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Exporters of coconut oil in Sri Lanka are contemplating a shift toward the domestic market as soaring freight rates cripple international trade. Industry insiders report that shipping charges per container have escalated from a previous range of $2,500-$3,000 to a staggering $12,500-$14,000. This fivefold increase has made exporting the product nearly impossible, despite robust demand for Sri Lankan pure coconut oil in European and Latin American markets.
Traditionally, these firms exported between five and eight containers monthly, totaling approximately 12 to 15 metric tonnes. However, the logistics crisis is compounded by rising domestic raw material costs. The price of a single coconut has climbed from Rs. 100 to over Rs. 120, while the cost of desiccated coconut (DC) has jumped from Rs. 150-160 to Rs. 195-200 per kilogramme, according to industry traders.
Consequently, profit margins for exporters have been decimated, plummeting from 20 per cent to just two per cent. Producers explain that while production costs have surged due to expensive raw materials, they are forced to maintain stable prices in global markets to remain competitive. Furthermore, the domestic market offers little relief, as locally produced coconut oil cannot compete with the lower prices of imported palm oil and other vegetable cooking oils.
Industry representatives warn that the future of the sector is at stake, with over 50 small and large-scale manufacturing establishments currently operating across the country. Without immediate intervention, the closure of most of these oil mills appears inevitable. Economic experts caution that such a collapse would result in a significant loss of annual foreign exchange earnings for Sri Lanka, even if palm oil imports were to decline as a side effect.
Source: Sri Lanka Mirror