Palm oil could strengthen Sri Lanka’s economy

In Colombo, a local industry body said that expanding palm oil production could significantly reduce the country’s import dependence and ease pressure on foreign exchange reserves, following a sector-focused discussion involving industry representatives and academics.

According to participants, Sri Lanka imported 38,210 tonnes of palm oil in 2025, compared with 33,696 tonnes of coconut oil, with total spending reaching about 140 billion rupees. By comparison, palm oil imports stood at 34,708 tonnes in 2024. Experts noted that developing domestic production could substantially cut these costs.

Professor Asoka Nugawela said current restrictions on oil palm cultivation are limiting the use of a high-yield crop. He added that average yields can reach around 4 tonnes of oil per hectare, and at a global price of roughly $1,100 per tonne, this represents a significant economic opportunity.

Participants also said that around 8,000 hectares of suitable land could be allocated for cultivation, supporting agricultural diversification, rural employment and potential export growth. At the same time, they stressed the need for clear regulations and oversight to minimise environmental risks.

The Palm Oil Industry Association said future policy decisions should be based on scientific evidence, economic rationale and sustainability principles, in order to integrate the sector into the country’s broader economic recovery strategy.

It is worth noting that the ban on oil palm cultivation introduced in 2021 has already cost Sri Lanka more than $175 million in edible oil imports and around $35 million annually in lost foreign exchange. Industry groups say the restrictions have left thousands of hectares idle, reduced investment returns and weakened employment, while prior to the ban the sector supported thousands of jobs and covered a significant share of domestic demand.

Tags: palm oil, Sri Lanka