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by Elmo Leonard

Sri Lanka's exports of desiccated coconut at end-September 2005 showed a dramatic drop to 23,395 tonnes from 45,464 tonnes shipped during the first eight months of 2004.

With more coconuts from the island's 2005 forecast harvest of 2.5 billion nuts (2004 - 2.7 billion nuts) adding to the domestic supply, the farm gate price of a coconut last week dropped to Rs 9.50 per nut, from Rs 11 per nut early-October.

The price of coconuts is expected to drop further with the big players, Philippines and Indonesia having made forward contracts for most of the year, a broker said.

Sri Lanka's FOB price for desiccated coconut stood last week at $900 per tonne and the international price at $875 per tonne. "Throughout this year Sri Lanka's price for desiccated coconut exports was around $100 per tonne higher than the international price," H D Jayasinghe, Coconut Development Authority (CDA's) Director-marketing development and research said.

In 2004 Sri Lanka exploited the Bangkok Agreement binding exports of desiccated coconut to India to a tariff of 30 percent (from the earlier 70 percent tariff) and by end-September had exported 10,737 tonnes to its neighbour.

But a hue and cry from South Indian desiccated coconut millers saw the Indian tariff raised to its earlier 70 percent on exports.

Desiccated coconut is on the non-negotiable list of the Indo-Sri Lanka Free Trade Agreement. While this year 615 tonnes of desiccated coconut reached India, CDA and the Commerce Department's efforts to persuade Indian authorities to bring down tariffs had fallen on deaf ears, Jayasinghe said.

Sri Lanka's 50 CDA registered coconut oil millers are largely on holiday, going the way of the desiccated oil millers. But, a 400-strong baby (oil)-expeller force is active, shying out of paying 15 percent VAT. Yet, imported edible oil is traded at Rs. 70,000 per tonne, while locally produced coconut oil is wholesaled at Rs. 80,000 to Rs. 90,000 per tonne.

The cost of producing a coconut is Rs 7 per nut, Ranjith Dias, President, Coconut Growers' Association of Sri Lanka said.

Dias fears, that if the price of coconuts falls further, few growers would have the funds to fertilise their plantations.

Sri Lanka with a mere 0.4 million hectares under coconut cultivation could do little to determine international market forces. In contrast Indonesia has 3.7 million hectares under coconut, the philippines, three million hectares and India 1.7 million hectares.

Sri Lankans consume 75 percent of its coconut harvest, while the coconuts produced in other countries go largely into exports, Jayasinghe said.

www.ceylincoproperties.com

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