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Government of Sri Lanka

NATIONAL EXPORT STRATEGY

OF SRI LANKAPROCESSED FOOD & BEVERAGES STRATEGY 2018-2022

The National Export Strategy (NES) of Sri Lanka is an official document of the Government of Sri Lanka

For any queries about the NES, please contact :

Ministry of Development Strategies and International Trade

Address: Level 30, West Tower, World Trade Centre, Colombo 01.Phone : +94 (0) 112337629Phone : +94 (0)112337627 E-mail : [email protected]

Sri Lanka Export Development Board

Address: No. 42 Nawam Mawatha, Colombo-02, Sri Lanka.Phone : +94-11-230-0705 / 11Phone : +94-11-230-0715E-mail : [email protected]

This processed food and beverages strategy was developed on the basis of the process, methodology and technical assistance of the International Trade Centre (ITC) within the framework of its Trade Development Strategy programme.

ITC is the joint agency of the World Trade Organization and the United Nations. As part of the ITC mandate of fostering sustainable development through increased trade opportunities, the Chief Economist and Export Strategy section offers a suite of trade-related strategy solutions to maximize the development payoffs from trade. ITC-facilitated trade development strategies and road maps are oriented to the trade objectives of a country or region and can be tailored to high-level economic goals, specific development targets, or particular sectors.

Technical assistance for the design of this document was provided by Charles Roberge, Alexandra Golovko, Ayanthi Gurusinghe, Bodhi Wanniarachchi, and Farhad Mohamed Zahir.

Financial support was provided by the European Union, as part of the ‘European Union –Sri Lanka Trade Related Assistance : Increasing SMEs’ trade competitiveness in regional and European Union markets’ project. The contents of this document can in no way be taken to reflect the views of the European Union.

The views expressed herein do not reflect the official opinion of ITC. Mention of firms, products, and product brands does not imply the endorsement of ITC. This document has not been formally edited by ITC.

The International Trade Centre

Street address: ITC 54-56, rue de Montbrillant 1202 Geneva, SwitzerlandPostal address: ITC Palais des Nations 1211 Geneva 10, SwitzerlandTelephone: +41-22 730 0111Fax: +41-22 733 4439E-mail: [email protected]: http://www.intracen.org

Layout : Jesús Alés (www.sputnix.es)

NATIONAL EXPORT STRATEGY OF SRI LANKA 2018-2022

PROCESSED FOOD & BEVERAGES STRATEGY

Government of Sri Lanka

Photo: ITC

[ II ]

[ SRI LANKA PROCESSED FOOD & BEVERAGES STRATEGY ]

MESSAGE FROM THE FOOD AND BEVERAGE PROCESSING INDUSTRYWith our diverse agricultural regions, experienced farmers, traditional processes honed over centuries and favourable geographic location, Sri Lanka has the potential to become a vital and prominent food processing hub in the Indian Ocean region with easy access to serve over two billion consumers in the Asian region alone.

Export growth over the last few years show that our food processers are able to engage in higher value added and innovative food & beverage processing and transform it into a major export industry, turning the sector into a leading foreign exchange earner and a standard-bearer for high quality Sri Lankan prod-ucts overseas.

The global food industry is in constant flux and is affected by changing lifestyles, trends and rapidly changing tastes. Therefore, complying with global standards on sustainability and food safety require-ments are no longer a mere value addition, but rather a minimum requirement upon which our producers need to innovate and build upon to become a com-petitive supplier in global markets.

Processed Foods & Beverages was one of the priority sectors identified in the National Export Strategy. This was collectively formulated by private and public-sec-tor stakeholders and is widely welcomed across the processed food & beverages industry in Sri Lanka. It will seek to set the sector on the course of strategic development by addressing key constraints in a com-prehensive manner and defining concrete opportu-nities that can be realized through the specific steps detailed in its Plan of Action ( PoA ).

Sri Lanka has had a tradition of exporting food going back centuries and still maintains a reputation as a supplier of high quality foods and beverage products. Despite this history, many members of the process-ing industry of varying sizes have faced constraints that prevent them from growing to their best potential.

Some of these constraints include outdated sector support frameworks, regulations & services not be-ing suitable to the needs of the modern food pro-cessing industry and an over-focus of policy makers & support institutions on only some parts of the sup-ply chain while neglecting others.

The National Export Strategy will focus on facilitating increased availability of raw materials, improving & modernising food safety controls and reinforcing na-tional branding for the processed foods & beverages sector. This will seek to provide a solid foundation for the growth of the industry and will assist Sri Lanka in achieving the status of an innovative food process-ing hub servicing many regions.

We the undersigned, as stakeholders of the Processed Foods & Beverages industry in Sri Lanka consider this an integral part of the National Export Strategy and a much looked forward to document. It is our wholehearted expectation that this strategy will streamline the growth of the Processed Foods & Beverages industry to overcome industry challenges and help position Sri Lanka as a regional hub in pro-cessed foods and beverages.

We wish to express our fullest commitment to the effec-tive implementation of the strategy for the Processed Foods & Beverages sector and look forward to be-ing part of this revolutionary change to come.

Maliek De Alwis Zuraish HashimPresident Chairman, Lanka Fruit and Vegetable Producers, Sri Lanka Food Processors’ Association Processors and Exporters Association

[ III ]

[ ACKNOWLEDGEMENTS ]

ACKNOWLEDGEMENTS

The Processed Food and Beverages Strategy was developed as part of the National Export Strategy ( NES ) of Sri Lanka, under the aegis of the Ministry of Development Strategies and International Trade ( MoDSIT ) and the Sri Lanka Export Development Board ( EDB ), with the financial support assistance of the European Union ( EU ), as part of the ‘EU-Sri Lanka Trade Related Assistance.’

The document benefited particularly from the inputs and guidance provided by the members of the sector team that steered the formulation of the sector strategy, namely :

Name Position Organization

Dr. P.N.R.J. Amunugoda Senior Research Scientist Industrial Technology Institute

Dr. I.M.S.K. Idirisinghe Head, Agriculture Economics Division Coconut Research Institute

Mr. I.V.A.D.C. Induruwa Assistant Director Department of Export Agriculture

Dr. P.V. Sriyalatha Chief Animal Quarantine Officer Department of Animal Production & Health

Mr. Canagaratnam Sabeson Head of Key Accounts Renuka Agri Foods PLC

Mr. Nadeeja Karunathilaka General Manager, International Market Development Ceylon Biscuits Ltd

Mr. Nilhan Ekanayake Manager Export Administration MD Lanka Canneries Ltd

Mr. Asiri Silva Manager Export Administration MD Lanka Canneries Ltd

Mr. Delano Dias Chief Operating Officer Cargills Quality Foods Ltd

Mr. Nihal Rathnayake Cooperate Management Consultant Bio Foods Pvt. Ltd

Ms. Zahra Cader Senior Manager Consulting - Finance PricewaterhouseCoopers

Mr.A.G. Abubucker Head of International Sales Bio Extracts Pvt Ltd

Mr. Suresh Ellawala Director Ellawala Horticulture ( Pvt ) Ltd

Mr. Maliek de Alwis President Sri Lanka Food Processors Association

Dr. I.M.S.K. Idirisinghe Head, Agriculture Economics Division Coconut Research Institute

Dr. P.N.R.J. Amunugoda Senior Research Scientist Industrial Technology Institute

Mr. Sapumal Kapukotuwa Value Chain Specialist Agriculture Sector Management Project, World Bank

Ms. Malani Baddegamage Director– Export Agriculture Export Development Board

Ms. Srimathie Narandeniya Deputy Director Export Development Board

Mr. M.Z.M. Farhad National Sector Specialist UNIDO EU/ITC/UNIDO Project Sri Lanka

The full list of public and private stakeholders that contributed their precious time to the design of this Strategy are detailed in Appendix 1.

[ Iv ]


CONTENTS

Message from the Food and Beverage Processing industry ii

Acknowledgements v

Acronyms ix

EXECUTIVE SUMMARY 1

A GLOBAL INDUSTRY IN TRANSFORMATION 3

SRI LANKA IS EQUIPPED TO CATCH UP WITH WORLD MARKETS 8

DOMESTIC PRODUCTS IN LINE WITH GLOBAL TRENDS 8

PRODUCT ALIGNMENT TRANSLATES INTO GROWING TRADE PERFORMANCE 10

INADEQUATE SECTOR SUPPORT LIMITS FURTHER GROWTH 14

THE VALUE CHAIN DIAGNOSTIC 16

THE WAY FORWARD 21

THE VISION 21

THE STRATEGIC OBJECTIVES 21

THE FUTURE VALUE CHAIN 22

MOVING TO ACTION 29

THE STRATEGIC FRAMEWORK 29

IMPLEMENTATION FRAMEWORK 30

PLAN OF ACTION 2018-2022 33Appendix 1 : List of participants in the public–private consultations 39

Appendix 2 : Institutional assessment results 41

REFERENCES 43

[ v ]

[ LIST OF FIGURES ]

LIST OF FIGURES

Figure 1 : Demand determinants in the global processed food and beverages sector 4

Figure 2 : Processed food and beverages sales, top 10 markets 2016 and growth prospects until 2021 4

Figure 3 : Major exporters and importers of processed food and beverages ( 2012–2016 ) 6

Figure 4 : Overall processed food and beverages export trends, compared to regional peers ( 2007-2016 ) 10

Figure 5 : Export trends in main HS categories ( 2005-2016 ) 11

Figure 6 : Export destinations in main HS categories 12

Figure 7 : Value chain diagnostic 16

Figure 8 : Future value chain 22

Figure 9 : Strategic framework 29

Figure 10 : Institutional framework for processed food and beverages building industry development 31

LIST OF TABLES

Table 1 : List of exported processed food and beverages products 9

Table 2 : Main current market characteristics 13

Table 3 : Product and market opportunities 24

Table 4 : Value chain adjustments in the processed food and beverages sector 25

Table 5 : Institutional adjustments in the processed food and beverages sector 26

Table 6 : Regulation adjustments in the processed food and beverages sector 27

Table 7 : Investment approach in processed food and beverages sector 28

Table 8 : Performance assessment of TSI from the processed food and beverages perspective 41

[ vI ]


ACRONYMS

The following abbreviations are used :

BOI Board of InvestmentBRIC Brazil, Russia, India, ChinaCCC Ceylon Chamber of CommerceCDA Coconut Development AuthorityCRI Coconut Research InstituteDEA Department of Export AgricultureEDB Export Development BoardEU European UnionGAP Good agriculture practicesHACCP Hazard Analysis and Critical Control PointsHS Harmonized systemILO International Labour Organization IMAP International Network of M&A PartnersIP Intellectual propertyISO International Organization

for StandardizationITC International Trade CentreITI Industrial Technology Institute

MoDSIT Ministry of Development Strategies and International Trade

MoHNIM Ministry of Health, Nutrition and Indigenous Medicine

MRI Medical Research InstituteNAC National Agribusiness CouncilNES National Export StrategyNFA National Food AuthorityOECD Organisation for Economic Cooperation

and DevelopmentPoA Plan of actionR&D Research and developmentSLFPA Sri Lanka Food Processors AssociationSLSI Sri Lanka Standards InstitutionSME Small and medium-sized enterpriseUNIDO United Nations Industrial Development

OrganizationWIPO World Intellectual Property Organization

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[ ExECuTIvE suMMAry ]

EXECUTIVE SUMMARY

The goal of Sri Lanka’s processed food and beverages strate-gy is to set the sector on the course of strategic development by addressing constraints in a comprehensive manner and defining concrete opportunities that can be realized through the specific steps detailed in its Plan of Action ( PoA ). The processed food and beverages strategy is an integral part of Sri Lanka’s NES.

Even though processed food and beverages are among the major traditional and stable industries, they are af-fected by global changes in consumption and lifestyles. Keeping up with health and sustainability requirements is not optional anymore. Sri Lanka appears to be well equipped to achieve export success in this context, through its natural and traditional endowments, as well as the private sector’s widespread commitment to quality.

Processed food and beverages is a booming sector in sri Lanka and is diversifying. Sri Lankan products are high quality and have healthy characteristics due to the excel-lence of local raw materials and the industry’s commitment to investment in manufacturing processes and in improving its market image. Leading firms already established in the sector can serve as inspiration for the sector’s smaller companies.

However, major constraints currently prevent upscaling by both leading sector operators and smaller companies alike. These constraints stem from outdated sector-support frameworks. Policymakers and support institutions have not yet aligned regulations and services with the needs of a growing food processing industry, and are still focused on agricultural production rather than processing. As a result, the main threats to potential growth are access to raw ma-terials from both local and imported sources. A consistent supply of materials requires urgent attention by policymak-ers and an adjustment of institutional and regulatory frame-works to support food processors. Other issues such as research and development ( R&D ), quality and food safety have a variable impact, depending on a company’s size. National branding and timely market information will be im-portant to transform the sector into the competitive food pro-cessing hub it can become.

Today, the sri Lankan processed food and beverages sec-tor appears ready for its next growth surge. Although start-ing from a low base, a growth in exports has demonstrated the interest in and markets for Sri Lankan products. Export growth over the last few years clearly shows that the country is in a good position to increase food and beverage process-ing and transform it into a major industry, turning the sector into a leading foreign exchange earner and a standard-bear-er for high quality Sri Lankan products abroad.

Fast-paced private sector development will require major efforts from all policymakers and regulatory bodies in or-der to create an enabling business environment that will keep leading national firms in the country and help to en-sure that their current and future operations are not moved outside sri Lanka. Thus, this strategy focuses on facilitating raw material provision, improving food safety controls and reinforcing branding for the sector, in order to provide a solid foundation for the industry’s growth.

The following is a delineation of the proposed vision and strategic approach for increased private sector development. This vision statement was agreed upon by all stakeholders in the processed food and beverages value chain in Sri Lanka.

“ To become a competitive export process-ing hub for innovative, sustainable

and value-added food solutions ”The PoA operationalizes this vision by addressing the sec-tor’s constraints and leveraging opportunities in a com-prehensive manner. Emphasis is on the following strategic objectives :

2


•

•

•

Strategic objective 1: Amend the regulation framework in line with the needs of the processed food and beverages sector

Numerous regulations require amendments to ensure effective operations in the sector, especially regulations related to import regulations (quarantine and import restriction laws)

The supply of raw material must be secured in order for the sector to have the means to respond to strong international demand and to upscale the industries.

To be able to supply the most demanding markets, quality assurance systems must be improved in Sri Lanka. This will be done both through increased research and innovation and through strong national branding.

Strategic objective 2: Ensure consistent supply of raw material for the sector

Strategic objective 3: Cater to high quality market

The objective of the processed food and beverages strate-gy for Sri Lanka is to create an enabling environment for the food processing industry to realize its potential and benefit the country’s image by providing innovative, sustainable and value-added food solutions. Achieving this ambitious objec-tive will depend on the ability of the industry to implement the activities defined in this strategy. To structure sector devel-opment, it is recommended that the following interventions be implemented with priority:

� Strengthen the institutional framework governing the pro-cessed food and beverages sector and its policies; and

� Build the operational, business skills and innovation ca-pacities of sector operators.

These immediate quick win activities are necessary to initi-ate successfully the strategy implementation and to create rapid industry growth. Key to achieving these targets will be coordination of activities, progress monitoring and mo-bilization of resources for implementation. A public-private ‘advisory committee’ for the food processing industry was established, operationalised and empowered in order to car-ry out these tasks.

Photo: ITC

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[ A gLObAL INDusTry IN TrANsFOrMATION ]

A GLOBAL INDUSTRY IN TRANSFORMATION

The processed food and beverages sector is one of the world’s largest industries and manufactures a wide range of food and drinks to cater to the growing needs of the global population. The total size of the processed food and bev-erages sector worldwide is difficult to estimate due to the variety of products. Since food can be a commodity, an in-gredient and a meal, its value can be measured in differ-ent ways at every stage along that chain. There are multiple methodologies, some of which may involve double-count-ing added value. As a result, the estimated size for the pro-cessed food and beverages sector varies from US $ 2.2 trillion1 to US $ 4.8 trillion.2 The International Network of M&A Partners’ ( IMAP ) Global report cited a valuation of US $ 7 trillion in 2014.3

The major driver in the processed food and beverages sector globally is population growth. From an estimated 7 billion people today, the United Nations predicts that the world population will reach 9 billion by 2050 ; food security thus takes on unprecedented importance. Demand for pro-cessed food and beverage products tends to increase in line with growth in the world population, as these products are considered staples throughout much of the world and are becoming increasing popular with the growing global urban population.

Another important factor pushing the international de-mand for processed food is the progressive changes in food consumption patterns, particularly lifestyle changes brought about by urbanization. Urban populations, which often are located far away from farming communities, con-sume much higher quantities of processed foods than ru-ral populations do. As a result, global urban population

1.– Roland Moreau ( 2016 ). As Packaged Food Growth Engines Falter, what are the Next Growth Drivers?, 17 October. Passport, Euromonitor.com.2.– Sarah Murray ( 2016 ). The World’s Biggest Industry. Forbes, 15 November. Retrieved from https ://www.forbes.com/2007/11/11/growth-agriculture-business-forbeslife-food07-cx_sm_1113bigfood.html.3.– IMAP ( 2010 ). Food and Beverage Industry Global Report – 2010. Dover. Available from http ://www.proman.fi/sites/default/files/Food %20 %26 %20beverage %20global %20report %202010_0.pdf.

growth increases demand for processed food and bever-age products.4

Also driving the global demand for processed food and beverages is the global growth in per capita income. As incomes grow, consumers demand larger quantities of more diverse and higher quality food. This explains the growing demand from emerging and developing markets, as higher income usually translates into an increased consumption of processed food and beverages relative to less expensive, locally sourced food.

Finally, consumer preferences increasingly are the ma-jor demand determinants. The growing health conscious-ness of consumers has driven and reshaped demand for processed food and beverages from Asia, the EU and the United States of America. Highlights on these trends will be provided further.

4.– IBIS World ( October, 2017 ). IBISWorld Industry Report, Global Fruit & Vegetables Processing. New York. Available from http ://www.proman.fi/sites/default/files/Food %20 %26 %20beverage %20global %20report %202010_0.pdf.

