The export of coconut products, kernels in particular, is facing a threat of virtually coming to a grinding halt due to the government’s decision to increase the import duty on palm oil once again, from 5% to 15% with immediate effect, the Coconut Products Traders’ Association warned recently.

Commenting on the import duty increase of edible oil, a senior official of the Coconut Development Authority said that the reason for this move is that the farmgate price of coconuts has declined below Rs.20 per nut. Chairman of the Coconut Products Traders Association Tharaka Dadagamuwa told the Sunday Times FT that this is far from reality and the average price of coconuts recorded at the Authority this week was Rs.27 per nut. The export processing industries are presently paying Rs.24 to Rs.28 per nut, depending on the size of the nuts.

He said that if the proposed import duty increase is implemented the export of coconut kernel products will be seriously affected once again. The export sector has appealed to the government to refrain from implementing any changes in the current import duty, on edible oils. The export processing industries will not be in a position to operate viably and will be back to the same position they were in during the first quarter of this year, he said. They have also recommended that any changes to the import duty should be made after consultation with all the stake holders.

If the proposed duty increase on palm oil is implemented the price of coconut oil in the local market will surge to Rs.265 – Rs.270 per kg and the price of coconuts will increase to Rs.40 - Rs.45 per nut, to the consumer, he said.

According to market sources, a few importers of palm oil are also strongly lobbying for the increase in the import duty. These importers appear to have imported large quantities of palm oil and are seeking to sell them at higher prices to the consumers and reap windfall profits running into several millions of rupees. The exports of coconut products, kernel products in particular, have been greatly affected between January and early April this year incurring a foreign exchange loss of Rs.2 billion, the sources said.