Tax concessions for palm oil affecting coconut industry

Shirajiv SIRIMANE

The Government must rethink its strategy to provide tax concessions to the import of palm oil to the country. The current tax structure has several negative impacts to other related industries such as export of desiccated coconut and the manufacture of coconut oil.

Coconut Growers' Association of Sri Lanka Secretary Nissanka E. Rodrigo said that due to this factor, the coconut oil production has decreased as the local producers cannot compete with palm oil.

He said today there is also an overproduction of desiccated coconut which is pushing down the prices. "This is a serious concern and action should be taken in this regard soon," he cautioned.

He said the country is now somewhat recovering from the "coconut crisis" where nuts hit record prices last year.

The average price of coconut at the Colombo Auctions on September 29 was Rs 22.00 and it was only a rupee or so higher at the auctions held on the previous weeks of the month.

The steep downward trend of prices commenced from June 2011. The ground situation is that dealers currently buy nuts from the smallholder grower unhusked at Rs 22.00. When the value of the husk which is Rs 5.00 is deducted, he gets only Rs. 17.00 (though the retail price of a nut in Colombo and suburbs and city centres is Rs. 35) So much for the best era and all time record prices for the grower.

The price of copra is no better. The price of milling copra at the Colombo Auction this week is Rs 25,000 - 29,000 (average Rs 27,000) per 250 Kg. (Rs. 108 per kg). At the standard conversion factor of 1200 nuts per 250 Kg. The price of a nut works out to Rs 22.50 per nut for the finished product.

When the copra producer's expenses are taken off, the price payable is less than Rs 18.00. It is in fact the value of the husk that enables him to buy nuts at Rs. 22.00.

The Customs tariff adjustment for import of palm oil and export of edible nuts inforced at the beginning of the year to curtail the prohibitive price for nuts paid by the local consumer are still in force.

Long delay in their adjustment by the authorities, continues to give a monopoly status to the D.C. Miller.