Photo: pxhere (CC0 Public Domain)

4


Figure 1 : Demand determinants in the global processed food and beverages sector

Global demand in processed food and beverages

Population growth Urbanization

Per capita income Consumer preferences

Competition in the industry means smaller regional com-panies compete with the large multinational corpora-tions for market share across a variety of regional markets. Industry competition has increased over the past five years, with more aggressive promotional and branding activity taking place. Competition for supply contracts with large wholesalers and supermarkets is particularly intense, given that these downstream buyers are the most important link to mass consumer markets.5

5.– Ibid. p 22.

The dynamics in the processed food and beverages sec-tor are shifting, as a sharp economic downturn stalled ma-jor growth engines such as brazil, China and the russian Federation in 2015 and 2016, while China also experienced reduced economic and sector expansion. Poor performanc-es were seen in several major emerging markets. In devel-oped markets, deflationary pressures generated declines in large categories, notably dairy.6

6.– Moreau, loc. cit.

Figure 2 : Processed food and beverages sales, top 10 markets 2016 and growth prospects until 2021

10

8

6

4

2

0

-2

India

China

US

Japan

FranceBrazil

Germany

Italy United Kingdom

Russia

0 50,000 100,000 150,000 200,000Market size 2016 (USD billion)

% C

AGR

2016

-202

1

Notes: Bubble size shows actual growth in market size over 2011-2016. Range displayed USD-5 to USD54 billion. White bubbles show declines.

250,000 300,000 350,000 400,000

source : Euromonitor, 2016.

5


While a recovery is expected in the 2016–2021 period, the key growth drivers are set to become smaller emerg-ing markets, notably India and Indonesia. India is forecast to retain the edge over China in terms of growth rates and is expected to reinforce its position as a key market in pro-cessed food. Among smaller markets, Indonesia delivered a solid performance in 2015 and 2016. Driven by growth in rice products, Indonesia’s solid performance is likely to continue between 2016 and 2021, as consumers and retail-ers increasingly move from unpackaged to packaged rice.

global exports and imports of processed food and bever-ages are dominated by the same countries, united states, germany, Netherlands, France, China and Japan. Here again the trends show a certain plateauing of the major ex-porters and importers over the past five years, particularly in BRICs ( Brazil, the Russian Federation, India and China ) countries such as Brazil and China.

Box 1 : Size of the Indian market

As the closest market for Sri Lanka’s processed food products, India needs to be examined specifically. However not all regions in India represent potential markets for Sri Lankan processed products, and, quite counterintuitively, not necessarily the neighbouring regions.

India is one of the largest countries in the world, with a growing population, a discernible increase in purchasing power in many regions and a rising affluence in many urban pockets. However, income distribution in India remains uneven between a wealthy urban population and a low-income rural population. The income split essentially means that India has two separate consumer segments, which are further split by strong regional differences. Throughout India there are 20 official languages, 3 main religions, and 14 main cuisine styles.

The West India region has the highest value processed food sales in the country. A large number of brands from domestic and multinational players are present in the region and many international brands are imported. Consumer awareness of packaged foods is also high in North India, which is one the most affluent regions in the country, containing areas such as New Delhi, NCR, Chandigarh, Jaipur and Lucknow. Packaged foods have seen good growth in the region and this trend is expected to continue. Due to the underdeveloped nature and continued political instability of East and Northeast India, these areas are the smallest markets in the country for packaged food.

India has a large agriculture industry and is one of the world’s largest food producers. This, combined with a cultural preference for fresh food, means that India supplies the majority of its own food for consumption. However, India is a growing market for processed food imports, which are becoming more popular with the younger population, especially in urban areas.

Overall food and beverage consumption is expected to grow at rates between 0.6 % and 1 % over the next few years. The products and sectors that are expected to have the highest potential for growth are :

• Processed food : Ready-to-eat meals, canned foods and snacks are forecast to be in higher demand.

• Milk and dairy : There is high growth for processed dairy and milk products, and the growing dairy processing industry in India requires milk and dairy ingredients. Cheese, butter, whey, yoghurt and ice cream are some of the major dairy products that are imported, with cheese the most popular.

• Beverages : In India, tea is one of the few beverage products with a mature market. Other beverages such as coffee, car-bonated drinks and functional drinks are experiencing high growth. Coffee consumption is expected to grow 20 % to 30 % per year for the next few years.

• Fish and seafood : Fish consumption is currently low due to low incomes and generally poor cool chain infrastructure. As incomes rise, fish consumption is expected to increase. The challenge for fish consumption growth is that fish is not traditionally part of some Indian cuisines. As with meat, Indians primarily prefer fresh fish so inland areas tend not to consume it.

Source : New Zealand Trade and Enterprise ( 2012 ). Exporter Guide, Food and Beverage in India Market Profile, 2012. Auckland.

6


Figure 3 : Major exporters and importers of processed food and beverages ( 2012–2016 )

Top importers706050403020100

United States of AmericaUnited KingdomFranceCanada

GermanyNetherlandsJapanChina

US$

Billi

ons

2012 2013 2014 2015 2016

Top exporters

55

45

35

25

15

United States of AmericaNetherlandsChinaBrazilUnited Kingdom

GermanyFranceItalyBelgium

US$

Billi

ons

2012 2013 2014 2015 2016

source : ITC calculations based on UN COMTRADE statistics.

Over the past 10 years, operators in the food process-ing industry had to address a number of emerging con-sumer trends that took on increasing importance when attempting to capture market share. Consumer trends are shifting to healthier and more sustainable options, which are currently reshaping the entire industry. As emphasized by Euromonitor’s trends for 2017, ‘health is no longer just a buzzword but a genuine strategic priority’. Emerging de-mand determinants include, but are not limited to, the fol-lowing trends :7

� The need to reflect tradition through processed food products and : creating comfort through modernised up-dates of age-old formulations ;

� A boom in the popularity of plant-based food and a preference for natural diets, which will drive further ex-pansion of vegetarian, vegan and other plant-focused formulations ;

� The importance of food and packaging waste reduction with the aim of sustainability zeros ;

� Time-saving preparations processes ( not to be confused with ‘fast food’ ) and the elimination of lengthy preparation for consumers, since the time investments required for products and meals will become as influential in purchas-ing choices as nutrition or ingredient claims ;

� Democratization and increased affordability of healthy food products, as healthy food and drink stop being ‘luxuries’ ;

7.– Mintel ( 2017 ). Global Food & Drink Trends 2017. New York. Available from www.mintel.com.

� The use of e-commerce sites like Alibaba and WeChat in Asia is rising and multinationals report that sales through e-commerce are progressively becoming more profitable than traditional retail. The growing purchase of power of generation Z will reinforce this trend.

research and development in the food and beverages sector is followed closely by consumers. Demand is very sensitive to new findings about healthy products and ingredi-ents. Cases in point are nutrient-rich and sustainable options such as algae and seaweed, the ‘super-foods’, ‘hero-foods’, and plant waters ( such as aloe, maple, artichoke, cactus or coconut ). This demand sensitivity requires that companies remain attuned to current research and consumer reactions in order to adapt their production swiftly.

Within this evolving global context a number of factors that contribute to success for companies in the sector can be highlighted :

� Use of standardized labelling � Diversification and receptiveness to new tendencies � Technology and innovation � Proper market identification � Governmental support / enabling.

7


Even though processed food and beverages is among the largest and most stable traditional industries in the world, it is being af-fected by global changes in consumption and lifestyles. Keeping up with the health and sustainability requirements is not an option anymore.

Sri Lanka appears to be well equipped to achieve export success in this context, thanks to its natural and traditional characteristics, as well as the widespread commitment of the private sector to quality. Sri Lanka has potential for growth both in traditional markets, such as western countries and Japan, as well as growing Asian markets, such as Indonesia and India.

Photo: ITC © Alexandra Golovko

8


SRI LANKA IS EQUIPPED TO CATCH UP WITH WORLD MARKETS

DOMESTIC PRODUCTS IN LINE WITH GLOBAL TRENDSThe processed food and beverages industry in sri Lanka has deep roots and has thrived in the past decade. Increased political stability brought socioeconomic bene-fits to new regions of the country, increasing the per cap-ita income and expanding the middle-income segment of the economy, all of which expanded the domestic market for processed food. This phenomenon is closely related to the narrowing of the urban-rural divide and the increase in the rural standard of living, with the rural population spend-ing more on quality food products and not just subsistence items. As a result, companies began penetrating the north-ern and eastern provinces, which allowed them to scale-up and to increase their earnings. Tourism also had a positive impact on the industry by multiplying the client base and the purchasing power.

As a result, processed food and beverages is one of the fastest growing sectors in sri Lanka. The industry counts more than 110 manufacturing and marketing companies. In 2016 the industry’s export value was close to US $ 400 mil-lion, representing about 4 % of total goods’ exports. About 40 % of micro, small and medium enterprises nationwide are involved in the sector and employ more than 2 million people.8

Large-scale food industrialists and exporters are based in Colombo and others are spread out in almost all areas of the island, close to their supply of agricultural raw mate-rials. Collectors and suppliers of ingredients for all types of processed foods and beverages are linked with the various food and beverage producers, processors and exporters.

8.– Export Development Board ( 2017 ). Industry Capability Report, Food and Beverage Sector. Colombo. Available from http ://www.srilankabusiness.com/pdf/industry_capability_reports/food-and-beverage-sector-2017.pdf.

In addition, companies in the food and beverages sector have their own orchards and work with farmer clusters for their produce. The industry is quite resilient to climatic irreg-ularities and is able to find raw materials in various areas of the country ( with ingredients such as pineapples, mangoes, bananas, etc. available year-round ).9

The processed food and beverages sector covers a wide range of products, spread over nine different Harmonized system ( Hs ) chapters. Only a limited number of products is actually represented in each chapter in Sri Lanka ; how-ever, the potential range is made up of countless products. Table 1 presents the major HS chapters that the sector cov-ers in the country. The product categories include processed coconut, vegetables and fruits, concentrates and juices, semi-cooked food, confectionery and bakery products, ready-to-serve food, beverages, animal feed, preparations of cereals and flour, processed gherkins, etc. These product categories have shown rapid growth during the past decade.

9.– Ibid.

Photo: (CC BY-NC 2.0) Sriyan Indika.

9

[ srI LANkA Is EquIPPED TO CATCH uP WITH WOrLD MArkETs ]

Table 1 : List of exported processed food and beverages products

Hs chapter Hs6 product Additional description

Miscellaneous edible preparations ( HS21 )

us $ 173 million

210690 Food preparations, n.e.s. ( 89 % of chapter exports )

Coconut water ( 21069097 )

210120 Extracts, essences and concentrates, of tea or mate, and preparations with a basis of these ( 10 % of chapter exports )

Preparations of vegetables, fruit, nuts or other parts of plants ( HS 20 )

us $ 96 million

200819 Nuts and other seeds ( 86 % of chapter exports )

Coconut milk ( 20081920 ), coconut milk powder ( 20081930 ), creamed coconut ( 20081940 ), coconut milk drink ( 20081990 )

200110 Cucumbers and gherkins ( 7 % of chapter exports )

200989 Juice of fruit or vegetables ( 1.5 % of chapter exports )

Residues and waste from the food industries ; prepared animal fodder ( HS23 )

us $ 67 million

230990 Preparations of a kind used in animal feeding ( 64 % of chapter exports )

Residue from coconut oil ( by-product ) : extraction of residue oil and convert to animal feed

2302 Bran, sharps and other residues ( 18 % of chapter exports )

Residue from coconut oil ( by-product )

230650 Oilcake and other solid residues ( 17 % of chapter exports )

De-fatted coconut and coconut flour ( 23065010 )

Non-alcoholic beverages ( HS2201-02 )

us $ 26 million

220290 Non-alcoholic beverages ( excluding water, fruit or vegetable juices and milk ) ( 97 % )

220210 Waters, incl. mineral and aerated, with added sugar ( 3 % of chapter exports )

Preparations of cereals, flour, starch or milk ; pastrycooks ( HS 19 )

us $ 19.2 million

190531 Sweet biscuits ( 76 % of chapter exports )

190219 Uncooked pasta, not stuffed or otherwise prepared, not containing eggs ( 7 % of chapter exports )

190110 Food preparations for infant use, put up for retail sale ( 5 % of chapter exports )

Cocoa and cocoa preparations ( HS 18 )

us $ 4.4 million

180690 Chocolate and other preparations containing cocoa ( 48 % of chapter exports )

180500 Cocoa powder, not containing added sugar ( 47 % of chapter exports )

Meat, fish and crustacean preparations ( HS 16 )

us $ 2.6 million

160100 Sausages and similar products, of meat, offal or blood ( 34 % of chapter exports )

160249 Prepared or preserved meat and offal of swine ( 30 % of chapter exports )

160415 Prepared or preserved mackerel ( 21 % of chapter exports )

Sugars and sugar confectionery ( HS 17 )

us $ 2 million

170290 Sugars in solid form ( 60 % of chapter exports )

170199 Cane or beet sugar and chemically pure sucrose ( 25 % of chapter exports )

170410 Chewing gum, whether or not sugar-coated ( 5 % of chapter exports )


sri Lankan processed food companies have built a repu-tation for working towards the ‘Food for Health’ concept while ensuring the supply of high-quality products to inter-national markets. The intrinsic quality of resources available

in different parts of the country helped create this good rep-utation. This gives an important comparative advantage to Sri Lankan products, matching them with the consumer trends in global markets.

The processed food and beverages sector in Sri Lanka is boom-ing, diversifying, and is driven by urbanization and increases in income, especially in the previously unstable areas of the North. Sri Lankan products have high quality and healthy characteristics due to the high quality of local raw materials and the industry’s

commitment to investment in manufacturing processes and improvement of their image in export markets. Well-established, leading firms can serve as inspiration for smaller companies in the sector.

10


PRODUCT ALIGNMENT TRANSLATES INTO GROWING TRADE PERFORMANCEThe processed food and beverages sector has demon-strated steady export growth over the past 10 years, which accelerated in the past year for specific products. Figure 4 shows an overview of all products in the processed food category. The compound annual growth rate of the overall export basket was 15 % over the past 10 years and 12 % over

the last five years, growing from US $ 112 million in 2007 to US $ 392 million in 2016. However, when comparing to Asian peers, Sri Lanka’s processed food exports remain marginal. China and Thailand led Asian processed food exports, with 28 % and 17 % respectively of total Asian exports in the sec-tor, which were valued at US $ 98 billion in 2016.

Figure 4 : Overall processed food and beverages export trends, compared to regional peers ( 2007-2016 )

30

25

20

15

10

5

0

China

Thailand

Singapore

Malaysia

Indonesia

India

Sri Lanka (20th position)

US$

Billi

ons

2012 2013 2014 2015 2016

200

150

100

50

0

500

400

300

200

100

0

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

TotalMiscellaneous edible preparationsPreparations of vegetables, fruit, nuts or other parts of plantsResidues and waste from the food industries; prepared animal fodderBeverages, spirits and vinegarPreparations of cereals, flour, starch or milk; pastrycooks’ productsCocoa and cocoa preparationsPreparations of meat, or fish or of crustaceans, molluscs or other aquatic invertebratesSugars and sugar confectionery

US$

Mill

ions

US$

Mill

ions


Note : Values in both graphics represent aggregated values for HS chapters listed in Table 1.

The best-performing exports from sri Lanka are relat-ed to coconut processing, such as coconut water ( Hs 21 ), milk and cream, milk powder ( Hs20 ), and coconut oil processing residues ( Hs23 ). Marinated gherkins and biscuits represent other major exports in the sector. More marginal export categories include non-alcoholic beverag-es, cocoa and cocoa preparations, meat, fish and crusta-cean preparations, and sugar confectionery. The success of coconut-based products demonstrates the alignment be-tween Sri Lanka’s products and global consumer trends. In

2016, the star product has undeniably been coconut wa-ter, both pure and flavoured, recorded under HS21069097. Coconut water represented about 89 % of the exports under the HS21 and is responsible for the 73 % growth between 2015 and 2016 in exports under this chapter. With a value of US $ 154 million, coconut water represented about 40 % of total Sri Lankan processed food and beverage exports. It also outstripped the desiccated coconut exports, one of the leading exported products from Sri Lanka, which amounted to US $ 105 million in 2016.

11


Figure 5 : Export trends in main Hs categories ( 2005-2016 )

120.000

100.000

80.000

60.000

40.000

20.000

0

2007

2006

2005

2008

2009

2010

2011

2012

2013

2014

2015

2016

USD

thou

sand

s

20 Preparations of vegetables, fruit,nuts or other parts of plants

200.000

150.000

100.000

50.000

0

2007

2006

2005

2008

2009

2010

2011

2012

2013

2014

2015

2016

USD

thou

sand

s

21 Miscellaneous edible preparations

30.000

25.000

20.000

15.000

10.000

5.000

020

0720

0620

05

2008

2009

2010

2011

2012

2013

2014

2015

2016

USD

thou

sand

s

19 Preparations of cereals, flour,starch or milk; pastrycook’s products

100.000

80.000

60.000

40.000

20.000

0

2007

2006

2005

2008

2009

2010

2011

2012

2013

2014

2015

2016

USD

thou

sand

s

23 Residues and waste from the foodindustries; prepared animal fodder


Export destinations and market segments vary widely among different product types, showing market diversi-fication. The main two coconut product types ( water and milk / cream ) are evenly spread among different Western, Asian and Gulf countries. This is not the case with coconut oil residues, which are mostly exported to India. However coconut oil residue is a by-product and exports to India rep-resent a convenient market, as stakeholders indicate that they do not concentrate on marketing or investing in these products.

Photo: (CC0) @pixabay

12


Figure 6 : Export destinations in main Hs categories

United ArabEmirates

5%

Germany11%

UnitedKingdom

14%

Australia5%

Netherlands8%

UnitedStates ofAmerica

20%Other37%

HS 20

United ArabEmirates

24%

Hong Kong,China15%

Ireland9%

France5%

Germany5%

UnitedStates ofAmerica

4%

Other32%

SaudiArabia

6%

HS 21

Maldives19%

Other32%

Ghana30%

United Statesof America

5% UnitedKingdom

6%United Arab

Emirates8%

HS 19

India79%

Other12%Japan

2%Iran2%

Pakistan2%

Viet Nam3%

HS 23


Table 2 provides a market destination perspective and sum-marizes the main product characteristics of the top three export markets for processed food and beverages from Sri Lanka. Once again, coconut-based products dominate. The table also shows that supply characteristics for these products represent a challenge.

