PALM OIL INDUSTRY IN SRI LANKA: An Economic Analysis

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Erandathie Pathiraja
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Ruwan Samaraweera
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June 2023

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Palm oil is the main edible oil source consumed in the world. However, oil palm consumption and cultivation are criticised globally for their health and environmental impacts despite palm oil’s rewarding factors such as low cost and versatility in food and many other industries. Sri Lanka also paid attention to the possible environmental hazards and health impacts of consuming palm oil and the resistance from the local environmental activists. As a result, oil palm cultivation was banned, and phasing out within 10 years was proposed as a policy decision in 2021. The investors claim that the criticism is irrational. Hence, this study explored the economic aspects of the industry, such as costs and returns, contribution to the economy, tariff protection, market linkages etc., and potential environmental and social issues in the palm oil industry value chain in Sri Lanka.