3rd Quarterly Bulletin for the Year 2019-2020

Coconut Growers Association of Sri Lanka

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Website: lankacoconutgrowers.com

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Mr. Jayantha Wickrakasinghe new Head of Lankan Coconut Sector Mr. Jayantha Wickranasinghe assumed duties as the new Chairman of the Coconut Cultivation Board, Coconut Development Authority, Coconut Research Institute and the Kapruka Fund Management Board on December 31, 2019 at the Head office of the Coconut Cultivation Board. General Manager Mr. Dammika Ranathunga and other Executive Officers of the Coconut Cultivation Board were present on this occasion. The newly appointed Chairman of the four Institutions of the Coconut Sector, Mr. Jayantha Wickramasinghe was the Chief Executive Officer of Lanka Logistics and Technologies Limited, Ministry of Defense and Urban Development from 2006 to 2015. He was a Member of the Board of Management of the Urban Development Authority from 2010 to 2015, during which time Sri Lanka experienced mammoth progress and investments in Urban Development. He was also a Director of the Information and Communication Technology Agencey (ICTA) of Sri Lanka from 2003 to 2006. Mr. Jayantha Wickramasinghe is a Non­Exceutive Director of Ceylinco Life Insurance Ltd., having the largest portfolio of Life Insurance business in the country. Further, Jayantha Wickramasinghe was a past President of the Sri Lanka Canada Business Council. He was also the Secretary of the Coconut Growers Association of Sri Lanka. He is a Chartered Member of the Chartered Institute of Logistics and Transport, UK.

Strategic Plan to Develop the Coconut Industry of Sri Lanka by 2025 The Coconut Growers Association of Sri Lanka (CGASL) has been participating in a series of meetings commencing in 2019 with other stake holders in the industry to formulate a Strategic Plan to have a robust Coconut Industry with all stake holders participating and benefitting from Marco and Micro polices to be adopted by all stake holders.The following stake holders have participated at these deliberations. 1. Coconut Growers Association of Sri Lanka

2. Ceylon Desiccated Manufactures Association3. Oil Millers Association4. Virgin Coconut Oil Exporters Association5. Exporter Association of Coconut Based Substrates6. Fiber Millers Association7. Fiber Exporters Association

As a outcome to these deliberation A document “ Way Forward – Stratergy for the Coconut Industry of Sri Lanka has being compiled by the Colombo School of Business & Management and presented to the stake holders.

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There are 8 main strategic focus areas. 1. Maximizing the productivity of existing plantations 2. Establish an efficient, cost effective collection system and supply chain between Grower and end user (consumer / manufacture) to have sustainable Farm Gate price. 3. Consistently improve the quality of market, production and business feasibility information to enable stakeholders to effectively plan for sector diversification, productivity improvement and development 4. Focus on product and market diversification 5. Develop finance mechanisms to enable strategy implementation and investment by all stakeholders. 6. Develop a coconut processing industry for value added and diversification of coconut products. 7. Improve support services to respond to sector needs. 8. Establish a coconut strategy implementation and coordination body to establish appropriate administrative and regulatory frameworks to manage the coconut Industry. This Strategic Plan was presented to the Minister of Agriculture Minister and the Secretary on 20th December 2019 and both of them endorse same and requested the stake holders to proceed with implementation of PLAN. The key highlight of the strategic framework is the establishment of a Joint Coconut Industry Chamber (JCIC) which will serve as a joint industry secretariat to facilitate the industry­wide corporation with consultation and support from government establishments. Thus this represents a coordinated central point for the Industry. The CGASL committee members have contributed their valuable time and resources in participating at stake holder meetings both in Colombo and Pannala. All the stakeholder associations have financially contributed to meet the cost of preparing this document. CGASL's share for same was Rs 250,000/­. Each stakeholder association is entitled to nominate representatives to form the Joint Coconut Industry Chamber (JCIC). Presently a constitution and other statutory document are being drafted for the formation of JCIC.CGASL nominations are

1. Mr. Cryshantha Jayawardhana (Vice President)

2. Mr. Lionel Fonseka (Immediate Past President)

3. Mr. Denzil Aponso (Past President)

4. Mr. Nimal Samarakkody (Past President)

thMeeting minutes Joint Coconut Industry Forum held on 27 April 2020

Present :� M/S S. Ratnatunga, Chrishantha Fernadopulle, Lakshman, Ranjith Pathiraja, Akila Fernando, Asitha Gunasekera, Chrysantha Jayawardena, Randolph, Suresh Silva, Jayantha Samarakoon, Ranil Seneviratne, ,Gamini Malwanegedera, Murthazar Lukmankee, Saman Indrajith, Kithsiri Palihawadana, Lalitha Ratnayake, Dayan Fernando, Shantha Ranathunga, Natarajan, Indika Fernando, Asanka Herath, Suresh Fernando, Lionel Fonseka, Lal Fernando, Dinesh Fernando

Mr. Dinesh Fernando explained the purpose for this meeting was to get all the stakeholder associations of the coconut industry get involved as one voice so that all decisions in future will be of mutual benefit to all.

