What has happened to the coconut market in the country? This is another outcome of wrong policymaking by the country’s political authorities
Making coconuts disappear from retail outlets
Fresh coconuts have disappeared from most of the retail outlets in the country by last week. In some places, they are available but sold through the backdoor as if the traders are dealing in contraband. Worse, they are sold at prices ranging from Rs. 100 to 120 per nut. That is close to double the price set by the Government for average sized coconuts.
But the customers are treated to a double jeopardy here. Apart from the high prices, they get partly mature coconuts plucked before they reach full maturity. Hence, they do not get value for money because the cream content in those coconuts is much less.
Since almost all the coconuts have been harvested before the due time, there won’t be coconuts to be harvested at least for another three months. Hence, the short supply will continue, to the dismay of housewives who use coconut cream abundantly in local curries.
Overreaction to price increases
What has happened to the coconut market in the country? This is another outcome of wrong policymaking by the country’s political authorities. When coconut prices started going up due to the short supply, the Government overreacted by imposing a set of controlled prices on coconuts based on their sizes. According to some Government authorities who made the announcement, the objective was to protect the consumers who were going to be exploited by the opportunistic middlemen in the market.
In the first few weeks, fresh coconuts were available at the controlled prices at Government-run retail shops like the Lak Sathosa and major supermarkets. When the supply dried out soon, coconuts in those places too disappeared. At that stage, the consumers were served only by small grocery shops but at prices above the controlled price.
When the authorities started threatening to sue them, coconuts on the front side of the shops quickly disappeared. Now they are sold in most places through the backdoor only to known customers. Even then, after treating them to a barrage of excuses that they too get them from the distributors at the same prices.
Cultivating coconuts without going for scientific methods
For centuries, coconut had been a tree of multiple use or in Sinhala, Kapruka, in Sri Lanka. Its main product, fresh coconuts, provided the cream for curries without which the local cuisine was tasteless. The edible oil it produced too was used as the base for many indigenous medicines. Yet, coconut was grown only in home-gardens without much care or tending.
When Dutch Governor Van de Graaf tried to persuade the local inhabitants to use scientific farming to improve the yields of both paddy and coconuts, he was not received very kindly by them. This changed to some extent in the British period when Sri Lanka’s newly-rich locals chose to invest their surplus earnings in commercial coconut plantations in Gampaha, Puttalam and Kurunegala Districts. However, they were absentee landlords who visited the coconut plantations very infrequently. Hence, unlike tea or rubber, coconut industry did not receive the due attention from its owners.
Coconut, the political weapon
Coconut was such an essential ingredient in local cuisine that its price increases caused much anger among housewives. Then, this was used as a political weapon by Opposition parties to attack the Government in power. Thus, to arouse the wrath of voters against the Government, politicians of all hues used to bring ‘half a coconut’ to political rallies and tell the people that that is what their Government has delivered to them. As a result, those in Government get nervous when coconut prices start rising in the market mainly due to short supplies.
In the past, consumers were appeased by importing coconuts from abroad. But partly due to disruption to international trade emanating from the COVID-19 pandemic and partly due to lack of foreign exchange to import coconuts, in the present price hike, the Government decided to impose price controls rather than importing coconuts from abroad.
But this should not have happened since the Coconut Research Institute or CRI had given advance warning at the beginning of the year that coconut output was to fall drastically in 2020. In fact, CRI’s prognostication had been fairly accurate since, in the first eight months of 2020, coconut output has declined by about 12%. Hence, had the Government listened to CRI at the beginning of the year, it would have averted the present fiasco in the coconut market.
Coconut is the main calorie source
As mentioned earlier, rice and curry are Sri Lanka’s staple diet and curries are cooked with an exuberant use of coconut cream extracted from scraped fresh coconuts.
Accordingly, about 65 to 70% of the country’s coconut production is used for household consumption. With this high consumption, the per head consumption of coconuts in fresh nut form has been very high at about 90 to 110 nuts per annum throughout the post-independence period. This has remained at this high level, despite the adverse publicity given to coconut fats since 1970s as a potential cause for heart diseases on account of the high saturated fat content in coconut oil.
