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Sunday, 20 January 2002 |
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Call to remove surcharge on vegetable oils The Coconut Product Traders Association (CPTA) is requesting the Government to immediately remove the surcharge imposed on imported vegetable oil as it has caused a crisis in the export of coconut products. Chairman of the Association, Murthaza Lukmanjee said: "The Government introduced a temporary surcharge of Rs 20,000 per metric ton (PMT) on imported vegetable oils from February to December last year. This has been extended to March 31 without consulting the trade. It is in addition to the prevailing import duty of 25 per cent." He said: "If Sri Lanka is to even remain in the world coconut trade as a supplier of kernel products, the surcharge of Rs 20,000 PMT needs to be removed immediately." Mr Lukmanjee said the effects of the surcharge were felt last year when export volumes dropped alarmingly while local prices rose above market levels. In addition, Sri Lanka started to lose the markets it had developed over the last few decades in the Middle-East. "Therefore, we urge the Government to have a long-term policy and commitment to uplift the coconut industry without resorting to ad hoc measures to escape from temporary volatilities," he said. During 1999 and 2000, exports of coconut products amounted to Rs 11,936 million and Rs 12,504 million respectively. Desiccated coconut (DC) being the major kernel export, earned 40 per cent of the total earnings. Exports from January to October 2001 have fallen from Rs 4.2 billion to Rs 2.5 billion for DC when compared to the previous year, which is a staggering decline of 40 per cent, Lukmanjee added. Volumes too have fallen similarly. The figures for November and December are disastrous with production coming almost to a standstill in mid-December. The main reason for today's local market price of coconut oil is an all time high of Rs. 95,000 PMT for vegetable oils due to the effect of the surcharge which amounts to 155 per cent of import tariffs and taxes. The world market price of coconut oil today is equivalent to Rs. 35,000 PMT. Such a huge difference in price makes it uncompetitive for DC and any other coconut kernel products in the world market," he added. "As a result, our competitors are capturing the world DC demand at 700 to 750 dollars per metric ton in the Middle-East and Europe. The few tons being quoted in the local market today are at Rs. 82,000 PMT or $ 975, a phenomenal difference which has seen the capture of the local market by Indonesia, Vietnam and the Philippines". Local DC exports have experienced a sharp decline in volume since the rise in local prices well above world market levels which has resulted in the closing down of more than 50 of the 60 DC mills in operation and the loss of employment for over 5000 in the sector, Mr. Lukmanjee explained. "In addition to the export crisis, the average consumer is paying Rs 95 per kg of oil and Rs 16-20 per coconut. This has a significant impact on the cost of living. At a time when the Government is trying to bring down the cost of living, the surcharge has resulted in a burden to the consumer." He said that even if the surcharge is removed, the import duty of 25 per cent would prevail, resulting in oil prices not going below Rs 65,000 PMT. This will ensure fair prices to the coconut grower and to the consumer, said Lukmanjee. |
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