Losing millions in silence: Why Sri Lanka must lift Palm Oil ban now

THE Planters' Association of Ceylon (PA) is urging the Government to act swiftly to lift the ban on oil palm cultivation, warning that with each passing day, the losses to the nation keep growing.

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The PA noted that an estimated amount of over $ 175 million has been spent on edible oil imports between 2021 and 2025 when the ban on oil palm cultivation first commenced in April 2021.

It also noted that Sri Lanka continues to spend exorbitant sums on foreign exchange for edible oil imports that could have been substantially offset by local production.

Once positioned as a key pillar in the nation's crop diversification strategy, the abrupt policy reversal in 2021 has stalled progress toward edible oil self-sufficiency and dealt a setback to Sri Lanka's broader economic recovery. Palm oil cultivation was first introduced to Sri Lanka in 1968, but only began to gain traction in the early 2000s when Regional Plantation Companies (RPCs) sought alternatives to loss-making rubber. Recognising the crop's immense potential, the Government at the time promised to extend tax concessions for the establishment of new oil palm cultivation in 2009 and even formally endorsed expansion up to 20,000 hectares by 2016.

Plantation companies say Sri Lanka can revive palm oil sector by lifting the ban and adopting sustainability standards, integrating smallholder farmers, reforming import taxation and investing in R&D and traceability systems.

India has already moved decisively in this direction, expanding palm oil cultivation by 45% in five years with ambitious plans to reach 1.7 m hectares by 2030

Sri Lanka's annual edible fat and oil requirement stands at approximately 264,000 metric tons. Yet local production meets barely a quarter of this demand, forcing the country to depend heavily on imports.

The result is a recurring foreign exchange drain estimated at around US $35 million annually, with cumulative losses already surpassing US $175 million since the ban was imposed.