Even today, about 12% of the daily calorie requirement of a typical Sri Lankan is obtained through the consumption of coconut fats, much higher than the calories obtained by consuming fish, meat and milk amounting only to a very small share of 5%.
A coconut index might show a marginal decline in people’s prosperity since independence
Hence, with increase in population, the demand for fresh coconuts for household consumption too has increased, while the production had remained almost static around 2,800 million nuts in recent periods. The result was the gradual increase in the price of coconut in the market offering a powerful political weapon for all opposition parties to attack the governments in power.
In 1948, the price of a coconut was just a little lower than 10 cents. In 2020, it has gone up to Rs. 120, recording a staggering increase of some 120,000% in coconut prices in the post-independence period. It is pertinent to note that with the per capita income in 1950, a Sri Lankan could have bought 5,350 coconuts. At current coconut prices, with the expected contraction in per capita income in 2020, he could buy only 5,200 coconuts. Thus, in terms of coconut index, the prosperity of Sri Lankans has marginally declined.
Global change in coconut consumption
During the last 70-year period, there has been a tremendous change in the global coconut industry but not in Sri Lanka.
Malaysia, which was a major coconut producer in the 1950s, made a strategic change in its policy in 1970s when it foresaw an imminent change in the global consumption pattern in edible plant fats.
This occurred when the US farmers switched to edible oil plant cultivation like soy beans, sun flowers, corns and peanuts after their cotton farms were hit by the polyester revolution of 1970s. Almost simultaneously with this development, the world became more conscious of ‘healthy hearts’ and it was claimed that coconuts contained a high quantity of saturated fats that contributed to elevate blood cholesterol levels raising the risk of heart disease. As a result, consumer preferences began to shift, logically or illogically, from coconut to what was perceived as heart-friendly plant fats.
Sri Lanka has killed the palm oil industry
When this development was taking place in the major coconut consuming countries, Malaysia decided to convert its old coconut plantations to palm oil plantations. It was driven by the fact that palm oil had an inflexible demand because it was not only an edible oil, but also an industrial oil. Today, Malaysia is the largest supplier of palm oil to the world market, sending its palm oil in tankers like the crude oil tankers, while coconut oil exporters are still using barrels to export their product.
Sri Lanka too started producing palm oil in a small way in early 1990s. The industry began to grow with new investments in palm oil plantations and associated factories to extract oil. However, due to the objections made by some groups against palm oil plantations, the present Government has decided to kill the palm oil industry altogether. With that short-sighted strategy, Sri Lanka has lost another chance to diversify its agriculture on modern lines.
New research to improve yields of coconut
A second development was the research done in the Philippines, Indonesia and Thailand to raise the yield of their coconut plantations so that the higher productivity would lower the average costs enabling the coconut sector to survive in a fiercely competitive market.
Sri Lanka just managed to raise its yield level from 4,000 nuts per hectare in the 1950s to 7,000 nuts per hectare in the early 2000s. But today, it has declined to 6,000 nuts per hectare. With proper and regular manuring and irrigation, supported by improved plant materials, a coconut tree today can produce a little more than 100 nuts a year.
In Sri Lanka, fertiliser application has been the lowest priority of coconut cultivators. Since it takes about three years for manuring to produce good results, fertiliser applied today will bring in a better output only after three years. As such, Sri Lanka produces about 40 nuts per tree. But its competitors have moved in the opposite direction. They have increased their yields manifold in the last few decades.
For instance, the Philippines had been producing about 11,000 nuts per hectare; recently it unveiled a new coconut variety that could produce 15,000 nuts per hectare. Even India, which ventured into coconut cultivation recently, has maintained a yield level, on average, of 8200 nuts per hectare with Tamil Nadu state reaching a record level of 13,000 nuts and Andhra Pradesh 14,000 nuts per hectare. Thailand has upgraded itself to producing 11,000 nuts per hectare, while Indonesia has reached a level of 15,000 nuts per hectare.