Photo: (CC0)

13


Table 2 : Main current market characteristics

Main products exported

Description of products and their supply characteristics

Main type of buyers in target markets

Top critical success factors

India

1. bran, sharps and oilcake ( 2302, 2306 )

• Extraction of residue oil and conversion to ani-mal feed : residue from coconut oil ( by-product ). Cheap and unfinished product ( could be further processed by local animal feed producers )

• Animal feed producers in India, are ‘cleaning the Sri Lankan coconut resi-due market’, according to stakeholders.

• Low quality requirements• Price is a determinant factor

2. Waters, incl. mineral waters and aerated waters, containing added sugar or other sweetening ( 2202 )

• Flavoured waters and juices• Raw materials are imported ( Sri Lankan prod-

ucts are not competitive )• Low productivity of local market ( import from

Philippines )• Local supply could be an advantage

• Venture partners in India • Due to venture partners, no dif-ficulties to enter market

• Sanitary safety and quality standards

• Volumes• Price

3. Nuts and other seeds, incl. mixtures, prepared or preserved ( 200819 )

• Coconut milk• Coconut milk powder• Creamed coconut• Coconut milk drink

• Small retail chains in India • Sanitary safety and quality standards

• Volumes• Price

united Arab Emirates

1. Food preparations, n.e.s. ( 210690 )

• Coconut water, natural and flavoured• Problem with local supply : currently water is

getting wasted• No water and other waste collection network

• Local large retail and hotels

• Thailand is a strong competitor

• Sanitary safety and quality standards ( achieved by export-ers )

• Volumes• Price as the main factor

2. Nuts and other seeds, including mixtures, prepared or preserved ( 200819 )

• Coconut milk• Coconut milk powder• Creamed coconut• Coconut milk drink• All those products are considered ‘super foods’

and require little marketing. The main problem is related to shortages due to raw material import limitations. Laws do not allow import of coconut due to disease prevention ( quarantine ).

• Protection of a few growers whose cost of production is very high. Currently a 1950-1970 regulation is in place : example sticker on a con-sumer pack is needed by Sri Lankan regulation. Very costly when there is no quality assurance related to label. Some factories do require it, but others do not.

• Example : 1960 salmonella problem in the United States : then this type of measure is required. Now obsolete.

• Local large retail and hotels

• Thailand is a strong competitor


• Volumes• Price as the main factor

3. sweet biscuits ( 190531 )

• Sri Lankan biscuits, ready for consumer use • Travel sector ( airlines )• Mainstream consumer

market ( supermarket chains, groceries )

• Price is a factor for both mar-kets : expats represent a major share and a lot from the South Asian Association for Regional Cooperation region

• Certifications + packaging ( specific size required ) for travel sector supplied locally

14


Main products exported

Description of products and their supply characteristics

Main type of buyers in target markets

Top critical success factors

united states of America

1. Nuts and other seeds,

incl. mixtures,

prepared or preserved

( 200819 )

• Coconut milk,• Coconut milk powder,• Creamed coconut,• Coconut milk drink.• ‘super foods’ and require little marketing

• Stringent quality control measures : dealing with multinationals, breakfast cereal industry such as Kellogg’s.

• There is potential be-cause larger quantities are asked for : Sri Lanka can only supply one-quarter of the demanded quantity.


• Price• Volumes as the main factor

2. Food preparations, n.e.s.

( 210690 )

• Coconut water, natural and flavoured• ‘Super food’ and requires little marketing

• Local large retail • Sanitary safety and quality standards ( achieved by export-ers )

• Price• Volumes as the main factor

3. sweet biscuits

( 190531 )

• Sri Lankan biscuits, ready for consumer use • Travel sector• Ethnic market


• Price• Volumes as the main factor• FDA approval is required

Although the sector starts from a low base, export growth dem-onstrates the interest in and recognition of Sri Lankan products by markets. Consistent export growth demonstrates that the country is in a good position to upscale the sector and transform it into a leading industry, serving as a major component of national branding and becoming a leading foreign exchange earner.

However, major constraints currently prevent both large sec-tor operators and smaller companies alike from upscaling. These constraints mostly stem from outdated sector support frameworks.

INADEQUATE SECTOR SUPPORT LIMITS FURTHER GROWTH

The government has not yet fully focused policy support on the processed food and beverages industry, and still emphasizes agricultural production. Most Government pol-icies and support programmes target agricultural produc-tion rather than food processing. There are no specific policy instruments or strategies focused on the food processing industry’s needs. This means that initiatives and changes required by industry operators take time to materialize and are implemented in an uncoordinated way. Some policies, however, indirectly concern the sector, even if they do not target it fully :

� National Land Use Policy of Sri Lanka ; � Sri Lanka National Agricultural Policy ( 2007 ) ; � National Policy and Strategic Framework for Prevention

and Control of Non-Communicable Diseases ( 2010 ) ; � Kapruka Navodawa-Nat ional Coconut Sector

Development Plan ( 2011-2016 ) ; and the � Ten-year Development Policy Framework of the Fisheries

and Aquatic Resources Sector ( 2007-2016 ).

15


The government’s current strategy for the processed food sector concentrates on increasing local and foreign in-vestment. The government’s industrial policy aims to es-tablish an enabling environment for investments and joint ventures focused on processing or re-exporting certain raw food products in order to bring foreign exchange. The Board of Investment ( BOI ) offers various incentives for investors.10 Research institutions also conduct a series of programmes to develop R&D facilities and Government-related institu-tions offer training and upgrade the skills of technical staff. For instance, Wayamba University is currently establishing a food research centre on technologies to convert agricultural commodities into nutritionally safe products.

Although additional national and foreign investment is im-portant to scale up the sector, the industry already suffers from a limited raw material supply base. As will be detailed further in the value chain diagnostic, the sector has chal-lenges obtaining a consistent local raw material supply due to producers’ coordination issues. Stringent and outdated regulations ( from the 1950s, in some cases ) on import ex-acerbate the issue. These old regulations date back to the protectionist period that lasted until 1977. The entry of new processors will increase the pressure on the limited supply.

In term of institutional support, even though some spe-cialized institutions exist, they lack resources and coor-dination among themselves. In addition, the food safety control function is insufficient to meet industry needs. The following points were highlighted by stakeholders during an institutional assessment exercise ( detailed results can be found in appendix 2 ) :

� Stakeholders confirm that agricultural and agro-process-ing policies are not in line with their needs.

� The food safety control function under MoHNIM is not resourced enough to support sector growth.

10.– Various exemptions under Inland Revenue Law, Port and Airport Development Levy Act, Value Added Tax Act and Strategic Development Project Act.

� The Department of Export Agriculture ( DEA ) is highlight-ed as being inefficient in terms of coordination capacity, resource allocation and influence on the sector.

� Most of the main sector associations, especially the Sri Lanka Food Processors Association ( SLFPA ), are un-der-resourced and therefore lack capacity to support the sector. However, their services, even though insufficient, are relevant, according to sector stakeholders.

� The Medical Research Institute ( MRI ), the current labora-tory responsible for food safety control, lacks sufficient capacity to serve the sector and only covers part of the services required by the industry.

� The education related to the sector offered by univer-sities and training institutes is insufficient, especially in post-harvest technology and food science and technol-ogy, both key aspects for processed food and beverages operators.

Policymakers and support institutions have not yet adapted to the needs of a growing food processing industry. Current initiatives focus mostly on agricultural production and do not evaluate and address connections between agricultural production and the food processing industry. Some outdated measures from the protectionist era related to production remain in certain areas to protect local producers. In order to stop leading firms from

leaving Sri Lanka for other locations that would allow them to scale-up operations, major efforts from all policymakers and regulatory bodies will be needed to create a business environ-ment that enables fast-paced private sector development and evolution. These efforts will be required particularly for the facilitation of raw material provision and food safety control.

Photo: ITC

16


THE VALUE CHAIN DIAGNOSTICFigure 7 : value chain diagnostic

Com

pany

-ow

ned

farm

s

Prim

ary

prod

ucts

:•

F&V

(impo

rt

espe

cial

ly

pulp

/mos

tly n

atio

nal

• M

eat a

nd fi

sher

ies

(impo

rt/m

ostly

na

tiona

l)•

Cere

als

(Ric

e m

ostly

loca

l, w

heat

im

port

ed)

• Pu

lses

(mos

tly

impo

rted

, and

na

tiona

l)•

Coco

nut (

natio

nal)

• Co

coa

(bot

h bu

t m

ostly

impo

rted

)•

Cane

(nat

iona

l)•

Suga

r (im

port

ed

mos

tly)

• He

rbs

(bot

h)•

Edib

le o

il (im

port

ed

mos

tly a

nd n

atio

nal)

Larg

e/m

edi-

um/s

mal

l en

terp

rises

Inpu

t Pro

duct

ion

Inpu

t Pr

oduc

tion

Tran

spor

tatio

n/re

tail

Outg

row

ers

sche

mes

(inp

uts

prov

isio

n su

ch a

s te

chno

logy

an

d ex

tens

ion

serv

ices

)

Hom

e ga

rden

s ar

e co

llect

ed

from

(man

go, p

assi

on fr

uits

, pa

paya

)

Colle

ctio

n ce

ntre

s an

d ag

ents

Rese

arch

inst

itute

s

Larg

e co

mpa

nies

trai

ning

Seas

onin

g in

gred

ient

s:sp

ices

(mix

ed),

salt

(mix

ed),

flavo

urs

and

colo

urs

(impo

rted

)

Rese

arch

and

ex

tens

ion

Grad

ing

for

F&V

(at

prod

uctio

nlo

catio

n)

Coco

nut b

ased

prod

ucts

all t

ypes

of f

irms

«coc

onut

tria

ngle

»

Dist

ribut

orne

twor

ks

Dom

estic

m

arke

t (M

ore

then

90

%)

Supe

rmar

ket c

hain

s (d

irect

ly fr

om

prod

ucer

) - m

oder

n tra

de

Smal

l ret

al(th

roug

hdi

strib

utor

)

Jam

, cor

dial

, cer

eals

, bis

cuits

and

edib

le p

repa

ratio

ns:

all p

rodu

ctio

n ex

cept

coc

onut

milk

/wat

er (9

5% e

xpor

ted)

Expo

rts

(Les

s th

en

10%

)

Dom

estic

Mar

kets

Inte

rnat

iona

l Mar

kets

Road

tran

spor

ttru

cks

an fr

eeze

rtru

cks

(fish

and

pe

risha

bles

)In

dia

US$

74 m

illion

Bran

, sha

rps

and

oilc

ake

US$

53 m

illion

Beve

rage

s US

$ 13

milli

onPr

epar

ed fr

uits

, nut

s, e

tc.

US$

3 m

illion

Mis

c pr

oces

sed

food

US$

42 m

illion

Mis

c pr

oces

sed

food

US$

6 m

illion

Mis

c pr

oces

sed

food

US$

26 m

illion

Mis

c pr

oces

sed

food

US$

5 m

illion

Swee

t bis

cuits

US$

1 m

illion

Prep

ared

frui

ts, n

uts,

etc

.çUS

$ 4

milli

on

Prep

ared

frui

ts, n

uts,

etc

.US

$ 18

milli

on

Prep

ared

frui

ts, n

uts,

etc

.US

$ 13

milli

on

Mis

c pr

oces

sed

food

US$

8 m

illion

Mis

c pr

oces

sed

food

US$

14 m

illion

Mis

c pr

oces

sed

food

US$

6 m

illion

Mis

c pr

oces

sed

food

US$

4 m

illion

Prep

arat

ions

of f

lour

, cer

eals

US$

4 m

illion

Prep

ared

frui

ts, n

uts,

etc

.US

$ 10

milli

on

Prep

ared

frui

ts, n

uts,

etc

.US

$ 8

milli

on

UAE

US$

57 m

illion

USA

US$

27 m

illion

HK, C

hina

US$

26 m

illion

UKUS

$ 20

milli

on

Germ

any

US$

19 m

illion

Irela

ndUS

$ 15

milli

on

Mal

dive

sUS

$ 13

milli

on

Neth

erla

nds

US$

13 m

illion

Loca

l pro

cess

ors/

ethn

ic m

arke

ts/im

port

dis

tribu

tion

War

ehou

sing

and

stor

age

faci

litie

sne

ar C

olom

bo (l

arge

co

mpa

nies

hav

e ow

n w

areh

ousi

ng)

Colo

mbo

por

t (m

ostly

) or

Katu

naya

ke

airp

ort

(per

isha

ble

and

smal

l qua

ntiti

es

of p

roce

ssed

)

Frui

ts a

nd v

eget

able

spr

oces

sing

all t

ypes

of f

irms

All r

egio

ns

Anim

al fe

edpr

epar

atio

nslo

cal m

arke

t - a

ll ty

pes

of fi

rms/

expo

rt -

med

ium

firm

sRe

gion

s de

pend

ent o

nth

e in

put -

loca

tion

isin

line

with

pro

duct

ion

area

Cere

als

proc

essi

ng in

t bi

scui

tsm

ediu

m in

cen

tral a

ndea

st a

nd la

rge

inw

este

rn p

rovi

nc e

Coco

a pr

oces

sing

m

ediu

m a

nd la

rge

firm

s ce

ntra

l and

w

este

rn p

rovi

nces

Mea

t, fis

h an

d cr

usta

cean

pro

cess

ing

med

ium

-larg

e fo

r exp

ort

close

to C

olom

bo, a

nd

small

on

loca

l mar

kets

Suga

r can

e pr

oces

sing

3 la

rge

com

pani

es E

aste

rn

prov

ince

And

Uva

Herb

s pr

epar

atio

nAl

l typ

es o

f firm

sSo

uth

Uva

and

East

prov

ince

Labo

ur (n

atio

nal)

Plan

t nur

serie

s

Cans

(im

port

), ja

rs

(mix

ed),

flexi

ble

pack

agin

g (im

port

ed

prim

ary

impu

ts a

nd

man

ufac

ture

d lo

cally

), bo

xes

(mos

tly lo

cal b

ut

impo

rted

mat

eria

ls),

bottl

es (l

ocal

co

mpa

ny e

xist

, im

port

)

Mac

hine

ry (f

or s

mal

l in

dust

ries

loca

lly

fabr

icat

ed p

lant

s an

d fo

r med

ium

/larg

e co

mpa

nies

impo

rted

Stat

e un

iver

sitie

s

TVET

inst

itutio

ns (M

inis

try o

f Vo

catio

nal S

kill

Deve

lopm

ent)

Depa

rtm

ent o

f Agr

icul

ture

and

DEA

Pack

agin

gm

anuf

actu

rers

Avai

labl

e fa

ctor

ies

Fact

orie

s

Refri

gera

ted

syst

ems

(impo

rted

)

Com

pany

’s in

vest

men

ts

Mac

hine

rym

anuf

actu

rers

Refri

gera

ting

syst

empr

oduc

ers

Lege

nd

Natio

nal c

ompo

nent

Mixe

d co

mpo

nent

Inte

rnat

iona

l com

pone

nt

Esta

blis

hed

who

lesa

lem

arke

ts (D

ambu

llaDe

dica

ted

Econ

onom

icCe

ntre

and

Pet

tha

mar

ket)

17

[ THE vALuE CHAIN DIAgNOsTIC ]

Insu

ffici

ent w

orke

rs s

uppl

y:•

The

inte

rest

of y

oung

peo

ple

in a

food

indu

stry

job

is lo

w, w

ith th

eir p

refe

renc

e be

ing

for w

hite

col

lar j

obs.

• W

orki

ng c

ondi

tions

are

not

app

ealin

g in

com

paris

on w

ith o

ther

sec

tors

.•

Adm

inis

trativ

ely

very

diff

icul

t to

impo

rt la

bour

forc

e.

High

cos

t of p

rodu

ctio

n:•

High

cos

t of l

abou

r and

ene

rgy.

• Co

mpa

red

to o

ther

cou

ntrie

s, S

ri La

nkan

in

puts

are

not

dut

y-fre

e, c

reat

ing

unfa

ir co

mpe

titio

n. T

he o

nly

way

to li

ft du

ties

is

thro

ugh

the

Tem

pora

ry Im

port

for E

xpor

t Pr

oces

sing

sch

eme,

but

a c

ompa

ny

mus

t be

BOI r

egis

tere

d an

d m

ust s

ell

100%

of p

rodu

ctio

n fo

r exp

ort (

none

on

loca

l mar

ket,

othe

rwis

e .d

oes

not a

pply

).

Tran

spor

t is

a ch

alle

nge

for

proc

esse

d fo

od a

nd b

ever

age

com

pani

es:

• Su

bsta

ntia

l inv

estm

ents

are

ne

eded

for t

rans

porta

tion

and

cold

ch

ambe

rs.

• Co

st e

ffici

ency

pus

hes

larg

e co

mpa

nies

to in

vest

in th

eir o

wn

cold

cha

ins.

• Li

mite

d de

man

d fo

r col

d st

orag

e do

es n

ot s

pur i

nfra

stru

ctur

e de

velo

pmen

t (on

ly p

rodu

cts

requ

iring

col

d st

orag

e ar

e se

afoo

d, fi

sh, m

eat a

nd d

airy

).•

No ra

il tra

nspo

rt av

aila

ble,

onl

y ro

ad.

Achi

evin

g co

mpl

ianc

e w

ith ta

rget

mar

ket

qual

ity re

quire

men

ts is

cum

bers

ome:

• Fe

w a

genc

ies

prov

idin

g co

nsul

tanc

y se

rvic

es

on q

ualit

y.•

Low

aw

aren

ess

of th

e ce

rtific

atio

n sy

stem

s (e

spec

ially

in S

MEs

).•

Qual

ity te

stin

g is

not

ava

ilabl

e lo

cally

for

pest

icid

es. U

p to

a c

erta

in le

vel n

ot p

ossi

ble

to te

st lo

cally

, cer

tain

toxi

ns, p

arts

per

billi

on

leve

ls, a

ntib

iotic

s, e

tc. N

ot a

ll ar

e de

tect

ed b

y lo

cal l

abs

but i

mpo

rtant

for t

echn

ical

re

gula

tion

requ

irem

ents

.•

Need

third

par

ty la

b an

alys

is/ a

ccre

dite

d la

bs

(MRI

not

acc

redi

ted)

.•

Priv

ate

labs

hav

e re

gion

al n

etw

orks

and

sen

d sa

mpl

es to

thei

r reg

iona

l rep

s. T

akes

tim

e an

d is

cos

tly.

