DC industry on verge of collapse due to nut shortfall

Work at 62 desiccated coconut mills in the island has come to a virtual standstill owing to insufficient coconuts to keep them running.

A spokesman for the Desiccated Coconut Millers Association told The Sunday Times FT that at least 10,000 employees in the DC industry are facing severe hardships and are on the verge of losing their jobs.

DC mills which have been operating for 2-3 days during the last three months of 2007 are now virtually closed.

Skilled workers are unable to find employment elsewhere, he said. As a result they and their families are finding it extremely difficult to live and are requesting the government to find immediate solution to their problem. He also attributed this situation to the increase in Edible Oil duty by the government to 28 percent from 10 percent with effect from January 1 this year in the midst of the off season.

He added that 50 out of 62 DC mills are operating one or two days per week at present.

DC millers and coconut oil mills have not been able to get the necessary requirement for the manufacture of DC last year as coconut prices shot up. Coconut shortages were caused by a spell of dry weather which affected the harvest last year.
The industry produces around 60,000 to 70,000 metric tons annually but due to a shortage of nuts, DC mills have produced just 45,000 metric tons last year.

Coconut Development Authority (CDA) Chairman D.J.U Purasinghe, referring to measures taken to tackle this situation, told The Sunday Times FT that the government has banned raw nut exports for a short period and also allowed the import of 30,000 MT of copra for coconut oil mills and duty free import of coconut oil last year.

This action was taken to prevent nut prices from rising even higher and also to ensure an adequate supply of nuts for both the DC mills and oil mills. Purasinghe noted that the CDA has made a proposal to the Ministry of Plantation Industries to import 30,000 metric tons of copra till the end of February and to import coconut oil at zero duty to save the DC industry.

He added that the ministry has given an assurance to consider these proposals favourably. Purasinghe disclosed that this year’s coconut production will be around 2.77 billion nuts, much below the demand of 4 billion nuts.

This prediction was made by the Coconut Research Institute, he said.

Sri Lanka exports DC mainly to European Union, Finland, Turkey, Egypt, UAE and Brazil.