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Mr. Dinesh also stressed that there were certain policy decisions that were going to be made by CDA/Ministry which will use this type of forum to discuss and notify.

Mr. Suresh Silva stressed that the coconut industry was one of the very few industries with a full order book. Hence it will be one of the industries which could be used for the inflow of foreign currency into the country. Therefore, it is imperative that the CDA and the government pay heed to the concerns faced by the industry and take decisions so that the industry will be able to thrive in this difficult global environment.

Mr. Suresh Silva also stressed that the implementation of the duty on imported edible oils has created a negative impact in the industry by driving the price of raw material (Coconut) up. He said that his company has reduced the working days from 5 to 2 days per week due to this issue.

Nut prices have gone up from LKR 70­73 per kg to LKR 85­90 per Kg as of last week. Our competition from Indonesia and Philippines remains at LKR 22 per kg. As a result of the inflation of coconut prices the export Industry for coconut is getting

crippled. Mr. Samarakoon added that in order to be sustainable and profitable the growers nee

to receive a price between LKR 60 ­ 70 per kg. Mr. Murtaza Lukmanjee stated that if the coconut prices can be stabilized between

LKR 30 ­ 40 per nut and maintain an average of LKR 35 per nut that the Industry could be competitive in the global market.

He also stressed that at the present prices the exporters will have to default on orders which have been forward booked as the prices negotiated cannot be maintained due to the abnormal increase of coconut prices.

Mr. Ratnatunga stated that the oil millers are operating very efficiently since the prices received for their oil is at a very good level.

The increase in the duty for edible oils has also impacted their market in a very positive manner.

He also stated that there was no need to be alarmed as there is plenty of coconut available. However, the constraint is to get it to the manufacturing facilities due to the prevailing curfew and transport restrictions.

He also stated that the oil imported into the country for refining purposes is of a very low quality and it is not fit for human consumption.

Mr. Lalitha said that the quality of the oil imported should be left to the authorities to investigate test and decide if it is suitable or not and that individuals' opinions should not be the deciding factor. Mr. Suresh Fernando endorsed what Mr. Lalitha said.

Mr. Shantha also re­affirmed that the nut prices should be in the range of LKR 70 per kg for the export market to be sustainable.

Mr. Chrysantha stated that the growers received a nut price between LKR 25­27 per nut last year. He said that it was not a sustainable price as far as the growers are concerned.

Mr. Dinesh Fernando said that it would be in everyone's interest if the coconut prices are stabilized at LKR 35­40 per nut.

He also said that the Ministry is trying to reduce the duty of imported coconut oil by LKR 50 per kg. And also to stop or minimize the import of palm oil into the country.

Mr. Ratnatunga was against this idea as it will be detrimental to the oil millers. They will not be able to remain competitive with imported coconut oil prices if the duty is reduced as suggested.

Mr. Dinesh Fernando said that the flip side of the coin would be that the coconut exporters will be facing factors beyond their control and that the export revenue generated from the coconut Industry will definitely suffer at a time country needs it most.

Mr. Ratnatunga stated that if the coconut prices are maintained at LKR 35­40 per nut that they could supply Coconut oil at LKR 350­375 per kg.

Mr. Murtaza Lukmanjee stated that in order to remain competitive across all stake

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holders that the coconut prices should be maintained at LKR35­40 per coconut and the coconut oil should be sold at LKR 350/kg base on the above price. He also stated that the duty on imported coconut oil should be brought down to LKR120 and palm oil duty should remain at LKT 170/kg

Mr. Suresh Fernando also mentioned that a price difference of LKR35,000 per ton should be maintained between crude and refined oil.

Mr. Lalitha Ratnayake mentioned that consideration should be given to the refinery facilities that are available in the country. Taking into consideration the investment into such facilities and the employment generated through such facilities..

A general belief was that the duty structure on edible oils should be reviewed quarterly taking into consideration the voice across all the stake holder associations (Joint Coconut Industry Association Forum).

Mr. Suresh Fernando also stated that the palm oil prices should be maintained at the higher level as if the prices are reduced some unscrupulous manufacturers mix palm oil with coconut oil in order to maximum profits. This creates a negative image for the product produced in Sri Lanka which is considered to be of a superior quality.

Mr. Chrysantha said that we should start discussing coconut prices on a per Kg basis and not per nut basis. This is because the entire industry buys coconut based on weight and not volume. Therefore based on this the per kg rate should be between LKR 70­80 per kg. This is the figure that the coconut growers find sustainable. Mr. Jayantha Samarakoon agreed to this as well.