• Pu

blic

labs

do

not h

ave

the

capa

city

to te

st

all p

aram

eter

s an

d m

ost a

re n

ot a

ccre

dite

d (s

ome

curre

ntly

are

in th

e pr

oces

s). T

heir

com

mer

cial

cap

acity

to s

erve

the

indu

stry

is

limite

d an

d th

e sk

ills a

nd m

anpo

wer

in th

ose

labs

are

insu

ffici

ent.

• Ge

tting

raw

mat

eria

l sam

ples

is c

halle

ngin

g fo

r pro

cess

ors

sinc

e m

any

prov

ider

s of

fer

diffe

rent

sam

ples

.

Risk

of r

egul

atio

n co

nstr

aint

for

tran

spor

tatio

n to

US

mar

ket:

• Cu

stom

s-Tr

ade

Partn

ersh

ip

Agai

nst T

erro

rism

: Pos

sibl

e up

com

ing

Cust

oms

regu

latio

n ag

ains

t ter

roris

m in

the

Unite

d St

ates

. Thi

s is

onl

y im

plem

ente

d fo

r sea

ling

of c

argo

s fo

r now

. If

fully

impl

emen

ted

then

wou

ld

affe

ct e

xpor

t to

the

Unite

d St

ates

.

Labo

ur re

gula

tions

are

not

in li

ne w

ith

inte

rnat

iona

l reg

ulat

ions

:•

Labo

ur re

gula

tions

are

ver

y ol

d (1

950)

an

d ne

ed to

be

upda

ted

in li

ne w

ith IL

O re

gula

tions

.

Tech

nica

l tra

inin

g fo

r uns

kille

d la

bour

is

lack

ing

in th

e se

ctor

:•

SLFP

A st

arte

d a

prog

ram

me

for t

rain

ing

(500

peo

ple

train

ed in

nor

th a

nd e

ast

prov

ince

s fo

r 1.5

yea

rs).

• S

mal

ler c

ompa

nies

hav

e di

fficu

lty fi

ndin

g su

ch tr

aini

ng.

Min

imal

R&

D fa

cilit

ies

focu

sing

on

proc

esse

d fo

od a

nd b

ever

ages

are

av

aila

ble:

• R&

D is

don

e by

larg

e co

mpa

nies

and

kep

t se

cret

by

fear

of c

ompe

titio

n.

• Re

lianc

e on

dia

spor

a’s

lead

s m

arke

t de

velo

pmen

t, w

hich

is b

ased

on

dias

pora

av

aila

bilit

y in

targ

et m

arke

ts.

• Li

mite

d kn

owle

dge

of g

loba

l mar

ket t

rend

s to

ens

ure

that

new

pro

duct

dev

elop

ed a

re

com

mer

cial

ly v

iabl

e.•

No re

sear

ch o

n sh

elf-s

tabl

e Sr

i Lan

kan

food

, eve

n if

oppo

rtuni

ty is

con

side

rabl

e.

• No

rew

ard

mec

hani

sms

for R

&D

or

inno

vatio

n.

Insu

ffici

ent s

uppl

y of

cap

ital a

nd p

acka

ging

inpu

ts fo

r pro

cess

ing:

• Lo

cal p

acka

ging

pro

duce

rs d

o no

t hav

e su

ffici

ent s

uppl

y ca

paci

ty fo

r foo

d pr

oces

sing

.•

Lim

ited

acce

ss to

pro

per m

achi

nery

in th

e co

untry

. Mos

t of t

he c

ompa

nies

impo

rt m

achi

nery

from

Ger

man

y, C

hina

, Mal

aysi

a, e

tc.

• Hi

gh im

port

tax

on im

port

of c

erta

in m

achi

nes

that

are

als

o pr

oduc

ed lo

cally

. Ho

wev

er, t

hese

mac

hine

s ar

e pr

oduc

ed o

n a

smal

l sca

le th

at is

insu

ffici

ent f

or th

e ne

eds

of la

rger

food

pro

cess

ing

com

pani

es.

• No

con

cess

iona

ry s

chem

es a

vaila

ble

for h

igh-

tech

mac

hine

ry.

Inco

mpa

tibili

ty o

f loc

al ra

w m

ater

ial s

uppl

y w

ith in

dust

ry’s

nee

ds:

• Ex

tens

ion

serv

ices

and

rele

vant

regu

lato

ry b

odie

s do

not

info

rm p

rodu

cers

abo

ut

the

varie

ties

that

are

nee

ded.

The

cho

ice

of c

rop

by p

rodu

cers

is th

us e

rratic

and

no

t coo

rdin

ated

by

any

mec

hani

sm.

• Ac

cess

to c

apita

l is

prob

lem

atic

at t

he p

rodu

cer l

evel

, whi

ch d

oes

not a

llow

pr

oduc

ers

to m

eet l

ocal

dem

and.

• Re

stric

tions

on

intro

duct

ion

of n

ew v

arie

ties

incl

ude

a ve

ry lo

ng a

nd c

ostly

app

rova

l pr

oces

s an

d qu

aran

tine

regu

latio

ns th

at a

re s

omet

imes

obs

olet

e.•

Som

etim

es th

e fru

it su

pply

is re

stric

ted

due

to lo

cal s

easo

nal w

eath

er c

ondi

tions

, w

hich

affe

cts

pric

e of

raw

mat

eria

l. As

a re

sult,

loca

l pro

duce

pric

es fl

uctu

ate

muc

h m

ore

than

the

glob

al m

arke

t pric

e.

Diffi

culti

es in

impo

rtin

g pr

imar

y or

sem

i-pro

cess

ed p

rodu

ce, e

spec

ially

for e

xpor

t pr

oces

sing

:•

Impo

rt of

cer

tain

raw

mat

eria

ls is

thor

ough

ly c

ontro

lled.

• Lo

cal p

rodu

ct p

rote

ctio

n re

gula

tions

exi

st fo

r man

y cr

ops

but a

re s

omet

imes

not

ne

eded

sin

ce im

porte

d cr

ops

com

plem

ent t

he lo

cal s

uppl

y ra

ther

than

repl

ace

it.

• Er

ratic

rate

s of

tax

appl

ied

to im

porte

d pr

oduc

ts.

• Im

porti

ng p

rodu

cts

off-s

easo

n is

rest

ricte

d (e

ven

whe

n lo

cal p

rodu

ce is

not

av

aila

ble)

.•

Unab

le to

des

troy

non-

com

plia

nt im

ports

: nee

d fo

r prim

e m

inis

ter a

ppro

val f

or

dest

ruct

ion

of n

on-c

ompl

iant

impo

rts.

No m

utua

l rec

ogni

tion

of s

tand

ards

(tes

ting

and

impo

rt p

roce

ssin

g tim

e is

14-

21

days

for t

estin

g th

en re

gula

tory

pro

cedu

re):

•

EU, C

anad

a, J

apan

, Ind

ia (l

ocal

hea

lth c

ertif

icat

e no

t acc

epte

d).

• Pa

ram

eter

s: s

alm

onel

la re

gula

tion

mor

e st

ringe

nt th

en e

xter

nal (

quar

antin

e re

gula

tion)

. •

No e

xpor

t pro

cess

ing

excl

usio

n (e

ven

if pr

oduc

t nev

er in

loca

l mar

ket).

No fo

od b

rand

is a

vaila

ble

for S

ri La

nka:

• Th

ere

is n

o id

entit

y cu

rrent

ly fo

r Sri

Lank

an

food

(onl

y at

com

pany

leve

l; ED

B ha

s as

sist

ance

pro

gram

s).

• Sr

i Lan

kan

pavi

lions

exi

st b

ut a

ll co

mpa

nies

ha

ve in

divi

dual

bra

nds.

• ED

B pa

rtici

pate

s in

sel

ecte

d fa

irs (s

elec

ted

by s

ecto

r com

mitt

ees)

.•

Assi

stan

ce to

pro

mot

e pr

oduc

ts is

in

suffi

cien

t.

No e

asy

acce

ss to

mar

ket i

nfor

mat

ion

avai

labl

e:•

Info

rmat

ion

is n

ot re

gula

rly u

pdat

ed.

• Li

mite

d m

arke

t int

ellig

ence

and

info

rmat

ion

on c

ompe

titor

s an

d gl

obal

tren

ds.

Acce

ss to

inpu

tsPr

oduc

tion

Tran

spor

tatio

n/w

areh

ousi

ngM

arke

t ent

ry

Ente

rpris

e pe

rform

ance

issu

esRe

gula

tory

and

pol

icy

issu

esIn

stitu

tiona

l and

coo

rdin

atio

n is

sues

Lege

nd:

18


The value chain diagnostic above outlines the operations of the processed food and beverages industry in Sri Lanka and provides an overview of the constraints faced by stake-holders at each stage in the chain.

FOCUSING ON THE MOST PRESSING ISSUES

To remain realistic and resource-efficient, this strategy will not be able to focus on all the issues affecting the value chain. An informed selection of the most important issues was made. To assess relative importance, criteria used are the level of disturbance ( perceived by national stakehold-ers ) and the ease of resolution ( both in terms of cost and time involved ).

Top issues to be addressed on input provision

Insufficient supply of workers

Because working-age young educated people are more in-terested in service industries and other competing economic sectors, the Sri Lankan food processing sector faces a la-bour shortage. Working conditions are also seen as unap-pealing compared to those of other sectors. More generally, there is limited knowledge about the potential of processed food in Sri Lanka. This situation can be partly explained by the fact that the sector receives little attention from train-ing institutions, which focus more on crop production and agriculture.

In addition, current labour regulations in Sri Lanka tend to discourage employers from hiring women in the plants, as the laws establish a protection level that is higher than re-quired by International Labour Organization ( ILO ) regula-tions. These labour regulations further limit the supply of workers to the industry.

The phenomenon is exacerbated by the fact that operators are unable to use foreign labour. The Sri Lankan administra-tion makes it very difficult to import foreign workers.

In order to trigger interest in agro-processing from the younger generation, communication campaigns and career guidance on the potential of the processed food and bever-ages sector are required.

The following constraints are addressed in PoA : 1.3.2, 3.4.1., 3.4.2, 3.4.3.

Incompatibility of local raw material supply with industry’s needs

The paramount issue for all subsectors of the processed food and beverage industry is access to the raw materials required to meet growing demand. At one level, this issue is rooted in poor connections and coordination between local producers and the food processing sector. Decisions on the variety of crops to be planted is made by farmers based on individual considerations, and sometimes on neighbours’ experiences ( for instance, if a neighbouring farmer’s crop sold at a good price, there is a tendency for other farms to then plant the same crop, which in turn may create an over-supply that might depress prices ). The needs of local food processors are not considered in farmers’ choice of crop. One explanation for this is the lack of communication by ex-tension services and relevant regulatory bodies about the varieties needed and those with the highest demand. The choice of crop by raw material producers is thus erratic and not coordinated by any mechanism.

Production capacities in Sri Lanka are limited, as raw mate-rial producers face a large variety of their own issues ( which this strategy will not concentrate on ). One of the major ones is a lack of access to capital, which constrains the ability of raw materials producers to meet local demand. However, there are also issues of raw material waste ( for instance, coconut water that is not properly collected ). At least 80 % of total coconut water production is wasted due to a lack of a collection mechanism. Producers of other materials face similar problems.

At the production level, a major issue affecting productivity as well as output quantity is the restriction on introduction of new varieties. Some Sri Lankan varieties have compara-tively low productivity ( for example, coconuts produced in Sri Lanka have a longer ripening period and are about 50 % smaller than those produced by major competitors such as Thailand ). Due to the insular ecosystem of Sri Lanka, quar-antine regulations are stringent and importing new varieties is a lengthy and difficult process that is controlled by the National Plant Quarantine Service. In addition, some quar-antine regulations are today obsolete and concern diseases that no longer pose a threat.

Finally, the local raw material supply is extremely vulnerable to weather conditions. Some of these weather conditions are seasonal and thus predictable. However, variations of weather conditions year-on-year have increased unpredict-ability and strongly affect the price of local raw material. As a result, local produce prices fluctuate much more than global market prices. Sri Lankan food processors have no mecha-nism to facilitate the replacement of their local raw material supply with imports during off-season periods.

The following constraints are addressed in PoA : 2.1.1, 2.2.1, 2.2.2, 2.2.3, 2.3.1, 2.3.2, 2.3.3.

19

[ THE vALuE CHAIN DIAgNOsTIC ]

Difficulties to impor t primary or semi-processed produce especially for expor t processing

The second aspect limiting the availability of products for food processing is the current regulation on food and agri-culture imports. There are strict controls on the importation of coconut, tea, rubber, rice, cacao and their planting mate-rials, with only small amounts authorized for importation by research institutions.

Import regulations are in place to protect local production. Importing materials needed by food and beverage pro-cessors off-season is currently restricted, even when local produce is not available. However, this is not required as im-ports do not replace local supply but complement it. Local producers need to produce large quantities of raw materials in order to supply their market ; currently they are only able to supply a small portion. The rates of tax applied to imported products and materials add to the issue, as they are incon-sistent, make imports too costly and decrease Sri Lanka’s comparative advantage.

Problems with Mutual Recognition Agreements also af-fect import processing time : testing itself and time taken for import processing is between 14 and 21 days ( for test-ing and then for the regulatory procedure ). This is particu-larly the case for the EU, Canada, Japan and India since local health certificates are not accepted. In addition, non-compliant imports cannot easily be destroyed, for destruc-tion of non-compliant imports requires authorization from the Prime Minister.

The following constraints are addressed in PoA : 1.1.1, 1.2.1, 1.2.2, 2.4.1.

Top issues to be addressed on production

Minimal availability of R&D facilities focusing on processed food and beverages

R&D activities appear to be insufficiently developed in the segment of the sector producing for the local market but not for export, due to a lack of interest from small processors and to the absence of specific fiscal incentives to conduct such activities in Sri Lanka. As a result, the manufacture of innovative products by smaller non-exporting companies is quite rare.

In most cases, R&D is conducted through large companies and kept secret for fear of competition. Superficial sector coordination and the fact that companies are not assisted in market promotion activities has helped create this strong competitive behaviour among entrepreneurs.

Incentives such as tax credits for R&D could play a ma jor role in encouraging the development of higher value added products and of more innovative products and manufactur-ing pro cesses and could help attract investors who might establish production in Sri Lanka. Company-reward mecha-nisms for R&D or innovation could also encourage and give visibility to high-performing manufacturers.

Another problem is a lack of understanding of global food and beverages markets. Many exporters currently rely on leads from the Sri Lankan diaspora and market develop-ment is done based on diaspora availability in target mar-kets. As previously mentioned, global markets are mostly led by consumer preferences, and consumers closely fol-low research and innovation in the fields of healthy nutrition and sustainability. This makes investment in R&D a prereq-uisite for export.

The following constraints are addressed in PoA : 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5, 3.1.6.

Top issues to be addressed on market entry

Achieving compliance with target market quality requirements is cumbersome

Quality issues affect all food processors in Sri Lanka : the degree depends on the company’s size and export-readi-ness. In the case of larger companies that export, under-standing the quality requirements of their target markets and factoring in the costs required to achieve compliance is not a problem. The entire process of research on quality requirements is fully integrated in these large companies, as there are few agencies that provide consultancy servic-es on quality. The issues companies face are external and related to their institutional environment, which is unable to provide the conformity assessment they require in a timely manner. For instance, testing is not available locally for pes-ticides below certain concentration levels, although this is required by target markets’ technical requirements or vol-untary standards. Other tests not locally available include those for the presence of certain toxins, parts per billion levels or antibiotics. In these cases, food processors need a third party accredited laboratory analysis, usually done abroad ; the only laboratory providing this type of testing in Sri Lanka, MRI, is not accredited. Other public laboratories do not have the capacity to test all parameters and most are not accredited. Their commercial capacity to serve the industry is limited and the skills and manpower are insuf-ficient, according to private sector operators. Private labo-ratories, however, do have regional networks and use their regional representatives to analyse the samples that require tests that are not available locally. This takes more time and increases the cost of the procedure.

20


Another issue is the difficulty for large food processors to acquire representative samples of their raw material for test-ing. Since local producers are small-scale and processors work with multiple local raw material providers, there is no uniformity among the samples and they are therefore not representative.

Smaller companies also face internal quality issues, most-ly related to awareness of the certification systems, which result in making their production non-compliant for export.

The following constraints are addressed in PoA : 1.3.1, 3.2.1, 3.2.2, 3.2.3, 3.3.1.

No food brand is available for Sri Lanka

Promotion and branding in the processed food and bever-ages sector in Sri Lanka is currently happening at the com-panies’ level, which, as mentioned earlier, creates a strong sense of competition among operators as they fight for mar-ket share.

Sri Lankan processed food and beverage companies could benefit from a national branding of Sri Lankan cui-sine. Sri Lankan cuisine has many specific, intrinsic qualities ( low use of fat, use of healthy foods like coconut, vegetari-an-friendly, etc. ) that would distinguish it from other region-al cuisines and could stir interest in international markets. This could be a springboard for companies to upscale their activities and to increase cooperation by uniting the sector around a common image.

Currently, EDB provides support to companies to develop their individual branding and brings operators to selected in-ternational fairs ( selected by sector committees ). However, these Sri Lankan pavilions represent a multitude of individual brands and are not marketed under a unique Sri Lankan cui-sine brand ( as is done, for instance, by Thailand ).

The following constraints are addressed in PoA : 3.6.1, 3.6.2, 3.6.3.

No easy access to market information available

Although EDB has been providing support, the lack of mar-ket intelligence still appears to be a major constraint for current and potential Sri Lankan exporters, as very little in-formation is available on issues such as market require-ments, global food trends, distri bution channels, packaging requirements and duty ac cess, among others. This inad-equate knowledge of market requirements not only nega-tively affects the development of processed food exports from Sri Lanka, it also prevents the design of rel evant mar-ket entry and promotion strategies. Insufficient or incomplete information prevents exporters from meet ing the market re-quirements critical to succeeding in a specific target market.

