Sri Lanka palm oil production is at the center of a growing policy debate that could reshape the country’s agricultural and economic future. In Colombo, a local palm oil industry association stated that developing domestic production could significantly reduce import dependence and ease pressure on foreign exchange reserves. Furthermore, the discussion involved industry representatives and academics, highlighting the broad interest in resolving this issue. Therefore, the question of whether Sri Lanka should lift its cultivation ban is now more pressing than ever.
Sri Lanka Palm Oil Imports: Rising Costs and Foreign Exchange Pressure
According to meeting participants, in 2025, Sri Lanka imported 38,210 tons of palm oil. By comparison, it imported 33,696 tons of coconut oil in the same year. Together, these edible oil imports cost the country approximately 140 billion rupees. Moreover, in 2024, palm oil imports alone totaled 34,708 tons. Experts note that these significant costs could be reduced by developing domestic production. Consequently, the economic case for lifting the cultivation ban is growing stronger each year.
Sri Lanka Palm Oil Potential: 4 Tons per Hectare and $1,100 per Ton
Professor Asoka Nugawela emphasized that current restrictions on oil palm cultivation are hindering the use of this highly productive crop. He noted that the average yield could reach approximately 4 tons of vegetable oil per hectare. Furthermore, with the current global price of approximately $1,100 per ton, this creates significant economic potential for Sri Lanka’s agricultural sector.
Additionally, participants noted that approximately 8,000 hectares of suitable land could be converted to this crop. This would contribute to the diversification of the agricultural sector, create jobs in rural areas, and potentially increase exports. At the same time, they emphasized the need for clear regulations and oversight to minimize environmental risks.
The Cost of the 2021 Ban: $175 Million in Lost Value and Idle Plantations
The Palm Oil Association stated that future policy decisions regarding the industry should be based on scientific data, economic feasibility, and sustainable development principles. Moreover, integrating the sector into the country’s broader economic recovery strategy remains a key priority.
Recall that the ban on oil palm cultivation, introduced in 2021, has already cost Sri Lanka over $175 million in vegetable oil import costs. Additionally, the country has lost approximately $35 million in annual foreign exchange earnings as a direct result. Industry associations note that the restrictions have led to the idling of thousands of hectares of plantations, lost investment, and reduced employment. This is particularly significant because, prior to the ban’s introduction, the sector provided thousands of jobs and met a significant share of domestic demand.
Source: Ukragroconsult (Ukraine)
