Palm oil ban deepens forex drain for SL, industry warns

The ban on palm oil cultivation has cost the country millions in foreign exchange and risks worsening its fragile economic recovery, the Planters’ Association of Ceylon (PA) said, urging the government to reverse the policy.

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Annual consumption of edible oils stands at about 264,000 metric tonnes, but local production meets only a quarter of that demand. The shortfall is covered by imports, draining an estimated US$ 35 million each year from the country’s reserves. Over a five-year horizon, losses could top US$ 175 million, the Association warned.

“This was particularly damaging because palm oil was by far the most profitable crop in the sector, delivering average net margins of 49 percent and contributing in some cases to more than half of RPC profits. The abrupt prohibition has eroded profitability, diminished investor confidence and crippled a once-thriving segment of the industry,’ said PA Secretary General Lalith Obeyesekere issuing a fresh statement yesterday.