Sri Lanka coconut prices hit new highs amid trade protection

Oct 23, 2010 (LBO) – Sri Lanka’s fresh coconut prices hit a new high at this week’s auction in Colombo, compounded by state interventions that restrict trade and keep prices of substitutes at higher than global levels. At Thursday’s auction of fresh coconuts in Colombo – which is a proxy for farm gate prices – rose by nearly 4,000 rupees per thousand nuts from a week earlier.

The average auction price rose to 33,006 rupees for a thousand nuts on October up from 29,069 a week earlier.

The top price rose to 35,510 rupees from 31,100 rupees a week earlier.

From early September the average farm gate price of coconut has gone up from 25 rupees (25,107 rupees per 1000 nuts) to 33 rupees a nut last week. Before the auction retail prices were around 40 to 42 rupees.

The auction prices are expected to translate to the retail market over the next few days.

State induced Volatility

In Sri Lanka staple food supplies are insecure because of heavy state intervention in markets, and prices can also be more volatile as well as higher than the rest of the world.

The high volatility in coconut prices comes fro