Time to revoke the ban on palm oil cultivation

During a recent workshop which was conducted to review the policy on palm oil cultivation in the country, Haritha Derana SME Foundation, an agricultural community association, handed over a letter to the President’s Advisor on Food Security Dr. Suren Batagoda, urging the Government to remove the ban imposed on cultivation of palm oil in Sri Lanka.

The history of the controversial prohibition goes back to lackadaisical Maithripala Sirisena Presidency. Based on a questionable report submitted by the Central Environment Authority (CEA), Sirisena arbitrarily ordered in March 2019 to refrain from growing the crop much to the dismay of plantation companies. The CEA report linked oil palm plantations to soil erosion and drying up of water sources and outlined several recommendations to create the foundation for banning oil palm cultivation in the Island. Experts had pointed out the CEA study contained several wrong conclusions, and the report had not been signed by four of seven members of the panel.

In fact, the former President was associated with unscientific decisions in respect to the agricultural policy and thereby caused an enormous damage to the nation’s agricultural sector, particularly to commercial farming. For instance, the irrational ban which was enforced on the importation of glyphosate in 2015, led to substantial cost escalations for tea plantations. Furthermore, as a consequence of that ill-conceived decision, tea exports to Japan recorded a considerable decrease. The disastrous move was enthusiastically advocated by NPP protagonist Asoka Abeygunawardana, an electrical engineer who served as Chairman of the Strategic Enterprise Management Agency during the Sirisena administration.

Unfortunately, Sirisena’s successor Gotabaya too further reinforced the proscription of palm oil plantations in April 2021 and demanded uprooting of oil palm trees and replanting such areas with rubber trees due to concerns about the palm oil industry’s alleged negative social and environmental ramifications. To make the matters worse, Gotabaya even banned palm oil imports to Sri Lanka, creating a nightmare to the local food and confectionary industry. Although the ban on palm oil imports was swiftly reversed after resulting in a significant financial strain of $ 88 million, the prohibition on oil palm cultivation remains in effect. 

Sri Lanka currently imports 180,000-220,000 metric tons of vegetable oil annually, a demand that could be efficiently met with 50,000 hectares of oil palm or 271,000 hectares of coconut. Importantly, oil palm generates a significantly higher oil yield per hectare, ranging from four to five times more than coconut. With a history dating back to 1968, oil palm plantations in Sri Lanka have served the nation for over 54 years, and it is reported that there is no proof of soil degradation and scarcity of water resources in these estates. During the above-mentioned seminar, it was revealed that studies have confirmed oil palm generates an average profit of Rs. 720,000 per hectare per year, outperforming coconut (Rs. 315,000), rubber (Rs. 90,000), and tea (Rs. 600,000). Also, monthly wages for labourers in palm oil plantations range from Rs. 30,000-50,000, exceeding those in tea (Rs. 25,000) and rubber (Rs. 18,000) sectors. Moreover, the water usage of palm oil (1,097 m3 water/tonne) is considerably less than that of coconut oil (2,678 m3 water/tonne), rubber (13,737 m3 water/tonne) and tea (8,856 m3 water/tonne).

It is speculated that Wickremesinghe administration is seriously considering the possibility of reversing the unscientific decision made by his two immediate, substandard predecessors in the context of the economic challenges the country is encountering especially in terms of foreign reserves. Palm oil consumption worldwide is predicted to grow at the rate of 5.5% in CAGR terms, accounting for more than 70% share of the food and confectionary industry. Sri Lanka has a great potential to save precious foreign exchange and create green jobs for the country’s rural workers by expanding palm oil production. Our economy has suffered tremendously due to short-sighted decisions, and the time has come to undo them for the good.