While stakeholders forecast an increase in domestic production of coconuts from April onwards, Sri Lanka is facing a severe coconut shortage, which has caused prices to skyrocket and disrupted both local consumption and exports.
Coconut auctions have been postponed, with prices hitting an all-time high of Rs. 185-190. While the shortage in cultivation is affected by several critical factors, including fertiliser shortages, extreme weather conditions, pest infestations, and land fragmentation, stakeholders believe this particular price hike is unusual.
This situation also raises questions about the impact of increasing export demand and local demand.
Auctions to recommence with reduced allocations
Speaking to The Sunday Morning Business, Coconut Development Authority (CDA) Chairman Shantha Ranathunga said that coconut auctions would recommence soon.
“A decision was taken to continue the auction based on discussions with the Sathosa Chairman and plantation companies, which confirmed that Sathosa only buys a certain quantity of coconuts of the bigger variety. The remaining coconuts will be used at the auction, as there is a need to continue it. However, the quantity provided will be lower,” he said.
He explained that during the off-season, as at present, 600,000-900,000 coconuts were usually brought to the auction, while during the season, two to three million nuts were brought. However, with the new decision to provide coconuts to Sathosa from estates, fewer coconuts will be supplied to the auction.
Further, he noted that as per the Coconut Research Institute (CRI) forecast, the harvest for the first two quarters would decrease compared to last year. However, the harvest is also expected to increase from May onwards. The CRI is yet to predict the yield for the rest of the year.
“We have not restricted value-added products and these products mostly go to the export market. These include promoting coconut-related products such as coconut milk, coconut milk powder, and two more products that will soon be introduced to the market – cream coconut and coconut creamer. All these products will serve as substitutes for fresh coconuts, making them convenient for household use,” said Ranathunga.
He added that the country can save 50% of domestic coconut wastage through promoting coconut products for consumption, after which the saved amount could be utilised by the industry. This will contribute to the export of by-products such as coconut shells, coconut water, and low-fat desiccated coconut as well.
Ranathunga explained that by diverting more coconuts to the domestic market, such as those sold to Sathosa, coconuts would be priced at around Rs. 130. This process is ongoing, with a substantial stock expected to be delivered directly to Sathosa from State-owned coconut estates to mitigate price issues.
Meanwhile, he noted that while the price of coconuts from estates ranged between Rs. 130-140, the price increased through an abnormal hike to Rs. 180-190 by the time they reached the final consumer, a fact that needed to be addressed.
“In 2024, 60% of coconuts were allocated for local consumption and 40% for exports. However, with increased promotion of coconut products, it is assumed that the allocation in 2025 could reach 50% each, supported by awareness programmes regarding coconut consumption and other efforts,” he said.
Additionally, discussions by the CDA with the Ceylon Chamber of Coconut Industries and Ministry of Industry have highlighted how the current coconut shortage is also affecting industries, creating a risk of coconut prices rising due to high demand.
“We decided to submit a Cabinet paper to import a specific quantity of coconut products such as coconut kernels, desiccated coconut, and coconut milk, amounting to the equivalent of 200 million coconuts for the export market under the the scheme for Temporary Import for Export Processing (TIEP-I Scheme).”
Need for fertiliser subsidies, increased land allocation, pest control
From January to October 2024, export revenue from coconut products increased by 22%, rising from $ 583.94 million in 2023 to $ 709.88 million in 2024.
Speaking to The Sunday Morning Business, Trade, Commerce, and Food Security Deputy Minister R.M. Jayawardana noted the impact of exports.
“It has been informed to the ministry that certain value-added exporters collect additional quantities of coconuts, such as over 200 nuts, directly from farmers. However, it has not yet been possible to assess the exact quantity of coconuts involved in this issue. There are assessments that suggest this also impacts the current shortage. We are working on solutions to address this matter,” he said.
Jayawardana emphasised that while exports were important, it was equally critical to ensure that domestic requirements were met, adding that discussions regarding this would be continued.
He also added that a considerable number of coconuts were wasted due to wild animal attacks and pests. These factors severely affect rural smallholder coconut cultivation, which typically involves around 250 trees. In many cases, these small plantations are completely affected.
“As short-term measures, we are discussing ways to subsidise fertilisers. We are also exploring methods to prevent wild animal and pest attacks in order to increase harvests. For long-term solutions, discussions are underway for a project that could potentially utilise 40,000 acres in the north for coconut cultivation,” he said.
Jayawardana further noted that a significant amount of land previously allocated for coconuts had been lost due to fragmentation and sale over the past several years, particularly in areas with favourable coconut harvests, such as coastal regions and areas like Kurunegala and Puttalam.
Impacts from a multitude of issues
Commenting on cultivation concerns, Coconut Cultivation Board (CCB) Chairman Dr. Sunimal Jayakody noted that the CCB had identified a decline in coconut yield in 2024.
“While 3,000 million nuts per year are expected, we failed to achieve 10% of this target, which has impacted both consumption and exports. The requirement per month is around 250 million nuts, with 150 million used for consumption and 100 million for exports.”
Addressing key issues affecting cultivation, he highlighted the severe impact of fertiliser shortages over the last five years. Extreme weather, seasonal variations, animal attacks, and diseases have further compounded the issue. Land fragmentation remains a prominent problem as well, as coconut lands are increasingly used for other purposes.
