import substitution. What would have been the negatives the President would have foreseen to arrive at this drastic decision is a question the stakeholders of the industry have. In this background it is timely and appropriate to review the major concerns and negative implications that were made public by those not in favour of having this industry in the country.

Negatives seen in oil palm industry -Environmental

The loss of natural forest cover due to oil palm cultivation has been a major concern globally. But it should not be a concern at all in Sri Lanka as growers cultivate oil palm in land already cultivated through a crop diversification programme. Crops replaced are mainly rubber and tea and the same ecosystem services are possible through oil palm cultivations as well.

In Galle district where annual rainfall is around 3,500 mm per annum the oil palm cultivations are in existence for more than 50 years. In Malaysia with a much lesser rainfall, i.e. around 2,500 mm per annum it is in existence for more than 100 years in very large extents. None of these areas has reported a shortage of water that could be attributed to the crop. In fact, Malaysia is exporting water to Singapore! With climate change shortage of water is evident in different parts of the country even after short drought spells whether or not the oil palm crop is present.

“Cultivation of oil palm compacts the soil. As a result, rainwater does not penetrate into the soil and also leads to flooding and soil erosion. This situation is aggravated as not even weeds will grow under the oil palm crop”. Though it is the perception of some regarding the oil palm crop a visit to oil palm plantations will show them that they are just myths. When natural forests were converted to oil palm cultivations elsewhere in the globe such changes had been reported but again, they are not at all relevant to Sri Lanka for obvious reasons.


“Palm oil is bad for health” is another concern. Both the types and amount of fatty acids in our diets are known to influence heart disease. The present global advice is to increase the consumption of unsaturated fats (mixed fatty acid profile) at the expense of saturated oils and fats. For optimal health we require a mixture of fatty acids to be present in our diet. In this context, palm oil having 50 per cent saturated and 50 per cent unsaturated fatty acids could be viewed as the better option for its ‘mixed’ fatty acid profile as compared to coconut oil which has over 90 per cent of saturated fatty acids.

Palm oil with its 1:1 balance of saturated and unsaturated fatty acids is the preferred choice for many applications in the food industry. This is because highly unsaturated oils which stay liquid over a broad temperature range, are not suitable for many commercial uses such as in the baking industry, manufacturing of margarines, confectionary products etc where ‘harder fats’ with higher melting point are essential to provide optimal taste, sensory and visual attributes and also to avoid softening and improve stability in warmer ambient temperatures.

Until 10-15 years ago it was common practice to use chemically modified unsaturated oils for commercial food uses. This chemical process called hydrogenation transforms the highly unsaturated vegetable oils into more saturated forms (semi solid to solid fats) thereby achieving the desired range of melting points for commercial applications. However, from a health and nutrition viewpoint there have been major concerns since the hydrogenation process not only increases the melting point to the desired range, but also leads to the formation of trans fatty acids due to changes in the unsaturated double bonds. Trans fatty acids have been found to adversely impact human health and now has been banned or severely restricted from incorporation in food sources in many countries. In fact, recently the WHO has called on all governments to ban trans fatty acids from food sources by the year 2023. Palm oil on the other hand is trans-fatty acid free and is the product favoured by the food industry.

Impact on other plantation crops

Some argue that we should expand coconut cultivations to meet our vegetable oil and fat requirement. Oil palm industry being a threat to our traditional coconut industry is another thought. To bridge the current national deficit of about 200,000 mt of oil and fat, the country will need an additional 200,000 ha of coconut land. If oil palm is used for the purpose the land extent needed will be only 50,000 ha since it’s a more efficient crop than coconut in the production of vegetable oil. A unit area of oil palm land produces four times more oil than coconut. Further, the chemistry of the coconut oil is such that it cannot be used to manufacture most of the products made using palm oil. In the light of this scenario, the palm oil industry could be supportive rather than negatively impacting the coconut industry in the country as there will be more nuts available for the coconut-based industries which will facilitate to earn relatively more foreign exchange to the country and also income to all the stakeholders in the coconut industry.

The rubber industry is concerned that given the option to the growers, they would opt to cultivate oil palm instead of rubber and hence it would lead to a significant drop in rubber extent and production in the country. As a consequence, there could be a short supply of the raw material for rubber-based industries in the country. However, it should be emphasised that this is the case even at present and the country is importing approximately a similar quantity as what it produces each year to cater to the needs of the rubber product manufacturers.

Policy makers responsible for  the rubber industry and the growers involved have many options to increase the national rubber production. The land productivity in Sri Lanka is at a very low level when compared to other rubber growing countries in the world. Further, research and development work undertaken by the Rubber Research Institute of Sri Lanka with alternate areas to cultivate rubber have been identified. Therefore, the natural rubber production in the country could be increased by adopting strategies for both productivity improvements and increasing the total land area. Moreover, the option of what crop to grow should be left to the grower as long as it is sustainable and environmentally friendly.

Hence it is clear that issues faced by coconut and rubber industries could be solved through productivity improvements, expansion of cultivated area and focusing on value addition rather than interfering with another industry that has enormous economic potential.

Government policy that prevailed

The government took a policy decision to expand oil palm cultivation in Sri Lanka up to 20,000ha in 2009 and then also in 2014. This decision can be considered significant to the economy of the country since it is an import substitution strategy for Rs. 30 billion worth of foreign exchange lost annually. Strengthening the plantation economy and improving the livelihood of all stakeholders including plantation workers are added benefits of this government policy decision. In this regard it should be mentioned that the return on investment is far higher for oil palm compared to other crops as also earnings of workers engaged in the industry. The government also put in place the necessary institutional structure to drive this policy decision by mandating the Coconut Research Institute to undertake necessary research and development for the crop. Despite this framework in place for the sustainable development of the oil palm industry in the country, governments’ succumbed to the pressure of environmentalists, religious leaders, politicians suspending of cultivation of oil palm without an in-depth analysis of the issues at stake. However, putting government policy into action and using institutions put in place to drive government policy the private sector of the country, which is considered as the engine of growth had invested very heavily on this development project. Investors are now at the risk of losing their investments leading to financial instability.

Industry expectations

Stakeholders of the oil palm industry believed that the new government would end the uncertainty that prevailed regarding the future of the oil palm industry after an in-depth analysis of the issues. It is highly justifiable and critically important to have a dialogue with relevant parties in the background of huge investments already made by the industrialists with government approvals in the light of highly debatable environmental and health issues attributed to the industry. If this is not tenable, the government is urged to appoint an independent team of experts to appraise and report on the matter.


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