by Chittaranjan de Silva
Sri Lanka’s coconut industry is facing a crisis due to the falling prices of coconuts. If the prices stay at low levels in the years to come, which is a possibility, the country’s coconut industry could be severely affected, industry sources said.

Though the coconut growers, the desiccated coconut millers and even the coconut plantation authorities, including the Coconut Development Authority, have expressed concern about the falling price of nuts, they admitted that no strategy and plans have been designed yet to counter the crisis.

Coconut estate owners, who are facing a financial difficulties due to the prevailing low coconut prices in many years, have expressed fears about the coconut industry’s future in Sri Lanka.

Vinitha Limited (VL), an agency which manages about 65 coconut estates said: ``Without sufficient revenues from nuts, we will not have enough funds even to manage coconut estates in future."

The coconut growers have decided on employing stringent measures until the price for coconuts improve, VL said.

The estate owners, who say that they can no longer afford to advance funds to their clients, also said that the cost of producing coconuts will have to be reduced to a maximum of Rs.3/- per nut.

The estates are to be scrutinised, with the estimates of each and every estate, with necessary directives given to superintendents in charge of estates in this regard.

Estate owners have warned that they would not be able to pay income tax on estate income for the year 2000/2001 if the estates continue to run at a loss.

The coconut growers said that several factors connected with the Asian crisis has affected the desiccated coconut prices in the Far East and the London market. The country’s desiccated coconut industry used to absorb a bulk of the coconuts produced here.

According to the Coconut Growers Association (CGA), the coconut oil production in Sri Lanka was discouraged since desiccated coconut (DC) industry was able to purchased nuts at a higher price.

Coconut oil production, which hit a low due to the import of edible oils such as palm oil, has not picked up since.

But the DC millers said that the price of desiccated coconut normally is low during the period from October -December. The market for DC picks up from July to September, according to industry sources.

DC Millers Association have maintained that it is not prudent to produce oil from coconuts, when growers could obtain a higher price by selling it to the DC millers. But according to some DC millers, it is important that coconut oil production and DC production should go hand in hand.

One DC miller also said authorities should take steps to encourage coconut oil production to help increase the price of coconuts in the market. He also said that production of coconuts should be increased so that both the oil industry and the DC industry would have enough nuts.

But industry sources pointed out that if the growers are unable to overcome the present crisis of falling nut prices, the production of nuts would decrease in the long term, affecting DC industry, the coconut oil industry as well domestic coconut consumers in the long run.

Recently this year, the government increased duties on imported edible oils, which was seen as a step to encourage coconut oil production in the country again.

But the coconut growers have argued that the price of alternative oils were lower compared to coconut oil, which had contributed to the low demand for coconut oil in the local market.

Though the duty on palm oil imports have increased to 35%, still, palm oil is cheaper than coconut oil, the coconut growers have argued.

Multi- national companies based in Sri Lanka, which consume oil in large quantities for industry, have also opted to buy oil form foreign countries such as Malaysia, the growers said.

The coconut growers said it was pitiful that the price fetched for 1000 nuts was only Rs. 3,500/- (producer price). The growers are expecting the price of coconuts to be in this range as coconut crops are larger compared to last year.

Meanwhile, the Hector Kobbekaduwa Agrarian Research and Training Institute (HKARTI)’s December(1-7) edition said that the retail price of both large and small coconuts have decreased in the first week of December. Large and small nuts have decreased by 16 cents per nut and 17 cents per nut respectively compared to the previous week due to the over production of nuts, the weekly Food Commodities Bulletin of

The HKARTI said that an increase in supply of coconuts has been recorded in the major coconut producing areas such as Nittambuwa, Kurunegala, Gampaha and Puttalum. The wholesale price of both large small nuts have decreased respectively by 3 cents and 12 cents, ARTI said.

Wholesale coconut prices in the first week of December, according to HKARTI, ranged Rs.7.00/kg to Rs.8.50/nut for large nuts and from Rs.5.50/nut to Rs.6.50/nut for small nuts.