News
Slump in imports trigger surge in coconut oil prices
By Suresh Perera
With the drastic drop in imports, coconut oil prices in the market have surged to a new high as local production is grossly insufficient to meet the annual consumption of around 200,000 metric tons, industry officials said.
In 2020, local coconut oil production was a negligible 20,000MT, which translated into a yawning gap that had to be bridged by importing 180,000MT, they said.
“This has been the position over the past few years as dominant imports dwarfed local supplies”, they pointed out.
The ban on the import of palm oil has also compounded the issue as customers will now have to depend wholly on coconut oil resulting in inevitable pressure on the demand curve, they pointed out.
Prices have soared with a 750ml bottle of coconut oil fetching Rs. 550-600 in the local market, they said, while predicting the upward trend to continue due to short supply.
The local production of coconut oil fell by the wayside as high prices of nuts was a challenge to compete with imports, says M. L. D. Niroshana, Director-General of the Coconut Development Authority.
On an average price of Rs. 85 each, it requires nine to ten nuts to extract a litre of coconut oil, and they need to sell a 750ml bottle for around Rs. 500 to make a small profit. However, this was not feasible when imports were available at a more competitive price, he noted.
Earlier, a 750ml bottle of coconut oil was selling at anything between Rs. 320-380. With the slump in imports following the aflatoxins controversy, prices have zoomed as supply can no longer meet the demand, market sources said.
Consignments of palm oil imported before the ban was announced are still available in the marketplace, but after existing stocks are lapped up, there will be more pressure exerted on the demand for coconut oil that’s bound to see prices going through the roof, they warned.
“Market forces are at play because there existed a big gap between imports and local production of coconut oil. With many importers now reluctant to order fresh stocks due to uncertainty over contamination fears, and coupled with the ban on palm oil, the market is grappling with the demand for this essential consumer commodity”, Niroshana outlined.
Sri Lanka’s production in 2020 was 2,760 million nuts, which fell short of the 3,000 million target. The figure was envisaged to reach 3,600 million at peak. During October, November, December and January, there’s a shortage of nuts, but production picks up with an increase in yield during May-August.
“There is neither a short-term solution nor a question of expediting the production process as it takes 10 years for coconut trees to yield. The government grants a subsidy for fertilizer and water to growers in a bid to push up production”, Niroshana elaborated.
As in any business, private millers are also driven by profits. In the short-term, the price of nuts cannot be expected to dip to Rs. 35-45 each for millers to make a margin by selling coconut oil, the Director-General said.
As long as nut prices remain high, local coconut oil will also be costly as they go hand in hand, he pointed out. “More millers will be encouraged to take to extracting coconut oil if imports are limited and market conditions and prices are good”.
On the other hand, the export of copra is more lucrative as prices are attractive in foreign markets. This segment earned an export income of US$ 661 million in 2020, Niroshana further said.
In a bid to mitigate the ballooning prices in the market, the government has permitted only the state-owned BCC Lanka to import desiccated coconut up to a maximum of 13,000MT per month under a Special Commodity Levy (SCL) of one rupee per kilo, industry officials said.
On the recommendation of the Industries Ministry, the consignments will be allowed for a period of three months with effect from April 28, 2021, they said.
The stocks are likely to be imported from Indonesia instead of India because of the raging coronavirus pandemic there, they noted.
According to a Finance Ministry directive, a SCL of Rs. 300 per kilo will be imposed on importers of desiccated coconut.
Retail coconut prices still remain relatively high with each fetching anything between Rs. 85-100 depending on the size, market sources said.
A coconut grower in Nattandiya said the average farmgate price for nuts has now dropped to Rs. 50-55 each. In the case of small nuts, two are sold for the price of an average nut.
He said the average farmgate price was Rs. 75 each about one and a half months ago when retail market prices shot up to Rs. 100-125 per nut.
Latest News
The sun will be directly overhead Colombo, Awissawella, Talawakelle, Dimbula, Galakumbura and Dambagalla at about 12:12 noon today [07]
On the apparent northward relative motion of the sun, it is going to be directly over the latitudes of Sri Lanka during 05th to 14th of April in this year.
The nearest areas of Sri Lanka over which the sun is overhead today (07th) are Colombo, Awissawella, Talawakelle, Dimbula, Galakumbura and Dambagalla at about 12:12 noon.
Defence Secy says a decision was taken at 2023 Defence Dialogue
Contrary to claims that the MoU/agreements finalised during Indian Prime Minister Narendra Modi’s state visit here were in accordance with an understanding between former President Ranil Wickremesinghe and PM Modi in July 21, 2023, the MoU on Defence Cooperation is a new addition.