Mr. Murthazar stated that LKR70 per kg in times of abundant supply and LKR 80 per kg in time of short supply could be agreed to.

Mr. Suresh Fernando said that the coconut pricing should be based on an average annual price and should be kept between LKR 65­80 in order for all stake holders to remain profitable and competitive.

Mr. Pathiraja stated that If the price per kg of coconut was LKR 65 the price per Kg of Coconut oil of LKR

375 could be given. If coconuts were LKR70 per kg the oil would be LKr 410 per kg' (Mill price) If coconuts were LKR75 per Kg the oil would be Lkr 435 per kg If the coconut were Lkr 80 per Kg the oil would be Lkr 465 per kg.

A suggestion was made that to suggest to the CDA to give average prices for the commodities that are controlled under their purview. (ie. Price per kg of husked coconut, Price per kg of Oil etc…)

A draft letter containing the points discussed will be done by Mr. Asitha Gunasekera and Mr. Suresh Fernando. This draft will be circulated and agreed upon. Thereafter once agreed it will be sent as an official document to the Treasury, Ministry and the CDA with the recommendations and proposals.

st It was noted and agreed by all that this was the 1 time that all stake holders have

had such a successful meeting where all parties have agreed on common proposals and suggestions for the betterment of the industry in general.

Mr. Chrysantha said that just as we have agreed on coconut and oil prices that we should agree on DC prices as well. However Mr. Murtaza Luckmanjee was of a different opinion as the market for DC from Sri Lanka has reduced by half although the world demand continues to increase. Countries such as Indonesia and Vietnam are capitalizing on this situation. He foresees a further reduction in future. Hence in a reducing and highly competitive market he does not think that the pricing formula for coconut based on DC will work.

All sectors agreed to make a request from the treasury, the ministry and the CDA to consult The Joint Coconut Industry Forum before making changes to the Special Commodities Levy (SCL) in future.

Non­Kernel Products Mr. Gamini stated that the main issue faced by the industry at present is on how

to overcome the restrictions in place as a result of the present COVID­19

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situation to operate fibre and substrates at optimum capacity. He said that the MOH and the security forces do not identify fibre and substrates

as an essential item. Hence it is difficult to carry on as usual. All present at the discussion were of the same opinion. Mr. Jayantha stated an interesting fact that the coconut growers predict a harvest

in excess of what we received in 2019. However, the report submitted by the CRI disputes this fact by stating a crop reduction of between 5­8%

Mr. Indika stated that their fibre mills are not operating as usual and that they are facing a bigger issue of selling the goods manufactured.

Mr Chrysantha discussed the possibility Formalization of the incorporation of The Joint Coconut Industry Chamber as a corporate entity. In this regard it was suggested that option of different corporate structures be compared and merits /demerits be compared and the most suitable corporate structure be proposed at the next meeting for discussion

A similar meeting was suggested to be held in 2 weeks time.Summary of decisions taken at the above meeting:

All sectors (Growers, Coconut Oil, Desiccated Coconut, Coconut Milk, Exporters) unanimously agreed that the farm gate coconut price should be Rs.35.00 – 40.00 per nut.

All sectors agreed that the coconut price should be quoted in Rs/Kg as opposed to Rs/nut. As such, coconut price of Rs.35 – 40 per nut should be quoted as Rs.65/Kg to Rs.80/kg husked and delivered to factories.

All sectors agreed the coconut oil price should be Rs.375/Kg to Rs.425/Kg Ex factory. Palm oil would then tend to be a little lower than this.

All sectors agreed in order to maintain an adequate supply of edible oil for the domestic market edible oil should be imported. Duty on imported edible oil should be decided by the CDA as per the agreed limitations (Coconut Price Rs.65/Kg­ 80/Kg and Coconut Oil Price Ex factory / Ex warehouse CMB price of Rs.375/Kg –Rs.425/Kg).

The duty on both Coconut and Palm Oil to be adjusted accordingly such that both oils can be imported. The CDA after calculating the rate of duties to take immediate steps with the Treasury to allow importation of edible oils freely and share their recommendations with this Joint Coconut Industry Association Forum. All future decisions on duty changes to be made by the CDA/Plantation Ministry after consultation of the Joint Coconut Industry Association.

JCIC to write to the Minister/Chairman CDA immediately, indicating above for prompt action to revise duties in order to stabilize the prices of coconut, for Industries to operate at commercial viability.

All sectors agreed to meet after 14 days from today (27th April) to discuss the developments/follow up of the decisions taken at the meeting.

Identify the most suitable corporate structure for the Joint Coconut Industry Association by comparing merits/demerits of various options at the next meeting.

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ARE YOU ALL STILL WITH PALM OIL OR CHANGED OVER TO COCONUT OIL?

