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Trade as an Option for Managing the Impacts of Supply Risks in Coconut Production: Importation of Dehusked Coconuts, Copra and Kernel

Author

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  • Pathiraja, P.M.E.K.
  • Griffith, G.R.
  • Farquharson, R.J.
  • Faggian, R.
  • Idirisinghe, I.M.S.K.
  • Abeysekara, M.G.D.
  • Subasinghe, S.D.J.N.

Abstract

The Sri Lankan coconut industry is facing intense competition due to increasing demand from local consumption and export processing while fresh nut production is stagnating. The situation is aggravated during weather extremes especially with prolonged droughts. The recent prolonged drought of nearly two years was the cause for temporary closure of processing industries and soaring nut prices. It may take more than a year to re-establish normal yield even with the onset of rainfall in October. Therefore, importation of coconuts as a strategy was explored in this study. An Equilibrium Displacement Model (EDM) was used to quantify the possible economic impact and its distribution among industry stakeholders. The results indicated that allowing imports is economically viable for the processing industries to recover their losses. Under the simulated scenarios where input substitution is a policy condition to be zero, reducing the costs of processing of desiccated coconut through fresh nut importation reduces the losses to the processors and exporters from 15.5 LKR million per year to about 5.5 LKR million per year. Consumers of desiccated coconut exports are also better off by around 45 LKR million under the above scenario of a price reduction of fresh nuts from 43 LKR to 32 LKR. However, still there are concerns for the existence of markets produced from foreign material and export substitution. Moreover, the compliance with the quarantine regulations especially for the risk of pest and disease outbreaks remains unresolved. Therefore, dehusked-coconut importation is still not an option for a severe coconut shortage while other semi-processed products may remain potential alternatives.

Suggested Citation

  • Pathiraja, P.M.E.K. & Griffith, G.R. & Farquharson, R.J. & Faggian, R. & Idirisinghe, I.M.S.K. & Abeysekara, M.G.D. & Subasinghe, S.D.J.N., 2018. "Trade as an Option for Managing the Impacts of Supply Risks in Coconut Production: Importation of Dehusked Coconuts, Copra and Kernel," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 19(02), December.
    • Handle: RePEc:ags:saeasj:359069
    DOI: 10.22004/ag.econ.359069
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    References listed on IDEAS

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    1. Mounter, Stuart W. & Griffith, Garry R. & Piggott, Roley R. & Mullen, John D., 2005. "The Payoff from Generic Advertising by the Australian Pig Industry: Further Results Relative to the Payoff from R&D," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 13.
    2. Pathiraka, Erandathie & Griffith, Garry & Farquharson, Robert & Faggian, Robert, 2017. "Specifying and Testing an Equilibrium Displacement Model of the Coconut Market in Sri Lanka," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 25.
    3. Mounter, Stuart W. & Griffith, Garry R. & Piggott, Roley R., 2005. "The Payoff from Generic Advertising by the Australian Pig Industry in the Presence of Trade," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 13.
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