A well-established palm oil industry in the country while having a vast potential for import substitution could also be used for export development, Wayamba University Emeritus Professor Asoka Nugawela told Sunday Observer Business last week.
He said as per the current oils and fats needs and production of the country, the government has the potential to save up to Rs. 31 billion in foreign exchange annually.
“In 2018, Sri Lanka’s annual oils and fats imports stood at over 250,000 metric tons. In the same year, the country produced only around 23,000 mt of coconut oil and 18,000 MT of palm oil. National production was a mere 16% of the total oils and fats needs of the country,” Prof. Nugawela said, adding that this scenario compelled Sri Lanka to spend over Rs. 31 billion in foreign exchange to import and bridge the gap of its oils and fats needs in 2018.
According to Prof. Nugawela, a significant proportion of this expenditure, i.e. Rs. 24 billion had been to import 220,000 mt of palm oil.
He said the country has the capacity to produce palm oil as an import substitution strategy and overcome this unaffordable draining of valuable foreign exchange which the government is desperately trying to prevent.
“Since oil palm is a economically viable crop to the grower, it could also strengthen the continuously weakening plantation economy giving the financial capability to enhance worker wages and improve plantation infrastructure,” Prof. Nugawela said, adding that countries such as Indonesia and Malaysia have widely used this crop in their poverty alleviation programs by introducing this crop to smallholders through projects funded by the World Bank.
Though the potential benefits from a palm oil industry is enormous towards the economic growth of a country, its development in Sri Lanka is hindered due to multiple reasons. The perception of a few that oil palm plantations impact the environment negatively is one major reason.
Unfortunately, what they do not understand is that it is a criticism aimed at countries planting oil palm after felling virgin forests elsewhere in the globe.