Thursday, February 21, 2008

[PBN] Going Nuts: Sri Lanka regulates coconut market


Going Nuts
19 February 2008 21:04:51

Sri Lanka plans draconian new laws to curb coconut farmers; new disease
threatens crop

Feb 19, 2008 (LBO) – Sri Lanka is planning draconian new laws to limit
the rights of coconut farmers to put land to alternative uses and cut
import duty on coconut oil as prices soared and a new pest hit groves in
the island.

Disease and clearance of coconut land for development have helped reduce
production of coconuts in Sri Lanka, leading to a scarcity a government
minister claimed.

"Low rainfall and scarcity of water affect coconut crops and over
200,000 acres of coconut trees have been felled," Salinda Dissanayake,
minister of coconut development, told reporters. "That is the reason for
lower production."

He attributed the high price of nuts to low crops during this time of
year as well as the cumulative effects of bad weather and loss of land
under coconut cultivation for housing and factories.

Dissanayake told a meeting at the coconut cultivation board Tuesday that
in February this year, production dropped sharply, creating a scarcity
in the markets which led to a coconut price hike.

Meanwhile a new bacterial disease, phytoplasma, has hit coconut groves
in the southern coastal belt, foricing tens of thousands of trees to be
destroyed, officials said.

The coconut price has increased to 36 rupees from a low of 18 last June.
However inflation in the country was 20 percent for two years running,
indicating that at least part of the increase in prices was monetary, or
due to money printing.

Sri Lanka's area of coconut estates had dropped to 800,000 acres from
one million acres as developers clear coconut land to sell them for
housing plots.

Land prices have been soaring, due to an asset price bubble fired by
loose monetary policy since 2004, but coconut growing areas in the north
central province have been getting urbanized for decades.

Though usually coconut farmers inherit the land from their forefathers
fragmenting of coconut land requires approval by local government bodies
in Sri Lanka.

This is given for coconut lands less than 10 acres in extent.

An owner of 50 acres of land might divide it into 10 acres each and
write the plots under their children's names to get around the law and
get local government approval to clear the land for sale, Dissanayake says.

"Finance companies discuss with provincial councils and go ahead with
clearing coconut land to sell. Our current law does not permit us to
control this."

The board has obtained authority to impose a tax of 300,000 rupees on
anyone who divides one acre of coconut land into plots for sale.

Draconian new laws are to be brought which analysts say could discourage
anyone from putting up commercial coconut plantations even in less
developed areas of the island.

A law on felling of trees will be amended to include coconut trees in
the near future so that owners felling coconut trees could also be taxed.

"We are in the process of formulating laws to control fragmentation of
coconut land and within one month we will present it to the parliament
and control the fragmentation of coconut land," Dissanayake told reporters.

Meanwhile, the board wants to reduce the price of a coconut to 25 rupees
by importing coconut oil.

Sri Lanka produces 70,000 metric tonnes of oil at present but the
requirement per year is over 160,000 metric tonnes.

"We have stopped at 70,000 metric tonnes because if we try to
manufacture more oil, it will affect our desiccated coconut industry,"
Dissanayake claimed.

Dissanayake says the desiccated coconut producers will not face a
scarcity of raw material from March onwards, once coconut production
picks up.

Sri Lanka has not thought of banning the export of coconut products, as
exports are considered earners of 'valuable' foreign exchange.

However other third world countries have put export controls of food
crops to keep down domestic prices, depriving farmers of their rightful
incomes amidst a worldwide commodity price boom.

Officials estimate Sri Lanka will produce 2,776 million nuts in 2008,
404 million nuts short of the annual requirement.

Sri Lanka produced 2,900 million nuts last year.

Check for earlier Pacific Biofuel posts:

No comments: