Cess on coconut and palm oil imports to fund local coconut industry

The Plantation Industries Ministry is looking at financing local coconut production through a cess on coconut oil and palm oil imports.

The Plantation Industries Ministry is looking at financing local coconut production through a cess on coconut oil and palm oil imports. “We will set up a Rs. 300 mn cess fund for the coconut industry by charging Rs 3.00 per kilogram of edible oil imports,” said a senior official from the Plantation Industries Ministry.

The Ministry is hoping to introduce the cess within the year and is waiting for Cabinet approval.

The local coconut industry also wants VAT on coconut oil removed in the coming budget.

Sri Lankans consume over 1.8 bn home grown coconuts – or nearly 70 percent of domestic production – per year, but also absorb around 150,000 MT of imported edible oils.

Palm oil, mainly from Malaysia, makes up nearly 125,000 MT of edible oil imports.

Despite domestic production of around 50,000 MT of coconut oil per year, Sri Lanka imports another 20,000 MT to meet demand.

Domestic margarine and soap manufacturers absorb nearly half the imports edible oils while the balance comes to the retail market as vegetable oils for cooking.

These cooking oils are eating into the domestic coconut oil market and local producers want the government to lift the VAT on home made coconut oil to allow them greater pricing flexibility.

Sri Lanka’s coconut production is also declining because of low investment in the sector.

In the coconut triangle between the districts of Puttalam, Kurunegala and Gampaha, where two thirds of the island’s coconut cultivation is concentrated, the industry experiences a land loss of around one percent every year, according to the Ministry.

“The corporate sector is selling their coconut land for real-estate or for industrial purposes. Domestic land is also being taken over to build houses or is sold,” said the Ministry official.

Although the last census in 2002 found over 400,000 hectares of coconut plantation still left over island wide, coconut production is dwindling also because of old age.

“Every year two percent of cultivation must be replanted. This has not happened, so there is a large backlog of very old trees,” said the Ministry official.

Around 30 percent of existing coconut estates are over 60 years old and are under productive due to age.

-Dilshani Samaraweera: dilshanis@vanguardlanka.com