I think you can remember my previous article captioned “IS IT COCONUT OIL OR PALM OIL?” I think it is an opportune time that I reiterate the same topic for the benefit of our members.

**********Is it Coconut oil or Palm Oil?

It is time that we did an analytical study of coconut oil and Palm oil; as there is a controversy over the supremacy of the duet.

Biochemical Analysis of the two oils.

Carbon Atoms – Fatty acids are basically made with Carbon, Hydrogen and Oxygen atoms. The length of the molecule of the fatty acid is determined by the number is determined by the number of Carbon atoms. Accordingly the fatty acids are catergorized in to long chain, medium chain and short chain fatty acids. LAs indicated by the above chart coconut oil though saturated has mostly medium chain fatty acids and palm oil though unsaturated has mostly long chain fatty acids. If we consider the metabolism of the two oils, coconut oil is highly digestible and is readily absorbed due to its high content of medium chain fatty acids and is taken via the portal system directly to the liver without being circulated around the body in the circulatory system and is metabolized by the liver into energy while utilizing the other benefits of it.To the contrary palm oil with its high content of long chain fatty acids it is not easily digestible and is converted into chylomicrons (large fatty molecules) in the intestine and is absorbed by the lymphatics (a system of channels other than blood circulatory system) and is circulated around the body and the fatty materials get deposited in the blood vessels forming obstructive plaques more so in the damaged internal linings of the blood vessels by high blood pressure, diabetes, smoking, obesity etc. When this obstruction occurs in the blood vessels of vital organs like heart, brain, eyes, kidneys fatal eventualities could befall.The other advantages of coconut oil are that it has anti carcinogenic (cancer making tendency) , anti bacterial and anti fungal properties. Virgin coconut oil has an added advantage of being an anti Alzheimer's nutrient. Coconut oil could be reused in cooking owing to its low iodine value classifying it as a non drying oil.Unfortunately the same could not be spoken of palm oil as it has a lot of disadvantages.

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It is not safe to be reused in cooking as the Esthers(chemical compounds) formed by recurrent heating palm oil are carcinogenic. Palm oil is cholesterologenic and contributes a lot to atherogenic(intra vascular) plaque formation in the circulatory system.Taking these into consideration it is not advisable to use palm oil for consumption but could be used in industry to make soaps etc. With all the advantages of coconut oil and the awareness among the international community there is a great worldwide consumer acceptance and has become a favored delicacy.Internationally coconut oil is vividly used in nutraceuticals (food materials), lllpharmaceuticals and in cosmeceuticals.As growers it is our duty to produce adequate quantities of coconuts to meet the ever rising local and international demands.

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Existence of coconut cultivation in Sri Lanka dates back to about 2000 years; though systematic cultivation has commenced rather late.Coconut kernel had been providing about 22% of the total calorie supply being only second to rice. Average per capita annual consumption is about 120 nuts of which about 30 nuts been consumed as coconut oil.Coconut oil had been used very widely in Sri Lanka till about a few decades ago when a very negative publicity was given by the western world as a very health hazardous oil, probably to market their own products. It took ground very well till proper bio chemical analysis proved the real value of coconut oil as a health friendly commodity. In the mean time palm oil had been imported to the country predominantly to be value added and re­exported. Most unfortunately major part of this oil had leaked into the Sri Lankan consumer market and is presently consumed in great volumes predominantly due to its low cost when compared to coconut oil. Not only that many dealers used to adulterate coconut oil with palm oil thereby reducing the market values to unrealistic low levels rendering a lot of oil mills to closure.Presently palm oil is enjoying a consumer market share of about 88% leaving coconut oil to 12%.The palm oil is marketed by the leading multinational companies as a vegetable oil misleading the people. Some of the multinational companies market it as vegetable oil derived by RBD Palm Olein. RBD means refined, bleeched and deorderized; none of which is going to change the chemistry of Palm oil. The money you save by paying less for palm oil on a long­term basis will have to be spent on medicine and hospitalization. In the pre palm oil era where coconut oil was used as the main edible oil the occurrence of heat attacks, strokes, blindness, kidney failure and cancers was insignificant where as presently it is difficult to find a family where such deceases are not found.As remedial measures to save our nation it is best that we completely stop the importation of palm oil and to import coconut oil to fill the void, the growers should be given a proper farm gate price, the closed down oil mills (about 90%) to be recommenced, to make available the other agro requirements like manure and other agro chemicals and agro equipment at affordable prices and at the necessary times (specially manure). In the next bulletin I will be publishing an article where one could make coconut oil at the level of a cottage industry. Wishing you all a very healthy future, Dr. Nihal Silva.

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If undelivered,Please return to :

J.V.R. Dias873, Negombo Road,Mabole,Wattala.

To:

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