Govt. moves to control rising coconut oil prices
The government plans immediate action to control rapidly rising coconut and coconut oil prices in response to a supply shortage and high local demand, Agriculture Ministry sources disclosed.
Local shortages have heightened the urgency to stabilise the domestic coconut oil market, as supplying coconuts domestically is challenging and unlikely to be resolved quickly, a senior official noted.
Global edible oil prices have surged, with refined coconut oil prices rising from US$1,320 to $1,880 per tonne and palm oil prices nearing $1,250 per tonne, impacted by climate conditions and international demand.
In Sri Lanka, refined coconut oil prices recently jumped from Rs. 630 to Rs. 700 per kg wholesale. These increases are straining local market, leading to cheaper imported oils.
The ongoing Russia-Ukraine conflict has sharply reduced sunflower oil prices, benefiting India through increased imports.
In contrast, Sri Lanka faces rising coconut oil costs, prompting the government to consider relaxing restrictions on palm oil imports to offset costs.
Since 2022, palm oil imports have required licenses, but with coconut oil imports adding about US$3.5 million monthly to Sri Lanka’s foreign exchange outflow, this restriction could be temporarily lifted to save an estimated $50 million annually.
Local oil refiners favour crude palm oil imports, while distributors prefer refined types. By meeting demand with imported oils, coconut oil prices could stabilise.
Sri Lanka’s edible oil imports have plummeted due to high freight costs, affecting palm, vegetable, seed, and coconut oil imports.
With freight charges escalating because of the US-China trade conflict, importers are struggling to clear containers, with some even hoarding stocks in anticipation of shortages.
Customs and other regulatory bodies have also been criticised for preferential treatment, with small importers facing prolonged delays.
The country consumes 10,000 metric tons of edible oil monthly, yet production has halved due to economic challenges and reduced purchasing power.
Local production currently meets only 4,000 to 5,000 metric tonnes monthly, causing importers to secure additional stock at higher costs.
As container freight costs have increased from $15-20 to $35-50, importers have begun to rely on smaller vessels to manage shipping expenses.
Of the 240,000 metric tonnes of coconut oil consumed annually, only 40,000 tonnes are produced locally, with the remainder blended with substitute oils.
Emeritus Prof. Asoka Nugawela of Wayamba University suggests palm oil cultivation is economically feasible, as there is little evidence that it leads to deforestation.
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