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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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“Foreign bond holders more important to govt. than hard-pressed people”

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SJB slams GR’s policy speech

The main opposition SJB says that President Gotabaya Rajapaksa’s Policy Speech delivered in Parliament on Jan 18 failed to provide solutions to the crises faced by the country.

Addressing a press briefing held at the Opposition Leader’s Office in Colombo on Thursday, SJB MP Eran Wickremaratne said that the crises with regard to economic management and governance had gone beyond the control of the government subjecting the masses to severe hardships without essential goods and services.

Wickremaratne said that  there had been no increase in the value of  GDP supporting the domestic and foreign borrowings by this government during the last two years.

He accused the government of giving priority to paying off debts of foreign cronies while  starving the people without essential foods inclusive of fuel for electricity generation.

“People who could not afford to basic necessities despite having cash in hand due to the shortage of dollars and foreign exchange now had to stay in the dark for several hours a day without electricity due to lack of fuel as the govt has not been able to maintain a supply chain properly. But the government, having crossed its wires, gives priority to repaying the loan to its cronies while mounting pressure on its citizens,” Wickremaratne said.

“President Rajapaksa’s Throne Speech did not provide answers to any of  the current problems  facing the country. Although the country faced two major problems, there was no answer to either of them in the President’s policy statement.

“First, rising commodity prices push up inflation increasing  vegetable prices. Secondly, the import of essential commodities has come to a complete standstill due to the foreign exchange deficit. There is a shortage not only for  food and fuel but also for  medicines for the people.”

He said only 25% of the country’s essential medicines are produced locally and the rest are imported. There is also a shortage of essential medicines due to lack of dollars for imports.

At a time when the people are under so much of  pressure, the government is  boasting of servicing   international sovereign bonds on time. People need to be told the secret of why foreign debtors are more important to the government than the citizens of the country, Wickremaratne said.

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Prevention, cooperation, mutual assistance essential to counter connected nature of terrorists in South Asia – Army Chief

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Prevention, cooperation and mutual assistance in controlled measures at international borders are essential to counter the transnational and connected nature of terrorists and criminal activists in the South Asian region, said Chief of Defence Staff and Army Commander General Shavendra Silva on Thursday, emphasising on the need of law enforcement’s institutional reforms based on common and agreed policies.”

“In the legitimate government efforts to fight terrorism or organised crimes, in this regard, a possible South Asian regional treaty could promote counter-terrorism and anti-crime measures by promoting institutional structures and decision-making processes to promote cooperation, coordination, shared expertise and common legal approaches,” said Silva while virtually addressing the “Countering use of Crypto Currencies to Finance Terrorism” event on Thursday.

“Due to the transnational and connected nature of terrorists and criminal activists in our region, prevention, cooperation and mutual assistance in controlled measures at international borders are essential,” he added.

The General also said that there are avenues for collaboration by establishing information exchange at customs, imposing immigration barriers and commonly agreeing on the regulation of transporting and stockpiling of weapons and drugs, dangerous goods or potential warlike equipment.

Emphasising that mutual assistance can be enhanced by extending measures for collecting evidence of suspects, exchange of wanted personnel and etc, Silva said that enhancing the capacities of regional countries to handle terrorism and criminals would depend extensively on the training of law enforcement agencies.

“Apart from training for military personnel, of a particular country, it is also essential to carry out joint training for various armed forces of the South Asian region. Conducting counter-terrorism operations at a regional scale would also require regional funding. It is understood that funding counter-terrorism campaigns in recent times has become quite expensive due to the sophistication of insurgence,” Silva added.

The General also said that “this is where we need cooperation as very experience armies, who have long been engaging in counter-terrorism operations, we have specialities, therefore we can share each other’s specialities to counter each other’s imitations.”

“Law enforcement’s institutional reforms based on common and agreed policies and principles in the regional countries feel enhanced the compatibility between the countries in fighting transnational crimes and terrorism,” he added. (ANI)

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COVID-19 on the rise again; 800+ new cases a second day running

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(Economynext) New COVID-19 cases are on the rise again in Sri Lanka, with health authorities detecting over 800 new infections on Thursday (20) for a second consecutive day.

With the 827 new cases, total cases in the country have gone up to 599,363, official data showed.

Around 15,279 patients are currently receiving treatment in hospital or at home.

With 12 deaths reported in the last 24 hour period, the island nation’s COVID-19 death toll has reached 15,243.

Health authorities warned that the sector could face challenges managing new patients if daily cases continue to surge.

Officials are also concerned about an apparent hesitance for the booster dose of the vaccine that was largely absent in the initial rollout.

“We have provided the opportunity to get the booster countrywide. But because the fatality rate is now low people may think taking it is no longer necessary,” State Minister of Pharmaceutical Production Channa Jayasumana said speaking to journalists on Friday (21).

“Sri Lanka will go back to the previous state with people not taking the booster dose,” he warned.

The booster rate is very low compared to Sri Lanka’s otherwise impressive vaccination numbers, said Jayasumana.

“Only 4.8 million have taken the booster so far, and only 26,796 came forward yesterday to get it.

“With the increase of patients, even though the fatality rate is low, it can be overwhelming for the health sector if patient numbers in hospital wards and ICUs go up.”

Sri Lanka has so far vaccinated 16.3 with the first dose while 13.8 have received both doses.

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