Current trade information services provided by EDB and other providers such as the Sri Lanka Standards Institution ( SLSI ) and the Ceylon Chamber of Commerce ( CCC ) are not regu larly updated ; a prerequisite in a constantly chang-ing en vironment. They also do not provide information on specific product types, due to the wide scope of the pro-cessed food and beverages sector. In addition, third par-ty information providers are absent. Experience has shown that the setting up tools to provide market access informa-tion should be accompanied by a continuous monitoring system to keep the online platforms up-to-date. Using the appropri ate communication channels to inform the sector’s stake holders about the existence of such online tools is also crucial to ensure the success of such initiatives.

The following constraints are addressed in PoA : 3.5.1, 3.5.2, 3.7.1, 3.7.2.

The main area of concern which truly threats the potential of the processed food and beverages sector’s growth is the constraints on the supply of raw material, both imported and locally sourced. The issue affects large and smaller companies alike. This area requires urgent attention by policymakers to adjust institutional and regulatory frameworks to support food processors.

Other issues such as R&D and quality and food safety are often related to the size of a company. National branding and timely market information will be important enablers in transforming the sector into the competitive food processing hub it aims to become.

Photo: (cc) pixabay

21

[ THE WAy FOrWArD ]

THE WAY FORWARD

The Sri Lankan processed food and beverages sector is po-sitioned to experience a dramatic export expansion if con-straints are addressed. Sri Lankan products are high quality and have healthy characteristics due to the high quality of lo-cal raw materials and the industry’s commitment to investing in manufacturing processes and to improving their market image. Lead firms that have emerged in the sector under-stand global consumer trends, and that keeping up with health and sustainability requirements is no longer optional.

Although the sector started from a low level of exports, ex-port growth over the past few years has demonstrated the interest in and recognition by external markets of Sri Lankan products. The country now is in a good position to upscale the sector and transform it into a leading industry that strong-ly supports national branding and becomes a leading for-eign exchange earner.

However, major constraints currently prevent both leading sector operators and smaller companies from upscaling. Policymakers and support institutions have not yet under-stood and aligned their work with the needs of a growing food processing industry. Fast-paced private sector devel-opment and evolution in the food and beverages sector will require major efforts from all policymakers and regulatory bodies in order to create an enabling business environment that keeps national lead firms in the country and attracts new processors to Sri Lanka. This strategy will thus focus

on efforts to facilitate raw material provision, improve food safety control and reinforce branding for the sector in order to provide a solid basis for the industry’s growth.

THE VISION

The following is a delineation of the PoA’s proposed vision and strategic approach. This vision statement was agreed upon by all stakeholders in the processed food and bever-age value chain in Sri Lanka.

“ To become a competitive export process-ing hub for innovative, sustainable

and value-added food solutions ”THE STRATEGIC OBJECTIVES

The PoA will respond to this vision by addressing sector con-straints and by leveraging opportunities in a comprehensive manner. To this end, particular efforts will be made to ad-dress these strategic objectives.

Strategic objective 1: Amend the regulation framework in line with the needs of the processed food and beverage sector

Strategic objective 2: Ensure consistent supply of raw material for the sector

Strategic objective 3: Cater to high quality markets

• Numerous regulations, especially those related to importation of materials (quarantine and import restriction laws), require amendment to ensure effective operations in the sector.

• The supply of raw material must be secured in order for the sector to have the means to meet strong international demand and to upscale these industries.

• To be able to supply the most demanding markets, quality assurance systems must be improved in the country. This will be done jointly with an emphasis on research and innovation and strong national branding.

22


THE FUTURE VALUE CHAINFigure 8 : Future value chain

Inpu

t Pro

duct

ion

Inpu

t Pr

oduc

tion

Tran

spor

tatio

n/re

tail

Dom

estic

Mar

kets

Inte

rnat

iona

l Mar

kets

USA

Proc

esse

d tro

pica

lfru

its

Orga

nics

-bas

edpr

oces

sing

Coco

nut-b

ased

prod

ucts

Bisc

uits

Heal

thy

bisc

uits

(Ayu

rved

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ypes

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port

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impo

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m

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(im

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(mix

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ts a

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man

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habl

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all q

uant

ities

of

proc

esse

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m

arke

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ss

then

70%

of

tota

l pro

d)

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stm

ent i

n ra

il tra

nspo

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d w

ater

way

s (c

anal

s)Ce

rtifi

catio

n of

sm

all

firm

s to

sta

ndar

ds

Impr

oved

coor

dina

tion

Quar

antin

e, im

port

tarr

iffs

and

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act

am

ende

d

Labo

ur la

ws

amen

ded

Natio

nal F

ood

Auth

ority

Supe

rmar

ket c

hain

s (d

irect

ly fr

om p

rodu

cer)

- m

oder

n tra

deJa

m, c

ordi

al, c

erea

ls, b

iscu

itsan

d ed

ible

pre

para

tions

:al

l pro

duct

ion

exce

pt c

ocon

utm

ilk/w

ater

(95%

exp

orte

d)Sm

all r

etal

(thro

ugh

dist

ribut

or)

Expo

rts

(Mor

e th

en 3

0%)

23

[ THE WAy FOrWArD ]

Acce

ss to

inpu

tsPr

oduc

tion

Tran

spor

tatio

n/w

areh

ousi

ngM

arke

t ent

ry

Lege

nd:

Mar

ket p

ersp

ectiv

eVa

lue

chai

n ad

just

men

tsIn

stitu

tiona

l adj

ustm

ents

Regu

lato

ry a

men

dmen

tsIn

vest

men

t req

uire

men

ts

Incr

ease

qua

ntity

of l

ocal

raw

mat

eria

l sup

ply

Use

of b

iom

ass

ener

gy in

pro

cess

ing

plan

ts

Dem

onst

ratio

n pl

ots

deve

lopm

ent

Cert

ify p

rodu

cers

’ coo

pera

tives

Incr

ease

fem

ale

wor

kfor

ce

Use

of s

olar

ele

ctric

ity s

uppl

y

Amen

d qu

aran

tine

law

s to

be

in li

ne w

ith th

e ne

ed to

furt

her d

evel

op th

e pr

oces

sed

bood

an

d be

vera

ge e

xpor

t sec

tor

Revi

se im

port

tarif

fs to

faci

litat

e in

vest

men

t in

food

and

bev

erag

es p

roce

ssin

g

Esta

blis

h co

nditi

onal

am

endm

ents

to fa

st

track

pro

cedu

res

to re

lax

impo

rt re

stric

tions

Com

mer

cial

farm

ing

Esta

blis

h an

info

rmat

ion

and

trad

ing

plat

form

to c

oord

inat

e pr

oduc

ers

and

proc

esso

rs

Conn

ect w

ith o

ther

sec

tors

for s

ourc

ing:

• Li

nk w

ith th

e sp

ices

sec

tor

• Us

ing

tea

extra

cts

loca

lly

Smal

l pro

cess

ors

to g

et c

ertif

icat

ion

on:

• HA

CCP,

Briti

sh R

etai

l Con

sort

ium

, ISO

, an

d w

aste

trea

tmen

t, Co

rpor

ate

soci

al

resp

onsi

bilit

y•

Orga

nic

cert

ifica

tion

• GA

P fo

r agr

icul

tura

l pro

duct

s•

Soci

al s

tand

ards

Alig

n na

tiona

l lab

our l

aws

with

ILO

regu

latio

ns

Revi

ew a

nd a

men

d th

e la

ws

unde

r the

Fo

od A

ct N

o. 2

6 of

198

0, c

once

rnin

g pe

stic

ides

and

fert

ilizer

Esta

blis

h a

dedi

cate

d Na

tiona

l Foo

d Au

thor

ity

Incr

ease

the

R&D

focu

s on

the

food

and

be

vera

ges

proc

essi

ng

Tech

nica

l and

voc

atio

nal e

duca

tion

and

train

ing

and

univ

ersi

ties

to s

uppl

y

qual

ified

labo

ur to

the

indu

stry

Tran

spor

tatio

n: R

eefe

r con

tain

ers

rent

ed fr

om s

hipp

ing

agen

ts to

re

duce

loss

es.

Unite

d St

ates

: Pro

cess

ed tr

opic

al

fruits

Euro

pe, U

nite

d St

ates

, Can

ada,

Ja

pan,

Aus

tralia

: Org

anic

s-ba

sed

proc

essi

ng

Euro

pe, U

nite

d St

ates

, Jap

an:

Coco

nut p

rodu

cts

Chin

a, In

dia,

Indo

nesi

a: C

ocon

ut

prod

ucts

for A

sia

Ango

la, K

enya

, Uni

ted

Repu

blic

of

Tanz

ania

, Eth

iopi

a: B

iscu

its

Euro

pe, U

nite

d St

ates

, Can

ada,

Ja

pan,

Aus

tralia

: Nor

mal

bis

cuits

Euro

pe, U

nite

d St

ates

, Can

ada,

Ja

pan,

Aus

tralia

: Hea

lthy

bisc

uits

Euro

pe, U

nite

d St

ates

, Can

ada,

Ja

pan,

Aus

tralia

: Coc

onut

milk

as

a su

bstit

ute

for c

ow’s

milk

, dai

ry

base

d on

coc

onut

milk

Chin

a, In

dia,

Indo

nesi

a, M

alay

sia,

an

d th

en w

orld

: Sri

Lank

an fl

avou

red

prod

ucts

Incr

ease

and

sys

tem

atize

link

ages

w

ith th

e to

uris

m in

dust

ry

24


The previous scheme presents the future processed food and beverages industry value chain in Sri Lanka and pro-vides an overview of the adjustments to be done in relation to markets, value chain operations, institutions, regulations and investments.

LEVERAGING NEW MARKET AND PRODUCT OPPORTUNITIES

sri Lanka’s recent trade performance has shown success in the area of super foods related to coconut. In order to diversify its markets, the sri Lankan food and beverage industry can leverage this success by developing con-nected products. However, this can only be done once raw material access issues are resolved. As highlighted in the global trends overview, research and development are a prerequisite for export success as research findings are followed closely by consumers. In this regard, demand is very sensitive to the new knowledge about healthy prod-ucts and ingredients. Recent examples are nutrient rich and sustainable options such as algae and seaweed, ‘super-foods’, ‘hero-foods’, and plant waters ( such as aloe, maple, artichoke, cactus or coconut ). This demand sensitivity will

require Sri Lankan companies to be attuned to the current research and consumer reactions in order to adapt their pro-duction swiftly.

Table 3 presents an overview of possible pathways for inten-sification and diversification of Sri Lankan processed food and beverage exports. The intensive margin presented in the upper left box, seeking to garner the most growth out of existing markets and products, mostly will require improve-ment of the raw material supply base, both locally and inter-nationally, while continuously investing into product quality improvement. However, the extensive margin, which will ex-pand the range of products and markets, shown in the upper right and lower boxes, will require in-depth market research and R & D, in order to offer innovative products such as an-cient grains biscuits or coconut dairy products. For all new concepts, companies will also need to focus on intellectual property ( IP ), seeking patents in the cases of new and orig-inal products ( representing important inventive and inno-vative characteristics ) as well as geographical indications. Main target markets will remain developed countries such as the united states, Canada, European countries, Japan and Australia, tapping into their strong health-oriented con-sumer preference.

Table 3 : Product and market opportunities

Existing markets New markets

Exi

stin

g pr

oduc

ts

united states : Processed tropical fruitsWhy? Receptiveness of consumer market and favourable global trends.How? Research needs to be adapted to export requirements ( example of Thailand where local farmers are equipped with more productive varieties )

China, India, Indonesia : Coconut productsWhy? Growing per capita income in these countries, urbanisation and freight advantage.How? Need to identify competitive advantage compared to their local production of similar products ( as they have similar climate and could be competitors ).

Europe, united states, Canada, Japan, Australia : Organics-based processingWhy? Growing market globally.How? Need to orient farmers to select appropriate crops ; establish model farmers under large processors to show other farmers ( should be backed up by research ).

Angola, kenya, united republic of Tanzania, Ethiopia : biscuits Why? Success of Sri Lankan biscuits in African markets. Price is a determinant factor and already high quality. How? Promotion of Sri Lankan products in these countries, business-to-business meetings, business tours.

Europe, united states, Japan : Coconut productsWhy? Super food is in high demand and Sri Lanka is recognized as a supplier.How? Farmers’ orientation as above and improvement of import regulation and quarantine law to allow raw material supply to complement local supply.

Europe, united states, Canada, Japan, Australia : biscuitsWhy? High value markets.How? Need to adapt packaging and quality. Targeted promotion is also needed. National branding initiative would help.

Existing and new markets

New

pro

duct

s

Europe, united states, Canada, Japan, Australia : Healthy biscuitsWhy? High value markets, health trends in those markets. Could raise awareness about Sri Lanka’s culture. How? Need to adapt packaging and quality, but also develop healthy variants such as ancient grains biscuits or traditional ayurvedic herbs in biscuits, as well as products from local tea extracts ( marketed as Ceylon tea ).

Europe, united states, Canada, Japan, Australia : Coconut milk as a substitute for cow’s milk, dairy based on coconut milkWhy? Lactose intolerance very common in western countries and the trend toward lactose-free products and research into new milk substitutes is high.How? R&D is needed on yogurt, cheese, etc.

China, India, Indonesia, Malaysia, and then world : Sri Lankan flavoured productsWhy? Receptiveness to curries in the region, cultural proximity and understanding.How? Develop a range of Sri Lankan products based on a national cuisine brand, highlighting the use of coconut. Examples : noodles, home cooking kits, curry powders, pre-cooked meals.

25

[ THE WAy FOrWArD ]

STRUCTURAL ADJUSTMENTS TO THE VALUE CHAIN

unlocking the potential of the processed food and bev-erages sector growth in sri Lanka will require transfor-mation throughout the value chain, especially to improve

connections with local producers as well as to facilitate imports. These adjustments will allow the sector to offer competitive levels of both quantity and quality of produce. To this end, the needed value chain adjustments have been identified in Table 4 :

Table 4 : value chain adjustments in the processed food and beverages sector

value retention : Possibilities for local production inputs or services sourcing

Adjustment How to implement Time frame

• Increase quantity of local raw material supply

• Develop linkages between processors and farmer cooperatives : setup buy-back agreements with cooperatives and advance price setting. Food processing industry needs to be able to advise producers. Currently, local production is an artificially inflated market ( as a cottage industry ) and is not competitive.

• Partnerships between producers and processors such as contract farming need to be promoted, with extension organizations as moderators ( Coast Conservation Department in the case of coconut ). These producers’ partnerships would develop annual forecast for producers.

Short term

value addition : Potential synergies with other value chains


• Link with the spices sector • Supply locally the spices and seasoning required for food processing. Connect through business-to-business meetings between firms.

Medium term

• Using tea extracts locally • Supply tea extracts for certain products such as biscuits, and use this as a brand-ing advantage ( Ceylon tea ).

Medium term

• Increase and systematize link-ages with the tourism industry

• Food processors to link up with catering companies, hotels, restaurants and cater-ing organizations.

Medium term

• Use the empty reefer containers • Rent reefer containers from shipping agents to improve transportation and reduce loses.

Short term

value addition : key buyers’ preference-related quality improvement opportunities


• Hazard Analysis and Critical Control Points ( HACCP ), british retail Consortium, International Organization for standardiza-tion ( IsO ), and waste treatment, corporate social responsibility

• Very important and mandatory for the OECD market. Large companies are compli-ant, but for smaller companies willing to engage into export, this can be a chal-lenge.

Short term

• Organic certification • Multiply organic processed foods, using local organic products ( need to orient farmers to select their crops ).

Long term

• Good Agricultural Practices ( GAP ) for agricultural products

• Multiply local producers using GAP : establish model farmers under large proces-sors to show other farmers.

Medium term

• Social standards • Achieve certification for Fair Trade International, Business Social Compliance Initia-tive, Codex Alimentarius and ESR.

Medium term

value distribution : Economic and social development opportunities


• Demonstration plots develop-ment

• Plots to be developed by private companies but also from the governmental institu-tions ( research agencies ). Inputs can come from the processing industry.

Medium term

• Certify producers cooperatives • Certification with Fair Trade International standards. Can get a premium for producer-fair production ( for specific markets ).

Medium term

• Increase female workforce • Mobilize female workers in the industry by adapting the equipment in firms. Medium term

value distribution : Environmental impact


• Use of biomass energy in processing plants

• Get verification of the practice through customer audits. Medium term

• Use of solar electricity supply • New offer for buy-back to replace/supplement existing electricity installations. Medium term

26


INSTITUTIONAL ADJUSTMENTS

Some key institutional adjustments will be required for the processed food sector to upscale, as outlined in Table 5. These adjustments will be required mainly in the areas of quality, sector coordination, r&D and skills development.

Table 5 : Institutional adjustments in the processed food and beverages sector

Institutional adjustment How to implement?

Institutionalize and centralize food safety control and conformity assessment

Need to set up a dedicated National Food Authority ( NFA ) responsible for food safety control function.

Improvement of the producers-processors coordination

• Align production requirements by establishing an information and trading platform. Sector associations and research institutions will play a key role in this platform to ensure that information related to proces-sors’ needs is passed to the producers.

• Support contract farming scheme ( associations to sensitize their members about the advantages, etc. )

Increase the R&D focus on the food and beverages processing

• Connect enterprise R&D departments with university department research and research institutes to get R&D support from public bodies.

• Build coordination and communication between the research and extension bodies for new findings to be transferred to production level

• Develop an innovation and R&D competition and reward scheme in the sector, and advertise the wining firms.

• Commercialise R&D at the university and research institute level.

Technical and vocational education and training and universities to supply of qualified labour to the industry

• Include short and medium-term courses, as well as on-the-job trainings, focusing on required skills within supporting institutions and universities.

• Promote employment opportunities in the industry in the regions of Sri Lanka with highest unemploy-ment rates, as well as to farmers during the off-season period.

