30 coconut mills to resume production
 

by Elmo Leonard

Twenty to 30 coconut oil mills in the coconut growing areas of the country are expected to recommence production of coconut oil shortly, following the government's decision to remove the 15 percent VAT on coconut oil produced.

When the VAT was in force oil millers produced coconut oil secretly, "as illicit liquor is made," often at night, said Ben Perera, coconut grower and oil miller. There are only two or three large scale coconut oil millers in the country.

While VAT was in force, the coconut oil produced by the small timers was of low quality, making use of pairings or the brown part of the kernel, left out in the production of desiccated coconut.

"Now, we can produce grade one oil in the open, which will fetch Rs. 85,000 to Rs 95,000 per tonne," Perera said. There are two or three large coconut oil mills and around 50 to 60 millers.

Most of the mills remained closed for long years, while imported vegetable oil, mainly palm oil from Malaysia was sold as coconut oil to the consumer. At the wholesale point, the palm oil is mixed with possibly 10 percent of coconut oil and sold to the retailer. Retail outlets numbering over 100,000 in the island in turn sell the mixture of palm and coconut oil as "coconut oil," while a few consumers are aware of this practice, which continues for the past two decades.

The five coconut oil producers' cooperatives in the coconut triangle had informed the Coconut Growers' Association of Sri Lanka (CGASL) that it would go into production, when VAT is removed, CGASL President, Ranjith Dias said.

The restarting of the coconut oil mills will be of immediate benefit to growers who are forced to sell coconuts at the farm gate price of about Rs. 10 per nut which is just above the price of producing a coconut.

Exporters of desiccated coconut are not pleased with the removal of VAT on the production of coconut oil. With it, the demand and price of coconuts will go up. The desiccated coconut miller will have to buy coconuts at a higher price. Then desiccated coconut produced locally will cost more than the international price of desiccated coconut.

Then, Sri Lanka will loose its market for this commodity, they said.

The coconut mite, raging for years has reduced the production of coconut by 20 percent and if the Coconut Research Institute helps eradicate it, there will be enough coconuts to feed the export of desiccated coconut, Perera said.