Sri Lanka coconut farmers to get subsidies amid high prices

Dec 28, 2010 (LBO) – Sri Lanka’s coconut farmers, who are now perhaps getting the highest prices in the world due to agriculture protection, are to get tax payer support in the form of a fertilizer subsidy, the government has said.

Earlier in the year Sri Lanka’s desiccated coconut producers proposed a periodically adjusted tax formula to the plantations ministry on edible oils which can keep coconut prices at around 20 rupees a nut. The government’s information office said this week that a fertilizer subsidy of 1,000 rupees will be given to a bag of 50 kilos of fertilizer for coconut farmers.

Commodity Bubble

Sri Lanka’s coconut prices started to shoot up from around October as palm oil and other commodities started to rise in price due to loose US monetary policy which is undermining the value of the dollar and firing a fresh bubble in food commodities, metals and precious metals.

At the time industry analysts warned that unless taxes were cut on imported palm and coconut oil street prices of Sri Lankan coconut will soon end up at around 50 rupees, about three times the price in other countries.

Though the government cut some taxes on imported oil Sri Lanka’s edible oil prices remain higher than th