The Latin American countries have been the real winners in this race. From a very low yield level five decades ago, they have surpassed even the Andhra Pradesh State in India. Given this situation, Sri Lanka appears to be fighting a losing war with respect to yield improvement in coconut industry.
Dwarf coconuts to maximise yield and address labour issues
The third development is the breeding of the dwarf coconut tree to address the issue of labour shortage and late flowering of trees. The plucking of coconuts from dwarf trees is easier than plucking from traditional tall trees, the variety which Sri Lanka has grown. Also, the traditional tall trees take about five years for flowering, but the dwarf trees take only three-and-a-half years.
These changes made in the cultivation practices and policies by other coconut producing countries have enabled them to compete effectively with rival edible oils that had captured the global edible oil markets.
Sri Lanka has been a laggard in this area.
Sri Lanka’s past interventions in the coconut industry
To the credit of Sri Lanka, the country has in fact spent a vast amount of resources for the development of the coconut sector since independence. These measures include the establishment of the Coconut Research Institute or CRI as early as 1951, introduction of fertiliser subsidy schemes, free distribution of newly developed planting material, introduction of coconut to new regions of the country and the establishment of the Coconut Development Authority in 1971 for the promotion and regulation of the coconut sector. The most recent intervention by the Government in the coconut sector has been the new loan scheme, titled Kapruka Ayojana Scheme, to help coconut growers to replant their coconut gardens or small estates.
There is a basic shortcoming in all these measures. They are all activities carried out in isolation without considering the developments taking place in other coconut producing countries or the global market for edible oils.
In the current context, development initiatives undertaken by governments are targeted to attain a single objective: management of governmental activities for attaining development results or MfDR that strives to create the intended impact in the economy or the sector. Government initiatives are praised not based on the activities they have completed but based on the impact they have created.
Sri Lanka’s authorities should, therefore, move from the current activity-based intervention to impact creating intervention.
Climate change and its impact on coconut industry
An important factor which the coconut sector should take into account is the impact of climate changes on the sector’s long-term development.
Two researchers attached to the International Water Management Institute in Sri Lanka, namely, Nishadi Eriyagama and Vladimir Smakhtin, in a paper presented to the National Conference on Water, Food Security and Climate Change in Sri Lanka in 2009, have reviewed the available evidence on the subject and concluded that “the science community in Sri Lanka has come up with ample evidence that country’s climate has already changed”. According to the evidence quoted, during 1961-90, Sri Lanka’s mean air temperature has increased by 0.016 ºC per year and the mean annual rainfall has decreased by 144 mm (or 7%) compared to the period 1931-60.
The two researchers have projected that by 2100, the country’s mean temperature will rise between 2.5 ºC and 2.9 ºC over the mean temperature in the baseline period 1961-90 and there will be changes in the quantity and spatial distribution of rainfall as well. Quoting a study done by T.S.G Peiris and others in 2004, the two researchers have suggested that these climate changes would reduce coconut yields significantly making Sri Lanka’s coconut production by 2040 insufficient to meet the country’s domestic demand. The study by Peiris and others has also suggested that the increased temperature will increase the incidence of pest and other diseases requiring growers to spend more money to control such epidemics.
This is bad news for Sri Lanka’s coconut industry which at present depends wholly on rain-fed cultivation practices.
Better to be ready to avert calamities in the coconut sector
These projections are long-term projections and, therefore, subject to many counter developments that would produce results completely different from what the scientists under reference have come up with. Hence, the much-feared warming of the air temperature or the reduction of the rainfall may not even take place.
Yet, it is advisable for Sri Lanka to be ready for this eventual calamity by diverting its research potential for the development of crop varieties that has a better chance of survival in increased temperatures and reduced rainfall conditions. It is reported that India has already moved into research in this area, not necessarily to be better prepared for increased temperature, but in a bid to introduce coconut cultivation to relatively arid areas of the country.
Sri Lanka stands to gain if it teams up with agronomists and scientists in the rest of the world in this enterprise.
(The writer, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at email@example.com.)