By Emeritus Prof. Asoka Nugawela

Palm oil is a versatile commodity. It is used in numerous products world over. The global usage in 2022/23 is estimated as 76 million metric tons. Accordingly, the average global per capita usage is in the range of 10 kg per annum. Sri Lanka too recorded similar usage during 2018/2019 period, prior to economic downturn in the country. Palm oil usage is very much higher than the usage of other vegetable oils such as coconut, soya, canola, sunflower, rape seed and olive. One major reason for the relatively high per capita usage of palm oil is the affordability to purchase and its availability. Per unit land area, the oil production is four times greater in oil palm when compared with coconut. When comparing with other crops grown for vegetable oil production it is about tenfold higher. Further, oil palm, coconut and olive are perennial crops whereas soya, sunflower, canola and rape seed are short term crops. With short term crops the capital cost component is relatively high with yearly land clearing, land preparation and planting activities to be undertaken. Oil palm with a high oil yield and having a 30-year economic life cycle has the ability to provide a relatively cheaper vegetable oil than from other crops. With perennial crops the disturbance to the soil properties and biodiversity is less than in annuals and is a positive attribute as far as sustainability is concerned.

One other reason for palm oil to be the preferred vegetable oil is because it contains both saturated and unsaturated fatty acids in almost equal proportions. Thus, it is different from coconut and other vegetable oils which contain a relatively high percentage of unsaturated fatty acids, around 90%. Palm oil with its 1:1 balance of saturated and unsaturated fatty acids is the preferred choice for many applications in the food industry.

Both the type and the number of fatty acids of fat in our diets are known to influence health and wellbeing. The present global advice is to increase the consumption of unsaturated fatty acids 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 among the sources of dietary oils and fats palm oil could be viewed as a relatively better option for its ‘mixed’ fatty acid profile (saturated, mono and polyunsaturated fatty acids).

The relative advantage in the return on investment the oil palm crop is having over other plantations crops also drives the investments towards this crop. This is true for both plantation and smallholder sectors in major palm oil producing countries in the world. The profitability from different plantation crops grown in Sri Lanka under average management conditions and current agrochemical/material costs & trading conditions are summarised in Table 1. Accordingly, oil palm is by far the most profitable plantation crop in the country. (See table)

The country has a demand for palm oil as a cooking oil and also as a raw material for many other industries. The products made in these industries are essential and widely used. For vigorous growth and high yields oil palm crop should ideally be grown under tropical climatic conditions with more than 2,500 mm of rainfall per annum. The low country wet zone of the country is blessed with such climatic conditions. The return on investment is high with this crop. However, even under such a favorable business environment for this industry, the government of Sri Lanka has taken a decision to ban cultivating this crop in the country. All other palm oil producing countries in the world, i.e., more than 20, are surprised and view this as a wrong decision.

Some repercussions of this decision to ban oil palm cultivation in Sri Lanka are a). dependency on other countries to fulfill our vegetable oil need, b). loss of foreign exchange to the country by importing palm oil, c). loss of income to the potential investors, d). loss of employment opportunities and e). depriving potential smallholders, the opportunity to enhance their livelihood. Prior to the economic crisis in this country, around 200,000 MT of crude palm oil (CPO) had been imported annually. The current global market price of a metric ton of crude palm oil is around 900 US$. Thus, the foreign exchange requirement to import national crude palm oil requirement will be more than 180 million US$ per annum without freight and insurance costs.

In the past, forests have been felled to cultivate oil palm in some major palm oil producing countries. The same approach was adopted for planting other plantation crops as well in the past. Deforestation will invariably lead to further shrinking of already depleted forest cover and loss of environmental services we accrue from natural forests. Natural forests significantly contribute to depleting of greenhouses gases, to the natural water cycle and protects biodiversity, soil, catchment areas, rivers and water bodies. Due to serious negative impacts of deforestation on the environment, a worldwide lobby demanding countries to grow oil palm in a more sustainable manner was initiated. With this lobby changes are now taking place in the manner in which land is selected to grow oil palm. For most crops including oil palm, systems to certify sustainable plantation management have evolved and such certification has become a requirement for marketing of produce from plantations. Basically, issues related to cultivating oil palm had been identified, awareness created amongst parties concerned and interventions for rectification have been put in place. In Sri Lanka however, to start with there was no issue of deforestation associated with oil palm cultivation. The land for cultivating oil palm in Sri Lanka was obtained through crop diversification, a scientifically accepted approach. Even then cultivating of oil palm in Sri Lanka was suddenly banned by the government incurring the investors a loss of more than Rs. 500 million on nursery plants alone. The global lobby was against felling forests to plant oil palm. The reasons for the anti-oil palm lobby in Sri Lanka according to some environmentalists, scientists and politicians are negative impacts to the environment, loss of biodiversity, depleting soil water and threat to the existence of other plantation crops. There is no scientific basis for such allegations. But those who lobby against planting oil palm do not want to understand the difference between ecological impacts when planting oil palm subsequent to felling natural forest cover and as a crop diversification program. Various attempts made had been futile and as the Sinhala saying goes it’s like trying to wake up a person who pretends to be sleeping.

The necessity for a country to produce its own needs is more than evident now with the economic crisis the country is facing currently. With a huge disparity in outflow and inflow of foreign exchange to the country the need to produce our own requirements are very much obvious. As explained earlier in this article Sri Lanka has a conducive business environment for a successful palm oil industry. What is lacking to drive the industry forward in the country is the political will. Politicians may be fearing that a decision to lift the ban on oil palm cultivation will not be a popular decision affecting their vote base. Countries economy is currently shrinking leading significant losses in employment, falling income levels, increased inequality and government borrowings. To recover from such an economic crisis the country should not ignore viable industries that could enhance national production. A reversal to the decision to ban oil palm cultivation will lead to producing national requirement preventing the outflow of millions of dollars each year. Revenue moving out will circulate among all stakeholders of the industry helping to enhance their livelihood and strengthening the economy of the country.