Increase sector coordination Establish an advisory committee to monitor and coordinate the implementation of the strategy in connection with the sector strategy governance structure. Will report regularly to the Task Force. Chaired by the SLFPA and co-chaired by EDB.

Photo: (cc) pixabay

27

[ THE WAy FOrWArD ]

REGULATORY AMENDMENTS

In the processed food and beverages sector, regulation amendment is one of the major areas in which action is needed to ensure proper operation in the sector. The key adjustments to be carried out are summarized in Table 6 below :

Table 6 : regulation adjustments in the processed food and beverages sector

regulation adjustment Purpose

Amend quarantine laws • Provide conducive and simplified procedures to import planting materials for farmers in order to improve the supply and quality of fruits and vegetables that are processed in the country. This will provide farmers and processors access to the high yielding varieties and varieties in demand in the global market. ( Seed and Planting Material Act, Fertilizer Act, Pesticides Act ).

• Facilitate the import of raw materials, such as coconut and tropical fruit, for processing when necessary, to ensure local producers, processors and exporters are able to sustain their markets when local raw material is in short supply.

Revise import tariffs When imports are not in competition with local producers, amend regulations designed to protect to local producers in order to facilitate investment in food and beverages processing, thereby providing access to processing and packaging machinery, packaging materials and raw materials.

Establish conditional amendments to import restrictions

In order to fast track procedures for import, relax import restrictions on inputs for processing, in case in which shortages affecting productivity and competitiveness ( climate irregularities, draughts, etc. ).

Review and amend the Food Act No. 26 of 1980

Amend provision concerning pesticides and fertilizer in order to support exporters and open the possibility to import new types required for organic production that are not produced locally.

Align national labour laws with ILO regulations

In order to ensure equal incentives for female employment in the sector.

INVESTMENT REQUIREMENTS

Investment in the sector will need to follow a twofold ap-proach, highly structured in the short term and more re-laxed in the longer term. The government’s current policy is to attract local and foreign investment in the processed food sector. Although this is an important measure for future sector growth and diversification, it should be conditional on the aforementioned adjustments being implemented. Only once access to raw material is facilitated can there be ad-ditional investment in food processing, as new investments will compete with local processors and use a higher share of the primary produce.

The following investment approach, outlined in Table 7, should be considered :

Photo: (cc) wikimedia

28


Table 7 : Investment approach in processed food and beverages sector

Investment requirement How to implement? Timeframe

Restriction on the new investments in processed food and beverages sector

Until the import, quarantine regulations and local production coordination measures are implemented ( first year ).

Short term

Creation of a land bank A land bank policy should be established ( based on soil type, climate, and topography ) overseen by a single responsible institution. Currently the issue is handled by the Land Division under the Department of Irrigation and the Land Division under the Department of Agriculture, with the Land Use and Policy Planning Department ( LUPP ) as an independent statutory body. The main issue is that these institutions do not have a forward-looking approach and are not commercially oriented. This measure will greatly facilitate investment in production and, later on, processing.

Short term

Transportation The national rail infrastructure requires public or private investment to ensure swift transportation of processed food products, a minority of which is perishable.

Short term

Commercial farming Investment in commercial farming should be supported and facilitated. Currently, investors are not coming in this area due to cumbersome investment procedures and the difficulty in acquiring land.

Short term

Favour investments in the processed food and beverages sector

Include transfer of technology in new foreign direct investment contracts. Include a commitment fee in transactions for five years.

Long term

Pursue promotion of commercial farming investments

To further grow local supply base and secure sufficient supply for local processing companies.

Long term

Photo: ITC – © Alexandra Golovko

29

[ MOvINg TO ACTION ]

MOVING TO ACTION

THE STRATEGIC FRAMEWORK

The strategic objectives define the main thrust that will guide the strategy implementation in order to achieve the vision laid out by the industry. The PoA will respond to this vision by

addressing the sector’s constraints and leveraging opportu-nities in a comprehensive manner. To this end, the strategic objectives outlined in Figure 7 will be addressed :

Figure 9 : strategic framework

Amend the regulation framework in line with the needs of the processed

food and beverages sector

Ensure consistent supply of raw material for the sector Cater to high quality markets

• Amend quarantine law.• Amend import restriction laws for export

processors.• Review the current food regulatory

system and harmonization system.

• Set up a land bank to be utilized for export agriculture products.

• Increase production of identified key crops which support export growth.

• Strengthen and extend the existing information sharing platforms to reinforce communication between producers and processors.

• Develop international supply channels at processors' level.

• Spread research and innovation in the sector to align with latest global trends.

• Adapt conformity assessment to the sector’s needs.

• Update packaging methods in the industry.• Increase availability of qualified labour for

the industry.• Conduct targeted trade negotiations to

ensure affordable market access to key target markets.

• Establish a unique Sri Lankan cuisine brand.• Provide trade intelligence and trends to

food and beverages processors.

STRATEGIC OBJECTIVE 1 : AMEND THE REGULATION FRAMEWORK IN LINE WITH THE NEEDS OF THE PROCESSED FOOD AND BEVERAGES SECTORThe first strategic objective focuses on the most urgent area of intervention, the regulatory amendments required to facili-tate imports for food processors. These regulatory amend-ments concentrate on the need to :

� Amend quarantine law. � Amend import restriction laws for export processors. � Review the current food regulatory system and harmoni-

zation system.

STRATEGIC OBJECTIVE 2 : ENSURE CONSISTENT SUPPLY OF RAW MATERIAL FOR THE SECTORThe second strategic objective focuses on raw material sup-ply, both local and foreign. It mostly concentrates on local production coordination and communicating processors’ needs to producers in a more effective manner. It also at-tempts to increase local production through investment fa-cilitation and contract farming. The measures are articulated around the following objectives :

30


� Set up a land bank to be used for export agriculture products.

� Increase production of identified key crops which support export growth.

� Strengthen and extend the existing information sharing platforms to reinforce communication between produc-ers and processors.

� Develop international supply channels at processor level.

STRATEGIC OBJECTIVE 3 : CATER TO HIGH QUALITY MARKETS

The last strategic objective focuses on increasing the capac-ity of food and beverage processors to close business deals in high quality niche markets. This covers a wide variety of

areas and includes a number of specific objectives that in-volve aspects such as innovation and research, conformity assessment, packaging, labour qualification, trade negoti-ations, branding and trade intelligence. The measures ad-dress the following objectives :

� Spread research and innovation in the sector to align with latest global trends.

� Adapt conformity assessment to the sector’s needs. � Update packaging methods in the industry. � Increase availability of qualified labour for the industry. � Conduct targeted trade negotiations to ensure affordable

market access to key target markets. � Establish a unique Sri Lankan cuisine brand. � Provide trade intelligence and trends to food and bever-

ages processors.

IMPLEMENTATION FRAMEWORK

The objective of the processed food and beverages strate-gy for Sri Lanka is to create an enabling environment for the food processing industry to realize its potential and benefit the country’s image by providing innovative, sustainable and value-added food solutions. Achieving this ambitious objec-tive will depend on the ability of the industry to implement the activities defined in this strategy. To structure sector devel-opment, it is recommended that the following interventions be implemented with priority :

� Strengthen the institutional framework governing the pro-cessed food and beverages sector and its policies ; and

� Build the operational, business skills and innovation ca-pacities of sector operators.

These immediate quick win activities are necessary to initi-ate successfully the strategy implementation and to create rapid industry growth.

MANAGING FOR RESULTS

It is the translation of priorities into implementable projects that will contribute to achieving the substantial increase in export competitiveness and in export earnings envisaged under the strategy. These will be driven by reforming the reg-ulatory framework, optimising institutional support to export-ers and strengthening private sector capacities to respond to market opportunities and challenges. Allocation of human, financial and technical resources is required to efficiently coordinate, implement and monitor overall implementation.

Successful execution of activities will depend on stake-holders’ abilities to plan and coordinate actions in a tactical

manner. Diverse activities must be synchronized across pub-lic and private sector institutions to create sustainable re-sults, and it is therefore necessary to foster an adequate environment and create an appropriate framework for the strategy’s successful implementation.

Key to achieving the targets will be coordination of activities, monitoring progress, and mobilizing resources for imple-mentation. To that effect, industry representatives recom-mended that a public-private ‘advisory committee’ for the processed food and beverages industry be rapidly estab-lished, operationalised and empowered. The ‘advisory com-mittee’ is to be responsible for overall coordination, provision of policy guidance and the monitoring of industry develop-ment along the strategic orientation

PROCESSED FOOD AND BEVERAGES ‘ADVISORY COMMITTEE’

The Export Development Act ( 1979 ) directs the EDB that ‘On the advice from the Board, the Minister may by Order in the Gazette, establish advisory committees the develop-ment and promotion of certain products, product groups and commodities as well as functional aspects of trade.’ Additionally, ‘Each such advisory committee shall have the power to fix and regulate its own procedure, including the power to determine the number of members necessary to form a quorum at its meeting.’ The advisory committees have the function ‘…to advise the Board on any or all of the matters which the Minister considers necessary for the pur-poses of carrying out of giving effect to the principles and provisions of this Act.’

31

[ MOvINg TO ACTION ]

It is thus recommended that a processed food and bev-erages ‘advisory committee’ be rapidly established by the Minister of MoDSIT and effectively organised by EDB and MoDSIT to support the industry with the capacity to steer its development strategically. The Committee is to be facili-tated by a secretariat coordinated by EDB, supported and advised by SLFPA. The advisory committee will report both to the sector task force set by the Prime Minister and to the Cabinet Committee on Economic Management. The task force and the Committee’s leadership are key to ensuring political backing for the regulatory amendments required under the strategy.

A processed food advisory committee has been established in February 2018 by the Minister of MoDSIT and effectively organized by EDB to give the industry the capacity to steer its development strategically.

The processed food and beverages ‘advisory committee’ be composed of the following members :

� Thirteen private companies � Tea Exporters Association � Sri Lanka Food Processors Association � Lanka Fruit & Vegetable Producers, Processors and

Exporters Association � Ceylon Desicated Manufacturers Association � VCO Millers Association

� Ministry of Development Strategies and International Trade � Department of Food Science & Technology Faculty of

Applied Science, University of Sri Jayawardenepura � Industrial Technology Institute � Sri Lanka Standards Institution � Fruit Research and Development - Institute, Department

of Agriculture � Department of Agriculture � Coconut Development Authority � Export Development Board

The advisory committee is empowered to meet quarterly and to implement the following functions:

i. Create a shared understanding of key market challenges and opportunities facing the sector ;

ii. Set goals and targets that, if achieved, will strengthen the sector’s competitive position and enhance Sri Lanka’s overall capacity to meet the changing demands of markets ;

iii. Propose key policy changes to be undertaken and pro-mote these policy changes among national decision makers ;

iv. Support the coordination, implementation and monitor-ing of activities in the sector by the Government, private sector, institutions or international organizations to en-sure alignment to goals and targets, as required to con-tribute to resource identification and alignment.

Figure 10 : Institutional framework for processed food and beverages building industry development

Investment and private sector Initiatives aligned to strategic

priorities

Implementation through national institutions and

national budget

Development partners projects

MoDSIT

Operational secretariatEDB, support of SLPFA

SLEDB act and coordination

‘Advisory committee’ on F&BPublic: MoDSIT, Department of Food Science & Technology Faculty of Applied Science, University of Sri Jayawardenepura, SLSI, Department of Agriculture,

Coconut Development Authority, EDBPrivate: 13 private companies, Tea Exporters Association, Sri Lanka Food

Processors Association, Lanka Fruit & Vegetable Producers, Processors and Exporters Association, Ceylon Desicated Manufacturers Association, VCO Millers

AssociationCivil society/research: Industrial Technology Institute, Fruit Research and

Development Institute

32


As part of the overall trade policy and NES design process it has been recommended that an inter-ministerial and mul-ti-industry private sector council be organised and struc-tured to address overall challenges and opportunities to Sri Lanka’s trade performance. It is recommended that Chairs of ‘advisory committees’, such as processed food and beverages, be members of the council to consult on key trade thematic areas ranging from policy to regulations and trade negotiations.

KEY SUCCESS FACTORS FOR EFFECTIVE IMPLEMENTATION

The presence of the ‘advisory committee’ to oversee the implementation of the strategy is a key success factor but it is not sufficient to effectively fulfil its assigned functions.

Private sector support and participation in implementation

The private sector clearly expressed its willingness to con-tribute, directly or in partnership with public institutions, to the implementation of the strategy. Their implementation ef-forts can range from providing business intelligence to in-stitutions to contributing to project design, promotion and branding, policy advocacy, etc. In brief, the private sector’s practical knowledge of business operations is essential to ensuring that the strategy remains aligned to market trends and opportunities.

Proactive networking and communication

The key implementing institutions detailed in the PoA need to be informed of the content of the strategy and the

implications for their 2018–2022 programming. This network-ing and communication is essential to build further own-ership and to provide institutions with the opportunity to confirm the activities they can implement in the short-to-long term. It will be important for the EDB, MoDSIT and Members of the advisory committee to reach out to relevant institutions nationally to create awareness and support for the develop-ment of the processed food and beverages industry.

Resources for implementation

The advisory committee, in collaboration with the EDB and the Trade Policy and NES Management Unit at MoDSIT, will need to leverage additional support for efficient implemen-tation. Effective planning and resource mobilisation is indis-pensable in supporting strategy implementation. Resource mobilisation should be carefully planned and organised.

As the processed food and beverages industry is a priority of the NES, the Government of Sri Lanka should define an-nual budget allocations and supports to drive the industry growth. This commitment will demonstrate clear engage-ment towards strengthening the sector and encourage pri-vate partners to support development. In addition to national budget support, resource identification will require the BOI to effectively target foreign investors in line with the priorities of the strategy, such as the attraction of more commercial farmers. Investment flows to Sri Lanka should also be con-sidered as a valuable driver of strategy implementation and overall industry development.

The various implementation modalities detailed will deter-mine the success of the strategy’s implementation. However, high-level support from the Government, in collaboration with strong championship by the private sector, will be the real driver of successful strategy implementation.

To achieve the vision and strategic objectives discussed, a robust, actionable and realistic strategic PoA is required. This is provided in the section below, and constitutes the heart of this strategy.

The PoA is structured along the three strategic objectives and the operational objectives described above. For each objective, the PoA outlines detailed activities and their implementation modalities, which include :

• Priority level : Priority 1 being the highest and 3 the lowest.• Start/end dates : The desired timeframe of the activity.• Targets : Quantifiable targets that allow completion monitor-

ing of the activity during the implementation stage.

• Leading implementing partners : One single account-able lead institution per activity. ( The institution can also have a technical role or can solely have an oversight and coordination role. )

• Supporting implementing partners : Any institu-tion that should be involved at any stage of the activity’s implementation.

• Existing programmes or potential support : Existing initiatives ongoing in the specified area of the activity.

• Indicative costs ( US $ ) : An estimate of the activity’s cost for the total implementation period.

PLAN OF ACTION 2018-2022

34


Stra

tegi

c ob

ject

ive

Oper

atio

nal

obje

ctiv

eAc

tivity

Prio

rity

Star

t dat

eEn

d da

teTa

rget

sLe

adin

g im

plem

entin

g pa

rtne

rsSu

ppor

ting

impl

emen

ting

part

ners

Indi

cativ

e co

sts

(USD

) 1:

Am

end

the

regu

latio

n fra

mew

ork

in

line

with

the

need

s of

the

proc

esse

d fo

od a

nd

beve

rage

s se

ctor

1.1:

Am

end

quar

antin

e la

w1.

1.1

Whi

le e

nsur

ing

the

secu

rity

and

sust

aina

bilit

y of

lo-

cal a

gric

ultu

ral p

rodu

cers

, am

end

quar

antin

e la

ws b

y:

• Si

mpl

ifyin

g pr

oced

ures

to in

trodu

ce/im

port

plan

ting

mat

eria

ls to

impr

ove

supp

ly o

f F &

V•

Prov

ide

acce

ss fo

r far

mer

s &

pro

cess

ors

high

yie

ldin

g va

rietie

s in

dem

and

in g

loba

l mar

kets

. (Se

ed a

nd

Plan

ting

Mat

eria

l Act

, Fer

tilize

r Act

, Pes

ticid

es A

ct).

• Au

thor

ize th

e im

porta

tion

of ra

w m

ater

ials

, suc

h as

co

conu

t and

trop

ical

frui

ts, f

or p

roce

ssin

g in

the

case

th

e lo

cal r

aw m

ater

ial i

s in

sho

rt su

pply

by

prov

idin

g co

nditi

onal

am

endm

ents

to fa

st tr

ack

proc

edur

es.

Expo

rters

to p

ropo

se a

prio

ritize

d lis

t of s

peci

fic c

om-

mod

ities

for D

OA to

prio

ritize

the

anal

ysis

pro

cess

and

ex

pedi

te la

w am

endm

ent p

roce

ss.

101

/04/

2018

31/1

2/20

22Qu

aran

tine

law

amen

ded

to a

llow

impo

rt of

new

pla

ntin

g m

ater

ials

and

raw

ma-

teria

l for

pro

cess

ing

Depa

rtmen

t of A

gri-

cultu

reM

inis

try o

f Rur

al E

cono

mic

Af

fairs

; Min

istry

of H

ealth

, Nu-

tritio

n &

Indi

geno

us M

edic

ine;

Co

conu

t Res

earc

h In

stitu

te

(CRI

); De

partm

ent o

f Exp

ort

Agric

ultu

re

100

,000

1.2:

Am

end

impo

rt

rest

rictio

n la

ws

for e

xpor

t pr

oces

sors

1.2.

1 Re

vise

impo

rt ta

riffs

to fa

cilit

ate

inve

stm

ent i

n fo

od

and

beve

rage

s pr

oces

sing

, the

reby

pro

vidi

ng a

cces

s to

pr

oces

sing

and

pac

kagi

ng m

achi

nery

, pac

kagi

ng m

ater

i-al

s an

d ra

w m

ater

ials

. Am

end

regu

latio

ns d

esig

ned

to

prov

ide

prot

ectio

n to

loca

l pro

duce

rs’ w

hen

impo

rts a

re

not i

n co

mpe

titio

n wi

th lo

cal p

rodu

cers

.

