Investment opportunities for the future: Coconut products for

the 21st century - Part Two

By Nilooka Dissanayake

In last week’s article we set out the pathetic status quo of the Sri Lankan coconut
industry. But then, what am I doing writing an article on the coconut as an
investment opportunity for the long term? Let me justify my commitment on
several fronts.

Firstly, the gut feel of those in the know, supported

by research and market trends in the global market
show bright prospects for the industry. When
recently asked, what areas he would wish investors
to go into, the Minister of Coconut Industries Salinda
Dissanayake’s instant reply was: “Go into virgin
coconut oil!” Then only he went on to describe other
areas that he feels investors should move into such
as copra, coconut oil, coconut cream, coconut
Why not invest in coconuts? After powder and dessicated coconut. And he added, “That
all, investing in trees is such a list is only those made with the coconut meat,”
lucrative business.
meaning that there is a host of fibre based products
and coconut shell based products that have a potential export market.

For example, Haycarb Limited, with its international subsidiaries, is the world leader
in activated carbon with a global market share of around 40 percent. And while
they are importing coconut shells, there are measures under way to collect shells
from Sri Lanka.

The Minister of Coconut Industries corroborated that a mechanism is being put in

place to collect shells which are thrown away in the cities and suburbs.

Chairman of the Coconut Development Authority, D. J. U. Purasinghe agrees about

the huge potential for virgin coconut oil.

According to him, it fetches the highest price for coconut oil in the global market
place. Virgin coconut oil is a colourless fluid extracted using a cold press process.

It is used in food preparation and for cosmetic products, among other things.

As the Minister explained, “if the virgin coconut oil you make is organic, there is an
even bigger price premium to be had.” He added that one foreign investor, at least,
is interested in making organic virgin coconut oil in Sri Lanka.

Sri Lanka has already earned a reputation and a significant place in the global
market as a producer of organic products. Companies like Lanka Organics have led
the way in this area. Organic oil would come from nuts of coconut trees grown
without resorting to artificial chemical fertilizers and pesticides. Since maintaining
an organic farm is more costly, complicated and relatively more labour intensive, it
is understood that the produce carries a price premium.

People who appreciate the value of organics and of virgin coconut oil, the high end
consumers and those who cater to them are willing to pocket this out.
This is a potential lucrative sector to consider.

Now, that kind of potential is one reason I am upbeat on the future of the coconut
industry.

On the other hand, Sri Lanka is estimated to be losing around 254 coconut trees a
day to housing development and other infrastructure projects. While the outlook
looks dismal, it certainly opens up huge opportunities for the long term investor.

Why not invest in coconuts? After all, investing in trees is such a lucrative business.
People invest in a few trees today expecting gains in the future. Touchwood, a firm
offering trees as long term investment, is doing well and recently obtained listing in
the Colombo Stock Exchange.

I am by no means suggesting we look at coconut in the same way. But as Henry

Nimal Appuhamy, the Head of Technology Transfer Division of the Coconut
Research Institute says, “Most people do not realize the coconut sapling they plant
grows to become a living asset capable of yielding at least Rs 35,000 over its
lifetime.” And, he is counting just the value of nuts.

Looking at it another way, the Touchwood approach is like paying money to adopt a
kid by proxy, and have nothing to do with its upbringing. You benefit in the end.
But with coconut, the approach is more like having your own child, which needs
nurturing. It seems people prefer the easy way. But I wonder. Would the Sri
Lankan entrepreneurs see the value of growing coconut as a long term investment?

(To be continued next week.) Share with us your ideas on this topic. Send your
comments and questions to ft@sundaytimes.wnl.lk.