Business Feature:

Increase in coconut sector export earnings in first half

Coconut, one of the major plantation crops, other than tea and rubber plays a pivotal role in the economy of Sri lanka. It is largely consumed locally as a major protein and fat supplement and the surplus utilised by the industry as a raw material to manufacture number of products.

Sri Lanka exports about 30-35 major category of coconut products to more than 100 destinations all over the world. Export performance of the coconut sector continued to express a strong tone over the past few years.

In 2006 Sri Lanka’s foreign exchange earnings from exports of coconut products amounted to over 19 billion Sri Lankan rupees and coconut products exports of Sri Lanka over the first half of 2007 registered an improvement of 30 per cent to Rs. 11,104 million against the corresponding value of Rs. 8,546 million in 2006. At this pace export earnings of coconut sector is estimated to reach 25 billion rupees mark in 2007.

Chairman, Coconut Development Authority (CDA) D.J. U. Purasinghe said this significant achievement was attributed by implementation of industry favourable policy framework initiatives and supportive role by CDA and prevailed conducive international market scenario for coconut based products.

Chairman, CDA further mentioned that export performance of coconut kernel based products over the first half of 2007 showcased a substantial growth by 38 per cent in value and earnings from this sector amounted to rupees 5,152 million against Rs. 3,728 million in first half of 2006.

Amongst the kernel based products Desiccated Coconut (DC) exports over the first half of 2007 amounted to 22,103 tonnes and this was a 39 per cent growth in volume as compared to 15,871 tonnes over the corresponding period in 2006. Leading importers of DC over the period under review are Middle East and European countries.

Sri Lanka was able to regain reasonable share of markets lost to competitors like Philippines and Indonesia in the past few years.

Total exports to Europe during the period under consideration registered an impressive increase by 82 per cent to mark 7,550 tonnes against the corresponding volume of 2006. Exports to Germany, France and Netherlands amounted respectively 1685 tonnes, 798 tonnes and 173 tonnes.

As a consequence, despite the stiff competition from coconut oil sector to procure limited available raw material, local DC industry remained very active. This situation caused a positive impact on the local market prices of fresh coconuts. It fetched Rs. 13,345/1000 nuts on average over the first half of 2007 against Rs. 10,487/1000 nuts over the period under consideration in 2006.

This was a 27 per cent increase as compared to the prices prevailed during the first half of 2006. Although the crop production in 2007 estimated at over 2900 million the total demand for coconut remained around 4,000 million.

Therefore CDA initiated number of programmes to increase the availability of nuts for the local coconut industry. Meanwhile in the local market annually about 2,000 million nuts are used for culinary purposes and around 35 per cent of which is wasted due to inefficient extraction methods applied at the domestic levels.

Therefore CDA has taken initiatives to introduce coconut milk and coconut paste in the local market especially to the urban segment to minimise the waste for certain extend and to ensure more availability of coconuts for the industry.

Other than desiccated coconut, coconut milk, copra and poonac displayed an impressive performance. Coconut milk exports amounted to 3,041 tonnes and it was a 31 per cent increase as against the corresponding volume in 2006. At the same time Sri Lanka continued to capitalise over the free trade agreements between Sri Lanka and Pakistan.

As a result exports of edible grades of copra to Pakistan increased to 7,068 tonnes during the first half of 2007 from the corresponding 2006 volume of 6,987 tonnes. Meanwhile enhanced activity in the coconut oil industry resulted in improved supply and exports of poonac in 2007.

During the first half of 2006 Sri Lanka had exported merely 84 tonnes of poonac whereas the exports of same commodity over the period under review has surged up to 4,082 tonnes.

The conducive market climate for coir fibre continued in 2007. The fast emerging economy China acted as the major driving force of the sector. Although China imports large quantity of fibre in raw material form, Chinese market kept the sector very active. Other than China improved interest was witnessed from developed countries towards coir as a environmentally friendly product.

As a result exports of coir over the first half of 2007 recorded a 38 per cent increase and amounted to 39,038 tonnes as against 33,101 tonnes in 2006. Accordingly the foreign exchange earnings from coir products amounted to Rupees 1,254 million over the first half of 2007.

CDA has initiated number of programmes to strengthen the coir industry in Sri Lanka. In this regard arrangements have been made to provide financial assistance to large number of coir mills.

This assistance are mostly focused ton efficiency improvement and manufacture of value added finished products. In addition, to improve the coir yarn industry, CDA has distributed large number of hand-spun yarn machines along with sufficient raw material as working capital.

Export value of coir fibre finished products in 2007 amounted to Rs. 3,274 million and this was a increase of 13 per cent against the corresponding 2006 value of Rs. 2,900 million.

Further the exports earnings from ekels expressed a 47 per cent increase and amounted to 47 million during the first half of 2007. As a measure to enhance the market for coconut based finished products CDA participated at number of trade fairs locally as well as internationally.

Meanwhile CDA has taken initiatives to popularise the coconut products in the domestic market through sales and display centres. The first of this kind of sales and display centre has been established at the premises of CDA head office Narahenpita. This concept is to be extended to most of the cities around Sri Lanka.