In th

e ca

se o

f exp

ort h

ub, c

ondu

ct a

lega

l rev

isio

n st

udy

and

upda

te th

e TI

EP s

chem

e to

wor

k wi

thou

t min

istry

’s

appr

oval

in o

rder

to s

tream

line

proc

edur

es.

101

/10/

2018

31/1

2/20

22•

Law

on T

IEP

amen

ded.

Min

istry

of I

ndus

try a

nd

Com

mer

ceM

inis

try o

f Fin

ance

; Sri

Lank

a Cu

stom

s; E

xpor

t Dev

elop

men

t Bo

ard;

Dep

artm

ent o

f Agr

i-cu

lture

; Dep

artm

ent o

f Exp

ort

Agric

ultu

re

50,

000

1.3:

Rev

iew

of

the

curr

ent

food

regu

lato

ry

syst

em a

nd

harm

oniza

tion

of

syst

em

1.3.

1 Pr

ocee

d to

a g

ener

al re

view

of t

he F

ood

Act a

nd a

dd

new

aspe

cts

Min

imum

Res

idue

Lev

els

(pes

ticid

es a

nd

ferti

lizer

) to

supp

ort e

xpor

ters

. The

follo

wing

poi

nts

to b

e in

tegr

ated

:

• de

velo

p a

regu

latio

n on

pes

ticid

e re

sidu

e le

vels

to b

e in

tegr

ated

in th

e fo

od a

ct•

deve

lop

a re

gula

tion

on te

stin

g fa

cilit

ies

• in

tegr

ated

pro

visi

ons

rela

ted

to th

e cr

eatio

n of

a fo

od

auth

ority

as

a co

ordi

natin

g bo

dy fo

r foo

d te

stin

g

201

/04/

2018

31/1

2/20

22Fo

od A

ct fu

lly re

-vi

ewed

and

am

ende

d

to s

uppo

rt cu

rrent

ex-

port

trend

s.

Min

istry

of H

ealth

, Nu

tritio

n &

Indi

geno

us

Med

icin

e

Min

istry

of D

evel

opm

ent S

trat-

egie

s an

d In

tern

atio

nal T

rade

; Sr

i Lan

ka C

usto

ms;

Sri

Lank

a St

anda

rds

Inst

itutio

n (S

LSI);

Ex

port

Deve

lopm

ent B

oard

; De

partm

ent o

f Agr

icul

ture

; Re

gist

rar o

f Pes

ticid

es

-

1.3.

2 Al

ign

natio

nal l

abou

r law

s wi

th IL

O re

gula

tions

in

orde

r to

ensu

re e

qual

ince

ntiv

e fo

r fem

ale

empl

oym

ent i

n th

e se

ctor

, fac

ilita

ting

nigh

t shi

ft ap

prov

al p

roce

dure

s.

301

/01/

2019

31/1

2/20

20La

bour

laws

am

ende

d to

cre

ate

mor

e fle

xibil-

ity fo

r em

ploy

ers

Min

istry

of I

ndus

try a

nd

Com

mer

ceEx

port

Deve

lopm

ent B

oard

; De

partm

ent o

f Lab

our

-

2: E

nsur

e co

nsis

tent

su

pply

of

raw

mat

eria

l fo

r the

se

ctor

2.1:

Set

up

a la

nd b

ank

to b

e ut

ilized

fo

r exp

ort

agric

ultu

re

prod

ucts

2.1.

1 Se

tup

a la

nd b

ank

base

d on

soi

l typ

e, c

limat

e an

d to

pogr

aphy

. Sel

ect a

sin

gle

resp

onsi

ble

inst

itutio

n to

per

-fo

rm th

e la

nd a

ttrib

utio

n.

201

/04/

2018

31/1

2/20

19La

nd B

ank

esta

blis

hed

and

sing

le in

stitu

tion

man

agin

g it

To b

e fin

alize

d by

Lan

d Us

e Po

licy

Plan

ning

De-

partm

ent

Min

istry

of M

ahaw

eli D

evel

-op

men

t and

Env

ironm

ent ;

De

partm

ent o

f Agr

icul

ture

; M

inis

try o

f Lan

ds a

nd P

arlia

-m

enta

ry R

efor

ms;

Dep

artm

ent

of N

atio

nal P

lann

ing

350

,000

2.2:

Incr

ease

pr

oduc

tion

of

iden

tifie

d ke

y cr

ops

whi

ch

supp

ort e

xpor

t gr

owth

2.2.

1 Pr

omot

e co

ntra

ct fa

rmin

g th

roug

h ex

tens

ion

ser-

vice

s to

pro

duce

rs in

ord

er to

incr

ease

sup

ply

of P

lant

ing

Mat

eria

l (Se

eds,

Incr

ease

fina

ncia

l and

R&

D su

ppor

t to

nurs

erie

s an

d tis

sue

cultu

re la

bs)

301

/04/

2018

31/1

2/20

22Ex

tens

ion

serv

ices

de

velo

ped

a sy

stem

-at

ic c

ontra

ct fa

rmin

g pr

omot

ion

cam

paig

n to

be

spre

ad a

t the

na

tiona

l lev

el.

Depa

rtmen

t of A

gri-

cultu

reEx

port

Deve

lopm

ent B

oard

; Sri

Lank

a Fo

od P

roce

ssor

s As

-so

ciat

ion;

Coc

onut

Res

earc

h In

stitu

te (C

RI);

Depa

rtmen

t of

Natio

nal P

lann

ing

100

,000

35

[ PLAN OF ACTION 2018-2022 ]

Stra

tegi

c ob

ject

ive

Oper

atio

nal

obje

ctiv

eAc

tivity

Prio

rity

Star

t dat

eEn

d da

teTa

rget

sLe

adin

g im

plem

entin

g pa

rtne

rsSu

ppor

ting

impl

emen

ting

part

ners

Indi

cativ

e co

sts

(USD

) 2:

Ens

ure

cons

iste

nt

supp

ly o

f ra

w m

ater

ial

for t

he

sect

or

2.2:

Incr

ease

pr

oduc

tion

of

iden

tifie

d ke

y cr

ops

whi

ch

supp

ort e

xpor

t gr

owth

2.2.

2 Pr

omot

e in

ter-c

rop

land

s th

roug

h ex

tens

ion

serv

ices

in

ord

er to

max

imize

yie

lds

per s

easo

n (u

se c

ocon

ut la

nd

for p

inea

pple

, ban

ana

and

pepp

er);

feas

ibili

ty s

tudi

es

to b

e do

ne to

sho

w ad

vant

ages

. (to

be

conn

ecte

d wi

th

2.2.

1.)

301

/04/

2018

31/1

2/20

22Ex

tens

ion

serv

ices

de-

velo

ped

an in

ter-c

rops

la

nd u

se p

rom

o-tio

n ca

mpa

ign

to b

e sp

read

at t

he n

atio

nal

leve

l.

Depa

rtmen

t of A

gri-

cultu

reM

inis

try o

f Prim

ary

Indu

strie

s;

Coco

nut R

esea

rch

Inst

itute

(C

RI);

Depa

rtmen

t of E

xpor

t Ag

ricul

ture

; Min

istry

of L

ands

an

d Pa

rliam

enta

ry R

efor

ms;

De

partm

ent o

f Nat

iona

l Pla

n-ni

ng

50,

000

2.2.

3 Se

lect

pro

cess

ors

that

ope

rate

thro

ugh

cont

ract

fa

rmin

g an

d th

at w

ould

be

willi

ng to

inte

grat

e tra

inin

g pr

ogra

mm

es.

• Su

ppor

t the

pro

cess

ors

agre

eing

to d

isse

min

ate

train

ing

on in

nova

tive

agric

ultu

re te

chno

logy

, GAP

, GM

P an

d be

st p

ract

ices

with

a s

peci

al fo

cus

on o

rgan

ic

cultu

re.

• Us

e de

mon

stra

tion

plot

s to

dis

sem

inat

e th

e te

chno

logy

to

farm

ers’

clu

ster

s an

d fo

od p

roce

ssor

s (e

xpor

ters

).

301

/04/

2018

31/1

2/20

18At

leas

t 10

proc

esso

rs

per y

ear s

uppo

rted

to

deve

lop

train

ing

pro-

gram

mes

.

Depa

rtmen

t of A

gri-

cultu

reM

inis

try o

f Pla

ntat

ion

In-

dust

ries;

Min

istry

of P

rimar

y In

dust

ries;

Exp

ort D

evel

op-

men

t Boa

rd; S

ri La

nka

Inst

itute

of

Info

rmat

ion

Tech

nolo

gy

(SLI

IT);

Depa

rtmen

t of E

xpor

t Ag

ricul

ture

330

,000

2.3:

Dev

elop

na

tiona

l ch

anne

ls o

f su

pply

at

proc

esso

rs' l

evel

2.3.

1 Pr

omot

e an

d st

reng

then

food

and

bev

erag

es c

om-

pani

es b

uild

ing

back

ward

inte

grat

ion

into

thei

r sup

ply

chai

n (c

olle

ctio

n ce

ntre

s), i

nclu

ding

est

ablis

hmen

t of

proc

essi

ng zo

nes

and

faci

litie

s. T

he s

uppo

rt sh

ould

focu

s on

skil

ls, t

ech,

and

infra

stru

ctur

e.

201

/04/

2018

31/1

2/20

22Su

ppor

t sch

emes

es

tabl

ishe

d fo

r tho

se

com

pani

es b

uild

ing

back

ward

link

ages

as

ince

ntiv

e.

Min

istry

of P

rimar

y In

-du

strie

sM

inis

try o

f Pla

ntat

ion

Indu

s-tri

es; E

xpor

t Dev

elop

men

t Bo

ard;

Foo

d Ad

viso

ry C

om-

mitt

ee (u

nder

MoH

NIM

)

170

,000

2.3.

2 Es

tabl

ish

Spec

ial P

urpo

se V

ehic

les

(SPV

s) –

or

shar

e-ho

lder

s’ p

roce

ssor

s cl

uste

rs fo

r Sup

ply

Chai

n ac

tiviti

es s

uch

as e

xtens

ion

serv

ice,

col

lect

ion

cent

ers,

pr

imar

y pr

oces

sing

and

fina

l pro

cess

ing.

101

/10/

2018

30/0

6/20

19Pr

oduc

ers

partn

er-

ship

s st

reng

then

edEx

port

Deve

lopm

ent

Boar

dM

inis

try o

f Pla

ntat

ion

In-

dust

ries;

Min

istry

of P

rimar

y In

dust

ries

100

,000

2.3.

3 Al

ign

loca

l cro

p pr

oduc

tion

base

d on

mar

ket

dem

and

thro

ugh

esta

blis

hing

an

info

rmat

ion

shar

ing/

tra

ding

pla

tform

that

will

cha

nnel

pro

cess

ors'

requ

ire-

men

ts to

pro

duce

rs (p

roce

ssor

s ca

n in

put t

heir

dem

and

into

the

syst

em).

The

info

rmat

ion

plat

form

will

als

o se

rve

proc

esso

rs b

y pr

ovid

ing

a re

gist

ry o

f wha

t is

grow

ing

and

wher

e. T

his

will

invo

lve

rese

arch

inst

itutio

ns a

nd s

ecto

r as

soci

atio

ns.

101

/01/

2019

31/1

2/20

19In

form

atio

n ch

an-

nelli

ng m

echa

nism

st

reng

then

ed a

nd

exte

nded

Depa

rtmen

t of A

gri-

cultu

reM

inis

try o

f Pla

ntat

ion

Indu

s-tri

es; M

inis

try o

f Prim

ary

In-

dust

ries;

Exp

ort D

evel

opm

ent

Boar

d; S

ri La

nka

Food

Pro

ces-

sors

Ass

ocia

tion;

Dep

artm

ent

of E

xpor

t Agr

icul

ture

; Hec

tor

Kobb

ekad

uwa

Agra

rian

Re-

sear

ch a

nd Tr

aini

ng In

stitu

te

100

,000

2.4:

Dev

elop

in

tern

atio

nal

chan

nels

of

supp

ly a

t pr

oces

sors

' lev

el

2.4.

1 Cr

eate

s aw

aren

ess

on a

vaila

ble

pote

ntia

l sou

rcin

g co

untri

es a

nd s

uppl

iers

of P

F&B

inpu

ts in

term

s of

pric

e,

qual

ity, v

arie

ties

for p

roce

ssin

g, a

nd m

ore.

Use

the

col-

labo

ratio

n wi

th E

mba

ssie

s to

be

esta

blis

hed

unde

r act

ivity

3.

7.1.

SLF

PA to

pro

vide

list

of p

riorit

y pr

oduc

ts fo

r whi

ch

addi

tiona

l sou

rcin

g is

requ

ired.

301

/06/

2018

31/1

2/20

21In

form

atio

n on

sou

rc-

ing

mar

kets

ava

ilabl

e to

sub

scrib

ed m

em-

bers

Depa

rtmen

t of C

om-

mer

ce

Expo

rt De

velo

pmen

t Boa

rd;

Sri L

anka

Foo

d Pr

oces

sors

As

soci

atio

n

20,

000

3: C

ater

to

high

qua

lity

mar

kets

3.1:

Spr

ead

rese

arch

and

in

nova

tion

in th

e se

ctor

to a

lign

with

late

st g

loba

l tre

nds

3.1.

1 Co

nnec

t ent

erpr

ise

R&D

depa

rtmen

ts w

ith u

nive

rsi-

ty re

sear

ch a

nd re

sear

ch in

stitu

tes

to g

et th

e R&

D su

ppor

t fro

m p

ublic

bod

ies.

Pub

lic b

odie

s to

iden

tify

ente

rpris

es

to b

e su

ppor

ted.

301

/06/

2018

31/1

2/20

19Al

l ent

erpr

ises

with

R&

D co

nnec

ted

to

lead

uni

vers

ities

Min

istry

of I

ndus

try a

nd

Com

mer

ceEx

port

Deve

lopm

ent B

oard

; In

dust

rial T

echn

olog

y In

stitu

te

(ITI);

Dep

artm

ent o

f Exp

ort

Agric

ultu

re; U

nive

rsity

of

Way

amba

50,

000

36


Stra

tegi

c ob

ject

ive

Oper

atio

nal

obje

ctiv

eAc

tivity

Prio

rity

Star

t dat

eEn

d da

teTa

rget

sLe

adin

g im

plem

entin

g pa

rtne

rsSu

ppor

ting

impl

emen

ting

part

ners

Indi

cativ

e co

sts

(USD

) 3:

Cat

er to

hi

gh q

ualit

y m

arke

ts

3.1:

Spr

ead

rese

arch

and

in

nova

tion

in th

e se

ctor

to a

lign

with

late

st g

loba

l tre

nds

3.1.

2 In

tegr

ate

curri

cula

on

IP in

food

pro

cess

ing

indu

stry

fo

r spe

cific

cou

rses

del

iver

ed in

uni

vers

ities

. Dev

elop

ad-

hoc

train

ing

mod

ules

for i

ndus

try o

pera

tors

on

IP.

201

/04/

2019

31/1

2/20

221

new

curri

culu

m d

e-ve

lope

d pe

r uni

vers

ity

New

mod

ules

inte

-gr

ated

Natio

nal I

ntel

lect

ual

Prop

erty

Offi

ceUn

iver

sity

of M

orat

uwa

; Uni

-ve

rsity

of C

olom

bo ;

Univ

ersi

ty

of J

affn

a ; I

nstit

ute

of F

ood

Scie

nce

and

Tech

nolo

gy

200

,000

3.1.

3 Es

tabl

ish

regu

lar k

nowl

edge

tran

sfer

ses

sion

s be

twee

n re

sear

ch a

nd e

xtens

ion

(pub

lic a

nd p

rivat

e) fo

r ne

w fin

ding

s to

be

trans

ferre

d to

pro

duct

ion

leve

l. Al

so,

prov

ide

agro

-clin

ics

and

serv

ice

outle

t at c

lust

er v

illag

e ca

terin

g to

mec

hani

zatio

n an

d ag

ricul

ture

exte

nsio

n.

301

/01/

2019

31/1

2/20

22Sy

stem

atic

info

rma-

tion

exch

ange

mec

ha-

nism

est

ablis

hed

Min

istry

of P

rimar

y In

-du

strie

sIn

dust

rial T

echn

olog

y In

stitu

te

(ITI);

Nat

iona

l Agr

ibus

ines

s Co

unci

l ; D

epar

tmen

t of A

gri-

cultu

re; D

epar

tmen

t of E

xpor

t Ag

ricul

ture

50,

000

3.1.

4 In

col

labo

ratio

n wi

th S

LFPA

, dev

elop

a y

early

in-

nova

tion

and

R&D

com

petit

ion

and

rewa

rd s

chem

e in

the

sect

or, a

nd a

dver

tise

the

wini

ng fi

rms

301

/01/

2019

31/1

2/20

22In

nova

tion

rewa

rds

esta

blis

hed

Indu

stria

l Tec

hnol

ogy

Inst

itute

(ITI

)Sr

i Lan

ka F

ood

Proc

esso

rs A

s-so

ciat

ion;

Lan

ka F

ruit

& V

eg-

etab

le P

rodu

cers

, Pro

cess

ors

and

Expo

rters

Ass

ocia

tion;

De

partm

ent o

f Agr

icul

ture

100

,000

3.1.

5 Co

mm

erci

aliza

tion

of R

&D

at th

e un

iver

sity

and

re

sear

ch in

stitu

te le

vel b

y es

tabl

ishi

ng c

ondi

tiona

l spo

n-so

ring

of P

HDs

base

d on

the

rese

arch

are

a se

lect

ed. P

ri-or

itize

are

as re

quire

d by

the

indu

stry

.

301

/06/

2018

31/1

2/20

22Co

nditi

onal

spo

nsor

-in

g of

PHD

s es

tab-

lishe

d

Min

istry

of

Scie

nce,

Tech

nolo

gy a

nd

Rese

arch

Sri L

anka

Foo

d Pr

oces

-so

rs A

ssoc

iatio

n; M

inis

try o

f He

alth

, Nut

ritio

n &

Indi

geno

us

Med

icin

e; D

epar

tmen

t of A

g-ric

ultu

re

50,

000

3.1.