Dr. Jayakody stated that in order to address animal attacks, the CCB and Ministry of Agriculture had appointed a new committee to devise a plan. As part of this effort, they have started the process of counting monkeys.
“In cooperation with the CRI, we are in the process of trying to find solutions to these attacks. A substantial number of lands in the Coconut Triangle are affected by infestations. The Weligama Coconut Leaf Wilt Disease is a longstanding issue, having started in 2008 and mainly affecting Galle, Matara, and Hambantota.
“The last resort in these situations is felling the affected trees, since it is still challenging to find a solution. Over 300,000 trees have been removed already. Furthermore, over 3,000 trees are affected at present,” he said.
According to Dr. Jayakody, over one million acres of land in Sri Lanka are currently utilised for coconut cultivation. Of this, nearly 80% belongs to small landholders and home growers. The remaining 20% consists of land used for commercial cultivation and State-owned lands, amounting to nearly 36,000 acres.
“We have had several discussions with all the stakeholders to stop the further fragmentation of coconut lands. Some of these lands are being used for solar power plants and cover large plots of land of 40-50 acres that are well suited for cultivation, including areas in the Coconut Triangle. We request people not to make requests of such nature going forward.”
As export demand grows significantly, Sri Lanka is unable to meet the required demand, creating a need for imports. However, Dr. Jayakody warned that importing full coconuts was problematic, and was not an option advocated by the CCB and CRI. According to him, while imports can be helpful, whole coconuts bring certain diseases, with many of the current diseases having originated through such channels.
“Importing coconut kernels is acceptable. However, we are working towards improving cultivation within the country in order to maximise production and cater to both consumption and export requirements. While importing may be an option to consider, we recommend importing kernels only,” he said.
The CCB Chairman added that although local usage of coconut products was not popular in the domestic market yet, it could be a potential solution for the future. In order to provide long-term solutions, he emphasised the importance of using fertiliser.
The CCB has requested the Government to incentivise fertiliser prices. As the Government has received fertiliser as a grant from Russia, 27,500 MT has been allocated for coconut cultivation. However, this fertiliser is of the Muriate of Potash (MOP) variety and is in the process of being converted to the Adult Palm Mixture (APM) variety before distribution in the near future.
“We encourage farmers to look after their trees and manage their lands properly. With the increased attention of all stakeholders, it is hoped that the country will see better production in the near future,” Dr. Jayakody said.
Rise in both local and export demand
Meanwhile, former Chairman of the CCB Saman Dewage told The Sunday Morning Business that the coconut auction had been halted due to a shortage of coconuts for consumers.
“The most favourable period for coconut yield is March to July. One of the main reasons for the shortage is the lack of fertiliser over the past five years due to the ban and the subsequent increased cost, which rose to over Rs. 10,000 per 50 kg bag, making it unaffordable for farmers. Further, climate change has also had an impact, especially when temperatures exceed 32 degrees Celsius, which affects pollination,” he said
“Extreme weather conditions such as rain and drought as well as disease (e.g. Weligama Coconut Leaf Wilt Disease) and pest attacks (e.g. whiteflies, black beetles, red beetles, mice, and wild animals such as monkeys, squirrels, and porcupines) also contribute to this shortage, lowering production capacity.”
Commenting on export demand over the past year, he noted that it had significantly risen. In 2024, Sri Lanka exported over 1.3 billion nuts, compared to less than one billion in previous years. Local demand has also risen, which has driven prices higher. He said that the CCB had proposed expanding cultivation within the country and providing irrigation to coconut trees in dry zone areas.
Further, the Government has already made the decision to stop the fragmentation of coconut lands and the CCB is expanding cultivation into non-traditional areas beyond the Coconut Triangle, such as Anuradhapura, Polonnaruwa, and Jaffna.
According to CRI estimates, Sri Lanka requires at least two billion nuts for local consumption annually. However, due to high prices, this figure fell to nearly 1.3 billion nuts. The country requires a minimum of 1.5 billion nuts for consumption and at least 1.5 billion for exports in the future, bringing the total requirement to a minimum of three billion nuts annually.
The CCB has already planned to increase production and productivity to meet these demands, according to Dewage.
Weather as the most prominent cause of shortage
According to the CRI, national coconut production in 2024 amounted to 442 million in January/February, 504 million in March/April, and 477 million in May/June. However, there is a decline in the forecast for some of these months in 2025.
Speaking to The Sunday Morning Business, CRI Director Dr. Nayani Arachchige noted that the most prominent factor affecting coconut shortages was weather-related issues. Sri Lanka experienced a shortage in supply in 2024 due to extreme weather conditions in early 2023.
Dr. Arachchige stated that the country would continue to face a short supply in January and February this year. A low yield is also expected in March and April, stemming from the adverse weather conditions between January and April 2024. However, production is forecast to increase from April onwards.
“Typically, 60-65% of the crop is used for consumption, with the remainder going to industries. The national coconut production forecast up to June is expected to be around 1,400 million nuts, with approximately 349 million in January/February, 467 million in March/April, and 591 million in May/June,” she said.
Addressing pest and mammalian attacks, she noted that 25-30% of crops had been lost over the years, contributing to yield losses. However, this has not been the sole reason for the current shortage, as such issues have existed previously.
Dr. Arachchige stated that it was difficult to predict future price movements given the unusual price hikes currently being observed. The situation reflected a combination of short supply and increased exports of value-added products, driven by low production in other countries, she added.