Oil palm industry has huge potential

Veteran plantation industry expert and Chief Executive Officer of Watawala Plantations PLC, Dr. Dan Seevaratnam recently extolled the virtues of increasing oil palm production locally.

"I am a believer in outcomes and not just outputs," said Seevaratnam.

"Around 95 percent of edible oils consumed in Sri Lanka is imported at huge cost. We need to see what the cost is in economic terms and the economic contribution to nation building".

The local oil palm industry is considered as an industry with huge potential and its products can be used for a wide range of purposes. "If we produce our own oil we would save a great deal of foreign exchange and substitution of edible oil imports underscores the rationale for oil palm cultivation" he said.

Oil palm has a potential oil yield of 3,000 to 4,000 litres per hectare per annum. In comparison, coconut yields just 700 litres per hectare. Alternatives such as sunflower oil yields 600 litres per hectare per year, and soya-bean oil has an output of only 460 litres per hectare per year.

Oil palm is also a high yielding crop and profitable, making it ideal for companies looking to diversify even in a situation where there is limited land, Dr. Seevaratnam said.

In addition, the labour requirement for oil palm cultivation is much less, with just one worker to cultivate 10 hectares of crop, unlike tea which needs two or three workers per hectare.

Similarly an oil palm harvester earns from Rs. 65,000 to Rs. 105,000 a month when compared to a good tea plucker's average income of Rs. 25,000 per month.

High yield coupled with low resource intensity also means higher profits, he said.

Crude palm oil earns an estimated Rs.150,000 to Rs. 200,000 per hectare, while rubber is struggling to make profits.

Dr. Seevaratnam stressed the need for local authorities to recognise the advantages of import substitution and its contribution to the economy.

"Apart from being in the industry for many years and cultivating millions of hectares, Malaysia and Indonesia have brought in vital foreign exchange to their economies. Sri Lanka could certainly benefit by following a similar strategy," said Director and Head of Business Development and Plantations at Aitken Spence PLC and Managing Director, Elpitiya Plantations PLC, Dr. Rohan Fernando.

"At the same time, investment cost for oil palm is lower than that of crops such as tea and rubber," he said.

Labour use too was lower than for other alternatives. Hidden advantages are that this crop cannot be stolen from plantations, unlike scrap rubber or even tea leaves.

According to Dr. Fernando, the potential for import substitution was one of the most compelling reasons to diversify. This is especially so given that oil palm has such a stable market internationally, with a diverse array of consumers.

Sri Lanka needs to look seriously at diversifying and increasing its production of palm oil to develop the industry to be on a par with other countries, he said.

Diversification into oil palm cultivation has revealed impressive results in terms of high productivity, improved value addition and export capability. It is a win-win operation for plantation companies, domestic consumers and the country.