Sri Lanka coconut by-product exporters upbeat on quick rebound
Sri Lanka’s export-oriented coconut by-products industry hit by COVID-19 for around two months will be back on track within the next few months, industry leaders said.
The manufacturers of the main products such as tender coconut water, coconut oil and desiccated coconut powder are suffering losses with the factories closed during the curfew period which was imposed following the coronavirus outbreak.
The industry is returning to normal as factories have now begun operations, a Coconut Development Authority (CDA) official said.
Sri Lanka’s desiccated coconut export volumes fell by 45 per cent year-on-year to 8,630 tonnes and by 28 percent in value to Rs. 3.7 billion (US$20.0 million) from January-April 2020.
The country earns Rs. 110 billion (US$594 million) annually through the export of coconut-related products, the CDA data showed.
Under this circumstance, Sri Lanka’s exporters of value added coconut products are asking authorities to allow more edible oil imports, so that it would reduce local oil production and free more nuts for other industries.
The CDA is also considering this request as a short term solution for coconut industrialists to raise their heads after struggling in the coronavirus storm.
The cost of production for Sri Lanka’s coconut milk powder, coconut cream and desiccated coconut producers has increased due to increasing coconut prices making it difficult to compete in the international market.
Fresh coconut is the main raw material for the production of coconut oil and desiccated coconut.
The island nation should find short term solutions to improve the export oriented coconut product industry while fulfilling the local consumer needs, industry leaders said.
A close study of the import policy of the Sri Lankan government on edible oils indicates that import tariffs on edible oil are lowered when the supply of fresh coconut in the domestic market is limited.
It has been claimed that the desiccated coconut producers lobby for lower import tariffs on edible oil so as to raise fresh coconut availability when the demand for desiccated coconut is higher.
This was one of the main issues confronting the local importers at present and an immediate solution should be found, they pointed out.
When the Government increases tax on imported edible oil, there is a demand for local oil production and this triggers an increase in local nut prices.
In 2019 value added products export (including coir sector) has earned $600 million by processing only 1 billion of fresh nuts.
If the CDA allocates more fresh nuts to the export sector they can generate $1 billion foreign income without any trouble, they added.
Furthermore if oil millers are allowed to import copra for oil milling and refineries, they can produce good quality coconut oil by refining crude coconut oil produced by oil millers.
They also emphasised the need to maintain a minimum farm gate price of Rs.35-40/nut to safeguard the growers.
In the aftermath of COVID-19, government authorities should promote the use of processed coconut milk, coconut paste and coconut milk powder at household level, they urged.
Since Sri Lankans consume around 1,750- 2,000 million fresh nuts, it is estimated that 300 to 400 million nuts can be saved this way and made available to the industry while an enormous amount of husk, shell and coconut water will be available for other industries.
Government involvement to reduce the packing material cost will help to increase the use of UHT coconut milk pack rather than use raw coconut in households.
Also, frozen grated coconut packs, and pasteurized or frozen coconut milk packs should be promoted in the local market and awareness programmes can be conducted to reduce the domestic raw coconut usage, they pointed out.