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Slump in imports trigger surge in coconut oil prices

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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.

 

 



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Debt-ridden CEB goes ahead with shocking pay hike amidst pandemic

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Workers offered 25% increase this year…12% annually over three-year period
 

By Shamindra Ferdinando

Two days after the Presidential Secretariat stated that the Ceylon Electricity Board (CEB) owed two state banks––Bank of Ceylon and the People’s Bank, a staggering Rs 85 bn, the cash-strapped enterprise announced an annual 12 percent salary increase to its employees.

Vijitha Herath, Chairman, of the CEB, yesterday (15) said that the salary increase in terms of the collective agreement for 2021-2023 period would enable the workers to receive 25 per cent in the first year whereas annually it would be 12 percent over a period of three years.

The ministry said that in spite of severe difficulties caused by the rampaging Covid-19 pandemic, the salary increment was granted in response to workers’ request.

Declaring that the Cabinet and the Board of Directors of the CEB had approved the salary increase, the ministry has sought cooperation of the CEB trade unions to finalise the collective agreement.

The ministry claimed that CEB workers had been granted a spate of privileges not given to other state sector employees hence consensus on collective agreement was expected soon.

The Presidential Secretariat on Sunday explained that one reason for the banking sector crisis was the failure on the part of the Ceylon Petroleum Corporation (CPC) and the CEB to settle Rs 562 bn and Rs 85 bn, respectively.

The Presidential Secretariat issued the statement in the wake of SLPP General Secretary Sagara Kariyawasam, MP, triggering a political storm by demanding Energy Minister Udaya Gammanpila’s immediate resignation over recent increase in fuel prices.

The CEB Chairman also claimed that they had been able to bring down the accumulated losses to Rs 56 bn last year from Rs 97 bn in the previous year.

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Indian fishers riled by SL moves to create new fish breeding grounds

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By Dinasena Ratugamage

 

Fishermen from Rameswaran will hold a protest today (16) against Sri Lanka’s decision to submerge 20 old buses in the seas off Jaffna to create breeding grounds for fish.

Members of 17 fisheries associations in Tamil Nadu and Rameswaran claim that this will affect their yield as more fish will be attracted to the breeding grounds created by submerged buses.

The Ministry said that sinking those buses was nothing new and that such buses provided a hard surface for invertebrates to live on, some of which could not live on the sand bottom that is naturally there.

“Some fish are not fast swimmers, so they need a structure to provide both food and shelter; they wouldn’t, for example, be able to outswim a shark, but they could duck into the shelter instead,” a Sri Lankan fisheries association representative said.

However N. Devadas, the head of the Indian fishermen’s association in Rameswaram, said that they would also hand over a petition against that decision to the Sri Lankan government. Sri Lanka has been submerging old SLTB buses in the deep sea for many years as a part of the Deep Sea Fish Development Project.

 

 

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Three more weeks needed to see drop in COVID deaths – Dr. Fernandopulle

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It would take at least three more weeks to see a drop in COVID-19 related deaths in the country, Minister of COVID Disease Control, Dr. Sudharshini Fernandopulle said yesterday.

There had been a drop in the number of cases reported already, she said.

“The number of patients is coming down but there has been an increase in deaths. However, this too will come down.

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