The Planters’ Association of Ceylon (PA) has renewed calls on the Government to urgently reverse the 2021 ban on oil palm cultivation, warning that the decision has inflicted deep damage on the plantation sector, rural incomes, and the wider economy.
Oil palm, once hailed as Sri Lanka’s most promising crop diversification strategy, was introduced in 1968 but began expanding significantly only in the 2000s when Regional Plantation Companies (RPCs) sought alternatives to loss-making rubber.
Encouraged by strong government backing, including tax concessions and formal approval to expand up to 20,000 hectares by 2016, companies such as Watawala, Namunukula, and Horana invested billions in nurseries, milling facilities, and research.
However, the abrupt ban in 2021 reversed decades of progress, resulting in the destruction of Rs. 550 million worth of seedlings and placing Rs. 23 billion in investments at risk.
The PA warned that no compensation has been provided, leaving both companies and workers exposed. More than 5,000 direct jobs and 21,000 dependent livelihoods were tied to the sector, with oil palm workers earning nearly double the wages of their counterparts in tea and rubber.
The industry also generated over Rs. 2.5 billion annually in household income, particularly in rural areas where poverty is entrenched. Its sudden halt, the PA noted, has thrown many families into financial insecurity at a time when the national economy is already under stress.
Ripple effects have spread across industries reliant on crude palm oil. Refiners and manufacturers now face supply shortages and higher costs, while the Rs. 200 billion bakery and confectionery sector has reported price hikes in bread, biscuits, and margarine. Pharmaceuticals, personal care, and industrial products have also been disrupted, compounding the burden on consumers.
The economic fallout has been particularly damaging for Sri Lanka’s foreign exchange reserves. Annual edible oil demand is 264,000 metric tons, but local production now meets only a quarter of this requirement.
The shortfall is bridged through imports, draining $35 million in foreign reserves annually. Over five years, this could exceed $175 million, an unsustainable cost for a nation struggling with recovery.
The PA argues that environmental concerns cited in defence of the ban are misplaced. Oil palm cultivation in Sri Lanka was restricted to degraded rubber lands, not virgin forests.
Globally, palm oil is recognised as the most efficient vegetable oil crop, yielding 40% of the world’s vegetable oil on just 6% of agricultural land. Countries like Malaysia and Indonesia have adopted sustainability standards such as RSPO and ISPO certifications to ensure minimal ecological damage.
Highlighting the nutritional value of palm oil naturally trans-fat free, rich in vitamin E and antioxidants the PA insisted the crop can be produced responsibly in Sri Lanka. It urged the Government to adopt global best practices, integrate smallholder farmers, reform import taxation, and invest in research and traceability systems.
Citing India’s expansion of palm oil cultivation by 45% in five years, the Association said Sri Lanka, with ideal growing conditions, cannot afford to miss the opportunity. “At this decisive moment, we urge the Government to embrace palm oil as a core strategy for plantation revival, food security, and foreign exchange generation,” the PA stressed
