SL’S coconut output projected to decline by 13% this year

„■ Adverse weather in 2019 and current fertilizer shortage cited as key reasons ■„ Expected to rebound next year amid prevailing favourable weather conditions

Sri Lanka’s coconut output is expected to decline by 13.1 percent year-on-year (YOY) to 2.7 billion nuts this year, due to unfavourable weather conditions that prevailed last year and the current fertilizer shortage in the market, according to Mahaweli Coconut Plantations Limited (MCPL).

However, MCPL, which is listed on the Colombo Stock Exchange, expects the coconut output to recover next year as weather conditions have improved this year.

“The coconut triangle, which received favourable rainfall in 2018, ensured that the yield in 2019 recovered and accordingly the country achieved a crop of 3,106.4 million in 2019 against 2,623.10 million in 2018.

However, Sri Lanka did not take advantage of the global demand for coconut products, and prices declined in 2019. In the second quarter of the year, prices declined to Rs.18-20 per nut. In the year 2020, the country’s annual crop is expected to be around 2,700 million nuts,” MCPL told shareholders in its latest annual report.

MCPL Chairman Asitha Gunasekara cautioned that the prevailing fertilizer shortage in the country could have a severe impact on the agriculture sector including coconut plantations.

“Due to issues related to COVID-19, fertilizer is not freely available in the country. This will have a major impact on the entire agriculture sector in Sri Lanka. We have used the available resources prudently and managed fertilizing until now. However, if the scarcity persists, this will be a hindrance to our plantation,” he added.

MCPL grows coconut and other subsidiary crops in a 551.38 hectare land in Aralaganvila in the North Central Province, which has been acquired from the country’s Mahaweli Authority on a lease basis.

In 2019/20 financial year, the coconut output of the plantation declined to 4,523,200 nuts from 5,429,150 in the previous financial year due to extremely unfavourable weather conditions and water restrictions imposed by the Mahaweli Authority in 2019.

However, the company was able to maintain its yield at a satisfactory level above the national average at 55 nuts per tree.

Further, it noted that the plantation is experiencing an increase in incursion of elephants over the years triggered by destruction of forests. However, MCPL plans to construct an elephant fence in the coming year to tackle the issue.

“The continuous clearing of jungles without addressing to the displacement of elephants would further aggravate this problem in the future. The authorities should strive to find solutions to this at-least in the future. The company has already constructed an elephant fence and hope to increase the area under cover in the coming year,” MCPL stated.

In addition, MCPL plans to increase cinnamon and cashew cultivations in the plantation as subsidiary crops while moving back to cultivate turmeric and ginger encouraged by favourable government policies.

“We have now realised the ideal cultivation for us is cinnamon and cashew as they are not fast perishable items. Since government policies have now changed in favour of ginger and turmeric cultivation, the cultivations would be started again,” it added. However, the firm has decided to abandon banana cultivation which was planted for export in collaboration with an Israeli company, as most of the crop perished before reaching the market.

Meanwhile, the firm plans to harvest 1,832 matured teak trees out of its 25,398 teak tree stock shortly, subject to statutory approvals.

However, the valuation of its teak stock was discounted by almost Rs.25 million amidst the COIVD-19 crisis.

“The value as at 31st March 2020 was Rs.145,173,600, which if valued under normal rates would have been Rs. 169, 200, 000,” the company noted.

Meanwhile, due to the coronavirus crisis, the company was unable to get its coconut husk project with Eura Substrate (Pvt) Ltd, off the ground. However, it was optimistic of launching the project with a new partner.

“We could not launch the coconut husk processing project as planned during the past financial year due to the COVID19 crisis. However, we are determined to complete it this year. We are looking at the possibilities of collaborating with a strong partner for value added husk processing and marketing,” MCPL stated.