The Coconut Development Authority (CDA) said that the government’ s decision to slash the import duty rate for edible palm oil from 28 percent to five percent was a timely and appropriate move as the consumers will soon enjoy price reductions in coconuts and coconut oil. "It is a good move. It will greatly benefit the consumer as coconuts are a key factor in their basket of goods. We expect coconut prices to stabilise around Rs.32 by the end of the month and a bottle of coconut oil should be about Rs.180. Farmers should be able to sell a coconut at Rs.22," said the CDA Chairman, D. J. U. Purasinghe. He said that the escalation in coconut prices was due to poor productivity levels of the coconut plantations. He said the Coconut Cultivation Board should be held responsible for maintaining high levels of productivity while the Coconut research Institute should be responsible for the mite and other pest issues that plague the palms. He pointed out that growers and coconut oil millers are exaggerating their positions and that the farm gate price of Rs.22 is a reasonable return for the growers, while the government should also look into importing copra in order to sustain the coconut oil industry. The import duty reduction on palm oil will also give the desiccated coconut and other coconut based export industries much needed relief. "The government’s policy should be balanced. The CDA sees this move as a balanced move as everybody, most importantly the consumer, will get a fair deal," Purasinghe said. People have suffered long enough with rising food prices. The poor and underprivileged have suffered the most, with many not being able to afford a whole coconut but had to resort to buying halves. However, the Coconut Growers Association said that the government’s decision to slash the palm oil import duty was done in an ad hoc manner and jeopardised the livelihoods of over 500,000 people and their dependents to satisfy a few business tycoons and the 1,500 strong workforce of the desiccated coconut industry. "Palm oil importers have a strong voice and the situation in the country is such that their demands are being met at the expense of killing off the coconut industry," an official of the association said. Poor coconut yields resulted in the various industries supported by coconuts contesting for the limited number of coconuts available. The 28 percent import duty acted as a deterrent to palm oil imports and so the coconut oil producers had no competition and could offer high prices for coconuts and recover the costs from coconut oil sales as the consumer, as always in this country, was the price taker. While several industries, and the consumer, were almost chocked by the high coconut prices as a result of coconut oil producers forcing up coconut prices, for coconut growers it was a breath of fresh air. The association had said earlier that the government should not be too hasty to drastically bring down coconut prices because coconut cultivation was undergoing a re-emergence. "We don’t want the consumer to be burdened with high prices neither do we want the growers to get a price too low. All we want is consistent prices so the government should be careful about making ad-hoc decisions," Nalin Samarakkody, President of the Coconut Growers’ Association told the Island Financial Review earlier this month and today the association believes the government had done exactly that; taken an ad-hoc decision. He said that intervention to reduce the prices to benefit the consumer and other industries was a good thing but palm oil importers are a threat to the local coconut oil industry with several coconut oil mills on the verge of closing down, a view shared by the Chairman of the Coconut Cultivation Board, Jayantha Gunathilaka, who also said that around 500,000 growers are on the verge of losing their livelihoods. The CDA said that while coconut growers had received gains from the high coconut prices, production levels had dropped. "The government cannot take care of the growers’ needs alone. All this time they had received good returns for their crops but what has happened to productivity?" Purasinghe asked. Meanwhile, the Coconut Products Exporters’ Association said that this move will help revive the industry and open up operations that had been suspended. "The government’s move will bring down coconut prices and it will create a level playing field for all industries dependent on coconuts. But the biggest challenge exporters will now have to face will be to regain lost markets for desiccated coconuts, coconut milk powder and cream," said Tharaka Dadagamuwa, Chairman, Coconut Products Exporters’ Association. He also stressed that it was unlikely that the farm-gate price for a coconut would go below Rs.22 and that growers still enjoyed a reasonable return because demand for coconut oil will not come down drastically as the coconut oil millers fear it would because coconut oil still enjoys a few advantages over palm oil. "Even though the import duty on palm oil has been reduced to five percent from 28 percent, when you add VAT and cess the effective tax on palm oil imports will be about 30 percent. "With the world increasingly moving towards bio fuels as substitute for crude oil, world palm oil prices will also tend to move up, so coconut oil can still be sold at the best possible price," Dadagamuwa said in response to claims that coconut oil producers may be forced to abandon production altogether. The middle-man issue is another curse that had really "cropped up" at the various forums organised by the "business" stakeholders, be they the growers or manufacturers of coconut based products. A coconut small holder from Kurunegala told the Island Financial Review that if the government could eliminate the middle man and oversee distribution directly, they would be able to get much better returns and that the consumers too will not be forced to take such exuberant prices. Several industry analysts are of the view that Rs.22 per nut is a good deal for the coconut growers. But then the middle-man…. While each sector understandably routes for its own cause, the CDA Chairman said that a solution should not seem to have favourites and that the consumer, the people, should be the first to be treated fairly. "We are still waiting for the Attorney General to advice us on how the CDA could resurrect its regulatory authority as vested in the Coconut Development Act No.46 of 1971 and in a subsequent gazette notification on 31 December, 1979. We have written to the AG and are still holding bilateral talks because so many bi-laws have to be created to over ride existing bi-laws," Purasinghe said. He said that once the CDA received its statutory authority steps will be taken to protect the consumer and related industries while creating a brand image for Sri Lankan coconut based products in the world market. |