A joint statement issued on July 21, 2023, soon after the conclusion of Wickremesinghe’s visit, didn’t refer to an MoU on defence cooperation.
Premier Modi disclosed the decision to enter into an MoU on 16 Dec., 2024 at a joint press conference addressed by him and President Anura Kumara Dissanayake.
A media statement issued by the Indian High Commission in Colombo quoted the Indian PM as having said that President Dissanayake and he had agreed that the two countries’ security interests were interconnected. “We have decided to quickly finalise the Security Cooperation Agreement.”
President Dissanayake, in his address, didn’t refer to the proposed MoU on defence cooperation. The Presidential Media Division quoted President Dissanayake as having said that they exchanged views on cooperation in the fields of defence and security, power and energy, training and capacity building, education, agriculture and social security.
However, retired Air Vice Marshal Sampath Thuyakonttha, who signed the MoU on Defence Cooperation, in his capacity as the Defence Secretary, said that they had agreed to strengthen defence relations through an MoU during Defence Dialogue in 2023.
Responding to concerns expressed in some quarters about the MoU at issue, Thuyakonttha, a veteran Mi 24 helicopter gunship pilot, emphasised that the agreement on the MoU had been reached in keeping with the instructions issued by the Secretary to the President in January this year.
In addition to the MoU on Defence Cooperation, the two sides finalised six other MoUs/agreements. They dealt with Implementation of HDVC interconnection for import/export of power, cooperation in the field of sharing successful digital solutions implemented at population scale for digital transformation, multi-sectoral grant assistance for Eastern Province, cooperation in the field of health, medicine, etc.
India, Sri Lanka and UAE have agreed to develop Trincomalee as an energy hub.
Milinda Moragoda, who served as Sri Lanka’s High Commissioner in New Delhi during the August 2021-Oct 2023 period and played a critical role in negotiations, stressed the pivotal importance of going ahead with the MoU/agreements.
In response to The Island queries regarding the latest developments, Moragoda said that the progress made on the economic integration and connectivity side was extremely encouraging. Especially, the concrete steps taken to establish connectivity in power, petroleum and the development of Trincomalee as an energy hub, he said.
“The fact that trilateral cooperation between India, Sri Lanka and selected third countries will become part of our future development strategy, with the formal entry of the UAE as a partner in the Trincomalee energy hub initiative is a very important step forward.”
Moragoda said: “The establishment of a framework to share successful digital solutions between India and Sri Lanka is also another positive development.
“It is critical that both parties now focus on the speedy implementation of all the agreements that have been reached.
“Future consideration should be given to developing road and rail connectivity as well.
“We should all understand and absorb that the physical connectivity that would be established in power, petroleum and other sectors will link us directly to India, the Middle East and Europe making us potentially a key global hub at a pivotal point in world history.
“The understandings that have been reached with India could become critical for Sri Lanka’s immediate economic survival and development as we cope with the monumental disruptions taking place in the international economic environment and geopolitical sphere at the moment.
“Sri Lanka is in an extremely vulnerable position and will have to very quickly work out a survival strategy through which we can diversify our foreign income and investment sources while arriving at an understanding with the US in the short term.
“As we enter an era where geoeconomics will become more important than plain economics, the agreements reached during the visit of Prime Minister Modi could help lay an initial foundation for Sri Lanka’s future developmental direction.”
By Shamindra Ferdinando
Dambulla cold storage facility:
SJB Colombo District MP Dr Harsha de Silva has said he is happy that the government is continuing with his projects after changing their names.
Speaking to the media after Indian Prime Minister Narendra Modi had inaugurated a 5,000-metric-ton cold storage facility in Dambulla, Dr de Silva said the construction of that facility had been initiated in 2019 with a grant from India, during his tenure as Minister of Economic Reforms. The name of the project, Prabhaswara, had been changed, he claimed.
Dr de Silva said he had not been informed of the opening of the storage facility.
He said a plaque had been installed with names of the Indian prime minister and President Anura Kumara Dissanayake inscribed on it in violation of the NPP’s pledge that the names of its leaders would not be displayed in that manner.
Dr de Silva that he was genuinely happy about the opening of the country’s first agricultural storage complex capable of controlling temperature and humidity.
“Due to the collapse of the Yahapalana government, we were unable to complete the project. Later, those who came to power had no desire to finish the work. I believe that this government will ensure that farmers will benefit from the business plan we developed.
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The sun will be directly overhead Colombo, Awissawella, Talawakelle, Dimbula, Galakumbura and Dambagalla at about 12:12 noon today [07]
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