|Thursday, 3 April 2003|
Decline in production, ME conflict situation
Dark period looms ahead for desiccated coconut industry
By Channa Kasturisinghe
The desiccated coconut industry which is the largest foreign exchange earner in the coconut sector is likely to go through a difficult period in the coming months due to the decline in coconut production and the conflict situation in the Middle East where 65 percent of the D/C is exported.
Over the years Sri Lanka has been maintaining its position as the second largest exporter of desiccated coconut in the world, with an average market share of 60,000 to 65,000 M.T per annum. In the year 2000 local D/C millers created history by out-producing the Philippines and placing Sri Lanka as the largest maunfacturer and exporter of desiccated coconut in the world earning approximately five billion rupees in foreign exchange.
However, the President of the Sri Lanka D/C Millers' Association Sunil Watawala told the Daily News that this year's coconut production which is estimated to be in the region of 2,500 to 2,600 million nuts would not be sufficient for the country to maintain that position in the world market this year.
"According to statistics this quantity will not be sufficient for two industries including the coconut oil industry and it would be difficult to achieve the Ministry of Plantation Industries target of 50,000 M.T of desiccated coconut this year," Watawala said.
He said with Philippines and Indonesia stepping up their production from 75,000 M.T to 105,000 and from 30,000 M.T to 50,000 M.T respectively and new players such as Vietnam entering the market Sri Lanka's will have to concede the market to its competitors.
"It is extremely vital for Sri Lanka to aim at a production level of at least 50,000 M.T in 2003 in order to regain our loss markets. The desiccated coconut industry has an installed capacity of 95,000 M.T. However, this capacity could never be achieved in the country due to the shortage of coconuts. If we are thinking of a target of 50,000 M.T for this year then our mills will be in operation at least at half capacity," Watawala said. He said the 20,000-strong labour force has been living on a dole of 40 days relief wage at Rs.115 for the year 2002 and most of them are unemployed at present.
"This situation is expected to continue till May, 2003. Last year we produced 28,000 M.T and in the process the millers ran into very heavy losses. The liquidity problem among millers is very grave and we have already made representations to the Plantation Industries Ministry and they are negotiating with the banks to get financial assistance. The price of coconuts throughout last year remained very high. Due to this factor we were not competitive in the world market as our competitors offer low selling prices. The price of a coconut in our country was in the region of Rs. 10,000 to Rs. 11,5000 per 1,000 nuts while the prices in those countries ranged from around Rs.6,500 to 7,000. We should offer a fair price for estate owners too for their nuts in the region of Rs. 8,000 per thousand nuts," Watawala said.
He said if the present rainfall figures continued the production of coconuts would be in the region of three billion in the year 2004.
"A strong export market is vital to stabilise local coconut prices especially in a heavy cropping year. In order to achieve this we must maintain our share of the world market," Watatwala said.
He said although the Central Bank of Sri Lanka issued figures of total nuts production, domestic consumption and kernel product exports over the past few years were not accurate as no adjustments have been made on account of edible oils imported to the country and the yardstick in calculating the domestic oil consumption has changed. He said if millers are to achieve this target the Government will have to continue with the importation of edible oils throughout this year at the present duty levels.
Produced by Lake House