17/04/2008 (The Island Online) - The Minister of Coconut Development, Nation Building and Infrastructure said that the government should not have taken the decision to slash import taxes on palm oil.
"As a result of this the coconut industry has witnessed a sharp decline and consumers are buying cheap palm oil thinking it to be coconut oil. This move by the government was irresponsible and many coconut growers and coconut oil producers have already given up their occupations in the industry, Minister Salinda Dissanayake said.
The government’s decision to bring down the duty on palm oil imports from 28 percent to 5 percent in a measure to bring down coconut prices has put some 500,000 coconut growers into a desperate situation, one which they may not recover from, said the Chairman of the Coconut Cultivation Board, Jayantha Gunathilaka.
Gunathilaka said that a large number of coconut oil mill owners had closed down their production facilities as well because within the few weeks since the President had instructed the Treasury to slash the import levy on palm oil, the coconut oil producers could not find a lucrative market for their products, as palm oil was far cheaper than coconut oil.
"Coconut prices have come down to Rs.22 in some areas of the country as a result of this but the low returns to growers are forcing them to put their lands into other uses other than that of cultivating coconuts,
"The reduction in duty will result in about 160,000 MT of palm oil being imported in this year by certain business magnates who have taken the opportunity to capitalize on this situation. The desiccated coconut industry will no doubt benefit from the reduction in coconut prices," Gunathilaka said.