Reduction in Production on Kernel-Based Export Products and Coconut Oil Industry in Sri Lanka

Coconut is one of the most commercially important crops in Sri Lanka. The country requires around 3,600 million nuts per year to meet the current demand. However, the current annual production ranges between 2,500 and 3,100 million nuts, indicating a shortage in nut production. This study aims to investigate the impact of declining coconut production in Sri Lanka on kernel-based export products and coconut oil (excluding export). The study involved collecting primary data through a cross-sectional survey. This included interviews with 120 kernel-based exporters, palm oil importers, and dehydrated chip-importing millers. The participants were selected using stratified purposive sampling, and three semi-structured questionnaires were administered. In addition, secondary data was gathered from the Coconut Development Authority. The ARIMA (2, 1, 1) model was utilized to forecast potential fluctuations in coconut production in Sri Lanka over the next 5 years, aiming to determine whether production would range between 2500-3000 million nuts. The model projects nut production to be 2,626, 2,833, 2,978, 2,850, and 2,761 million nuts for the respective years. The Friedman test confirmed a significant difference (P<0.05) among the statements related to the sustainability of raw material supply and the sustainability of final product supply of kernel-based products for the export market. According to the statistical analysis, the production of kernelbased export companies would be affected by a decrease in annual nut production. However, they would continue to export even if the annual nut production decreases due to their strong supplier base. The study found a significant difference (P<0.05) in the impact of imported dehydrated chips. The research revealed that due to most existing coconuts being used in the milk industry, millers were unable to meet the demand for coconut oil because of a shortage of raw materials. The findings of this study propose to develop and implement strategic plans to address the projected decline in nut production in Sri Lanka and to create comprehensive strategies for the equitable distribution of coconut resources to support both domestic and international coconut-based industries.