ECONOMYNEXT – Sri Lanka’s palm oil ban was a ‘knee-jerk’ reaction that would push up costs for consumers and businesses and would give profits to those holding stocks of the commodity, opposition legislator Harsha de Silva said.
“This knee jerk reaction to ban palm oil imports without provision for any affordable substitute will only make even harder to make ends meet for consumers,” de Silva said.
“Price of bread and bakery products will no doubt increase.”
He said the ban may be relaxed.
“When politicians realize it’s no longer possible to pass on the high prices as consumer complaints rise the President will certainly reverse this ban and allow imports once again,” de Silva warned.
“In the meantime those with stocks will make huge windfall profits. ”
Sri Lanka said it is immediately banning the import of palm oil by gazette in what economists call ‘regime uncertainty’ and also said oil palm plantations would be ordered to uproot them in stages.
Regime uncertainty involves sudden state policy changes that makes it difficult for businesses to invest and plan for the long term and may also reduce profits.
Regime uncertainty includes expropriation.
Stocks of several companies that grow the plant plunged in the stock market.
Watawala Plantation fell 4.50 rupees down at 53.00 rupees yesterday.
Namunukula Plantations plunged 8.92 percent or down to 166.00 rupees falling 16.25 rupees.
Kegalle Plantation fell 4.97 percent or 4.90 rupees to close at 93.70 rupees a share yesterday, Elpitiya Plantation fell 1.40 rupees to 42.70 rupees and Agalawatte Plantation fell 80 cents to trade at 27.20 rupees.
Mahaweli Coconut Plantation gained 11.68 percent or 3.40 rupees to trade at 32.50 rupees yesterday.(Colombo/Apr07/2021)