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DateLine Sunday, 23 March 2008

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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 preference.

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 per annum.

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.

LF

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