Relax import duty, other levies on edible oil, say traders
Factories threatened with closure:
The Coconut Product Traders' Association (CPTA) said that they will
have to close their factories if the import duty and other levies on
edible oil are not removed. The country incurred a foreign exchange loss
of Rs. 1.5 billion during the first quarter of the year.
President CPTA, Tharaka Dadagamuwa said if duties and other levies
are removed edible oil can be imported at Rs. 175,000 per metric ton and
palm oil at Rs. 155,000 per metric ton whereby the price of the locally
produced coconut oil can be reduced to Rs. 175,000 per metric ton.
Despite the improvement in crops export industries cannot compete
with other producing countries due to the staggering cost of production.
Exporters are losing potential markets to the Philippines,Indonesia
Malaysia and Vietnam who have increased their market share with value
added products", Dadagamuwa said.
A consumer pays Rs. 310 per kilogramme for coconut oil which is 82
per cent more than the world market price around Rs. 170 per Kilogramme.
Managing Director Renuka Group Ltd, Dr. S. R. Rajiyah said there
should be a level playing field and that no sector should be given
The surplus of coconuts are channelled for coconut oil production at
the expense of export industries.
The coconut oil industry is protected by tariff barriers. The import
of edible oil including coconut oil is subjected to a 28 per cent import
duty, 15 per cent surcharge, 15 per cent VAT and Cess Rs. 6,000 per
metric ton which is around 65 per cent of the CIF value.
Dr. Rajiyah said the levies were imposed when coconut oil prices in
the world market were around US$ 750 per metric ton. The current coconut
oil price is US$ 1,470 per metric ton.
President, Sri Lanka Desiccated Coconut Millers' Association, Felix
Fernandopulle said that it is a shame that consumers have to pay over Rs.
40 per nut and exorbitant rates for other value added products when the
country is reputed for growing and exporting coconuts.
The Association said the factory owners cannot pay the festival
advance for the Sinhala and Tamil New Year and that this year's
celebrations will be very bleak for the employees.The CPTA has a direct
workforce of over 12,000 and another 5,000 who are indirectly involved
in the industry", he said.
The edible oil consumption in the country is around 160,000 MT per
annum of which 70,000 MT is produced and the shortfall is met with
imports. The import duty on edible oil was adjusted in an ad hoc manner
during the past two to three years and as a result of uncertainty there
is no import of the quantity required to meet the local demand.
Managing Director Adamjee Lukmanjee and Sons Ltd., Murtaza A.
Lukmanjee said most of the developing countries are removing the import
duties and other levies on essential food items as prices in the world
market are skyrocketing.
"Coconut farmers should receive a fair price for their produce. the
authority needs to strike a balance between the farmer, consumer and the
industries", he said.
The CPTA said efforts to revive a major revenue earning industry has
been a failure. Repeated appeals made to the Ministry of Plantations and
the Coconut Development Authority (CDA) have fallen on deaf ears.
While the country's earnings exceed over Rs. 9 billion from coconut
kernel products the expenditure on edible oil is around Rs. 8 billion
The demand for coconut oil in the country will increase sharply
during the first half of April due to the Sinhala and Hindu New Year. If
corrective measures are not taken consumers will have to pay over Rs.
350 per Kg of coconut oil and Rs. 45 per nut.