6 De

velo

p an

IP p

olic

y fo

r the

pro

per o

wner

ship

, ex

ploi

tatio

n an

d co

mm

erci

aliza

tion

of th

e re

sults

of t

he

rese

arch

and

inno

vatio

ns a

ctiv

ities

and

pro

ject

s on

pro

-ce

ssed

food

and

bev

erag

es.

201

/01/

2019

31/0

7/20

19IP

pol

icy

on S

ri La

n-ka

n pr

oces

sed

food

pr

oduc

ts d

evel

oped

.

Natio

nal I

ntel

lect

ual

Prop

erty

Offi

ceM

inis

try o

f Prim

ary

Indu

strie

s;

Natio

nal A

grib

usin

ess

Coun

cil

; Sri

Lank

a Fo

od P

roce

s-so

rs A

ssoc

iatio

n; M

inis

try o

f He

alth

, Nut

ritio

n &

Indi

geno

us

Med

icin

e; D

epar

tmen

t of A

gri-

cultu

re; D

epar

tmen

t of E

xpor

t Ag

ricul

ture

80,

000

3.2:

Ada

pt

conf

orm

ity

asse

ssm

ent

to th

e se

ctor

’s

need

s

3.2.

1 Re

vise

and

rest

ruct

ure

the

curre

nt n

atio

nal f

ood

cont

rol s

yste

m (s

peci

fical

ly th

e Fo

od A

ct) t

o co

nsol

idat

e fo

od s

afet

y in

to a

Nat

iona

l Foo

d Sa

fety

Aut

horit

y (c

oord

i-na

tion

plat

form

). Th

e NF

SA s

houl

d re

gula

te fo

od te

stin

g an

d ac

cept

con

form

ity a

sses

smen

t don

e by

acc

redi

ted

test

ing

labo

rato

ries.

(See

act

ivity

in th

e NQ

I stra

tegy

). Al

ign

Sri L

anka

n fo

od s

tand

ards

with

inte

rnat

iona

l bes

t pr

actic

es. N

FA to

inte

grat

e th

e SP

S en

quiry

poi

nt.

101

/04/

2018

31/1

2/20

22NF

A co

ordi

natio

n es

-ta

blis

hed.

SPS

enqu

iry p

oint

in

tegr

ated

.

Min

istry

of H

ealth

, Nu

tritio

n &

Indi

geno

us

Med

icin

e

Min

istry

of D

evel

opm

ent S

trat-

egie

s an

d In

tern

atio

nal T

rade

; Sr

i Lan

ka S

tand

ards

Inst

itutio

n (S

LSI);

Exp

ort D

evel

opm

ent

Boar

d; S

ri La

nka

Food

Pro

ces-

sors

Ass

ocia

tion;

Dep

artm

ent

of C

omm

erce

; De

partm

ent o

f Ag

ricul

ture

; Coc

onut

Res

earc

h In

stitu

te (C

RI);

Coco

nut D

evel

-op

men

t Aut

horit

y (C

DA)

650

,000

3.2.

2 De

velo

p a

perio

dic

conf

orm

ity a

sses

smen

t of P

F&B

Labo

rato

ries

to e

nsur

e th

at th

ey re

mai

n st

anda

rdize

d. G

ain

mut

ual r

ecog

nitio

n fo

r Sri

Lank

an L

abor

ator

ies.

301

/06/

2018

31/1

2/20

22Pe

riodi

c co

nfor

mity

as

sess

men

t set

Sri L

anka

Acc

redi

tatio

n Bo

ard

(SLA

B)Sr

i Lan

ka F

ood

Proc

es-

sors

Ass

ocia

tion;

Min

istry

of

Heal

th, N

utrit

ion

& In

dige

nous

M

edic

ine;

Dep

artm

ent o

f Ag-

ricul

ture

50,

000

3.2.

3 In

trodu

ce im

port

tax-

conc

essi

ons

on la

bora

tory

eq

uipm

ent f

or te

stin

g.3

01/0

6/20

1831

/12/

2022

Tax-

conc

essi

on a

p-pr

oved

M

inis

try o

f Fin

ance

Min

istry

of P

lant

atio

n In

dus-

tries

; Sri

Lank

a Fo

od P

roce

s-so

rs A

ssoc

iatio

n; N

atio

nal

Scie

nce

Foun

datio

n; D

epar

t-m

ent o

f Agr

icul

ture

100

,000

37


Stra

tegi

c ob

ject

ive

Oper

atio

nal

obje

ctiv

eAc

tivity

Prio

rity

Star

t dat

eEn

d da

teTa

rget

sLe

adin

g im

plem

entin

g pa

rtne

rsSu

ppor

ting

impl

emen

ting

part

ners

Indi

cativ

e co

sts

(USD

) 3:

Cat

er to

hi

gh q

ualit

y m

arke

ts

3.3:

Upd

ate

pack

agin

g m

etho

ds in

the

indu

stry

3.3.

1 Im

prov

e th

e te

chni

cal c

apac

ity in

line

with

inte

rna-

tiona

l sta

ndar

ds in

pac

kagi

ng to

the

proc

esse

d fo

od a

nd

beve

rage

s co

mpa

nies

. For

SM

Es, p

oten

tial e

xpor

ters

. Ex

plor

e IP

pro

tect

ion

for n

ew d

evel

opm

ents

.

301

/04/

2018

31/1

2/20

22At

leas

t 10

SMEs

in

volv

ed in

pac

kagi

ng

train

ing

per y

ear.

Min

istry

of I

ndus

try a

nd

Com

mer

ceEx

port

Deve

lopm

ent B

oard

; In

dust

rial T

echn

olog

y In

sti-

tute

(ITI

); Sr

i Lan

ka In

stitu

te

of P

acka

ging

; Uni

vers

ity o

f W

ayam

ba

100

,000

3.4:

Incr

ease

av

aila

bilit

y of

qu

alifi

ed la

bour

fo

r the

indu

stry

3.4.

1 In

col

lobo

arat

ion

with

SLF

PA, c

ondu

ct a

skil

l gap

as

sess

men

t in

the

proc

esse

d fo

od a

nd b

ever

ages

sec

tor,

spec

ifica

lly o

n th

e fa

ctor

y-ba

sed

requ

ired

staf

f.

301

/04/

2018

30/0

9/20

18Sk

ill g

ap a

sses

smen

t ca

rried

out

Min

istry

of S

kills

Dev

el-

opm

ent a

nd V

ocat

iona

l Tr

aini

ng

Expo

rt De

velo

pmen

t Boa

rd; S

ri La

nka

Food

Pro

cess

ors

Asso

-ci

atio

n; D

epar

tmen

t of L

abou

r

50,

000

3.4.

2 In

clud

e sh

ort a

nd m

ediu

m te

rm c

ours

es, a

s we

ll as

on-

the-

job

train

ings

with

in s

uppo

rting

inst

itutio

ns a

nd

univ

ersi

ties,

focu

sing

on

skill

s id

entif

ied

as la

ckin

g wi

thin

th

e sk

ill g

ap a

sses

smen

t.

301

/10/

2018

31/1

2/20

19Ne

w co

urse

s an

d tra

inin

g's c

reat

edM

inis

try o

f Ind

ustry

and

Co

mm

erce

Min

istry

of S

kills

Dev

elop

-m

ent a

nd V

ocat

iona

l Tra

inin

g;

Voca

tiona

l Tra

inin

g Au

thor

ity

of S

ri La

nka

100

,000

3.4.

3 Pr

omot

e em

ploy

men

t opp

ortu

nitie

s in

the

indu

stry

th

roug

h sc

hool

s, c

arrie

r orie

ntat

ion

cent

res

and

prom

o-tio

nal c

ampa

igns

, in

the

regi

ons

of S

ri La

nka

with

hig

hest

un

empl

oym

ent r

ates

, as

well

as to

farm

ers

durin

g th

e of

f-sea

son

perio

d.

301

/04/

2018

31/1

2/20

22Re

gion

al p

rom

otio

nal

cam

paig

ns c

arrie

d ou

tM

inis

try o

f Ind

ustry

and

Co

mm

erce

Min

istry

of E

duca

tion;

Min

istry

of

Skil

ls D

evel

opm

ent a

nd

Voca

tiona

l Tra

inin

g; V

ocat

iona

l Tr

aini

ng A

utho

rity

of S

ri La

nka

50,

000

3.5:

Con

duct

ta

rget

ed tr

ade

nego

tiatio

ns

to e

nsur

e af

ford

able

m

arke

t acc

ess

to k

ey ta

rget

m

arke

ts

3.5.

1 Bu

ild u

nder

stan

ding

of t

he tr

ade

nego

tiato

rs a

bout

th

e in

dust

ry th

roug

h in

dust

ry v

isits

and

yea

rly b

ilate

ral

mee

tings

with

key

indu

stry

repr

esen

tativ

es, b

oth

expo

rters

an

d sm

alle

r firm

s.

301

/04/

2018

31/1

2/20

22Ye

arly

mee

tings

of

trade

neg

otia

tors

set

Depa

rtmen

t of C

om-

mer

ce

Min

istry

of D

evel

opm

ent S

trat-

egie

s an

d In

tern

atio

nal T

rade

; Ex

port

Deve

lopm

ent B

oard

100

,000

3.5.

2 Es

tabl

ish

syst

emat

ic p

rivat

e se

ctor

con

sulta

tions

in

pre

view

of t

rade

neg

otia

tions

and

gat

her i

nfor

mat

ion

requ

ired

to b

uild

the

case

for t

he n

egot

iatio

ns.

201

/04/

2018

31/1

2/20

22Sy

stem

atic

con

sulta

-tio

n re

quire

men

t es-

tabl

ishe

d

Min

istry

of D

evel

opm

ent

Stra

tegi

es a

nd In

tern

a-tio

nal T

rade

Min

istry

of I

ndus

try a

nd C

om-

mer

ce; D

epar

tmen

t of C

om-

mer

ce

-

3.6:

Est

ablis

h a

uniq

ue S

ri La

nkan

cui

sine

br

and

3.6.

1 De

velo

ping

a B

rand

Pro

posi

tion

for S

ri La

nkan

Cu

isin

e, u

sing

inte

rnat

iona

l bra

ndin

g ex

perts

and

usi

ng

regi

onal

exa

mpl

es, a

nd ta

rget

ing

expo

rt m

arke

t and

the

tour

ism

sec

tor.

Cons

ider

the

use

of a

n IP

stra

tegy

for b

et-

ter p

rote

ctio

n.

101

/04/

2018

31/1

2/20

19Un

ique

Sri

Lank

an

food

, bev

erag

es &

fla-

vour

s Br

and

crea

ted

Annu

al c

ampa

ign

car-

ried

out.

Sri L

anka

Tour

ism

Dev

el-

opm

ent A

utho

rity

Boar

d of

Inve

stm

ent (

BOI);

Ex

port

Deve

lopm

ent B

oard

; De

partm

ent o

f Com

mer

ce ;

Depa

rtmen

t of A

gric

ultu

re

100

,000

3.6.

2 Cr

eate

pro

duct

s in

line

with

the

bran

ding

initi

ativ

e,

whic

h ar

e ce

rtifie

d co

nsis

tent

qua

lity

and

safe

ty, a

imed

at

pene

tratin

g hi

gh v

alue

& n

iche

mar

kets

.

Prod

ucts

lead

s id

entif

ied

in th

e st

rate

gy a

re:

• He

alth

y bi

scui

ts•

Coco

nut m

ilk a

s a

subs

titut

e to

cow

milk

•

Sri L

anka

n fla

vour

ed p

rodu

cts

101

/01/

2019

31/1

2/20

22Qu

antif

ied

incr

ease

of

dem

and

for b

rand

ed

prod

ucts

Expo

rt De

velo

pmen

t Bo

ard

Min

istry

of P

rimar

y In

dust

ries;

Sr

i Lan

ka F

ood

Proc

esso

rs

Asso

ciat

ion;

Spi

ce C

ounc

il ;

Coco

nut D

evel

opm

ent A

utho

r-ity

(CDA

)

-

3.6.

3 Id

entif

y su

itabl

e IP

righ

t pro

tect

ion

for n

ewly

de-

velo

ped

prod

ucts

and

exis

ting

IP u

npro

tect

ed p

rodu

cts.

De

velo

p an

inte

rnat

iona

l reg

istra

tion

stra

tegy

for p

rom

ot-

ing

bran

ds in

exp

ortin

g m

arke

ts (t

rade

mar

ks, c

olle

ctiv

e m

arks

, or p

aten

ts in

cas

e of

inve

ntiv

e pr

oduc

ts).

101

/01/

2019

31/1

2/20

22Su

ppor

t pro

vide

d on

IP

regi

stra

tion

for a

ll ne

w ar

eas

iden

tifie

d

Expo

rt De

velo

pmen

t Bo

ard

Min

istry

of P

rimar

y In

dust

ries;

Sr

i Lan

ka F

ood

Proc

esso

rs

Asso

ciat

ion

50,

000

38


Stra

tegi

c ob

ject

ive

Oper

atio

nal

obje

ctiv

eAc

tivity

Prio

rity

Star

t dat

eEn

d da

teTa

rget

sLe

adin

g im

plem

entin

g pa

rtne

rsSu

ppor

ting

impl

emen

ting

part

ners

Indi

cativ

e co

sts

(USD

) 3:

Cat

er to

hi

gh q

ualit

y m

arke

ts

3.7:

Pro

vide

tra

de in

tellig

ence

an

d tre

nds

to fo

od a

nd

beve

rage

s pr

oces

sors

3.7.

1 M

obili

ze a

nd re

sour

ce ta

rget

mar

ket-b

ased

Em

bas-

sies

of S

ri La

nka

to d

eliv

er tr

ade

info

rmat

ion

to E

DB. T

he

info

rmat

ion

shou

ld c

onta

in a

det

aile

d m

arke

t pro

file

with

a

sect

ion

on c

onsu

mer

tren

ds a

nd p

refe

renc

es a

nd la

test

su

cces

sful

pro

duct

s on

food

and

bev

erag

es m

arke

t.

Use

fixer

s in

mar

kets

to d

o qu

arte

rly b

ulle

tins

by e

mai

l.

201

/04/

2018

31/1

2/20

22Em

bass

ies

equi

pped

to

pro

vide

mar

ket i

n-fo

rmat

ion

to E

DB

Quar

terly

em

ail b

ul-

letin

s in

pla

ce.

Expo

rt De

velo

pmen

t Bo

ard

Min

istry

of F

inan

ce; D

epar

t-m

ent o

f Com

mer

ce

100

,000

3.7.

2 Es

tabl

ish

an A

dvis

ory

com

mitt

ee to

mon

itor a

nd c

o-or

dina

te th

e im

plem

enta

tion

of th

e st

rate

gy, i

n co

nnec

tion

with

the

sect

or s

trate

gy g

over

nanc

e st

ruct

ure.

201

/04/

2018

30/0

6/20

18Ad

viso

ry c

omm

ittee

fo

r stra

tegy

impl

e-m

enta

tion

man

age-

men

t

Expo

rt De

velo

pmen

t Bo

ard

Min

istry

of F

inan

ce; D

epar

t-m

ent o

f Com

mer

ce

5,0

00

39


APPENDIX 1 : LIST OF PARTICIPANTS IN THE PUBLIC–PRIVATE CONSULTATIONS

No. Name Designation Name of Institution

1 Mr. Y.Thishanthan Assistant Registrar Advanced Technical Institute

2 Mr. Dilantha De Silva Chief Operating Officer Bio Extracts (Pvt) Ltd

3 Mr.A.G. Abubucker Head of International Sales Bio Extracts (Pvt) Ltd

4 Dr. Sarath Ranaweera Chairman Bio Foods (Pvt) Ltd

5 Mr. Nihal Rathnayake Cooperate Management Consultant Bio Foods (Pvt) Ltd

6 Ms. Lakmali Withange Assistant Director- Investment Board of Investment (BOI)

7 Dr. R.A.U.C. Ranasinghe Chairman C.R. Exports (Pvt) Ltd.

8 Mr. M.A.C. Najeep Director (Northern) Central Environmental Authority

9 Ms. Sheamalee Wickramasingha Group Managing Director Ceylon Biscuits Ltd.

10 Mr. Nadeeja Karunathilaka General Manager- International Market Development

Ceylon Biscuits Ltd.

11 Mr. Buddhika Abayakoon Head of International Marketing Consumer Food Sector

Ceylon Cold Stores PLC

12 Mr. Sampath Samarawickrama Director- Market Development & Research Coconut Development Authority

13 Dr. I.M.S.K. Idirisinghe Head- Agriculture Economics Division Coconut Research Institute.

14 Mr. Dharmasiri Alahakoon Chairman/ Joint Managing Director Country Style Foods (Pvt.) Ltd

15 Mr. Sarath W. Alahakoon Chairman/ Joint Managing Director Country Style Foods (Pvt.) Ltd

16 Mr. H.R.P. Fernando Deputy Director Department of Agriculture

17 Dr. P.V. Sriyalatha Chief Animal Quarantine Officer Department of Animal Production & Health

18 Mrs. S.Shamala Asst. Commissioner of Co-Operative Development

Department of Cooperative Development

19 Ms. A.P.P. Disna Director - Regulation Department of Export Agriculture

20 Mr. I.V.A.D.C. Induruwa Assistant Director Department of Export Agriculture

21 Ms.Sepalika Wickramasinghe Deputy Director/ Quality Control Department of Fisheries & Aquatic Resources

22 Mrs. M. Ketharagowry District Coordinator (WDO) District Child / Women Development Unit

23 Mr. Suresh Ellawala Director Ellawala Horticulture (Pvt) Ltd

24 Mr. Suntharalingam Anpalagan Director Ever Tree Fruit Products (Pvt) Ltd

25 Mr. Theepan Accountant Ever Tree Fruit Products (Pvt) Ltd

26 Ms. Deepika Hettiarachchi Assistant Director - Agriculture Research Food Research Unit

27 Mr. Emilio Carcano Special Project and Strategic Development Goglio (Packaging Represent)

28 Mr. Fazal Mushin Chief Executive Officer Green Field Bio Plantation (Pvt) Ltd

29 Dr. P.N.R.J. Amunugoda Senior Research Scientist Industrial Technology Institute (ITI)

30 Mr. S. Shanmugalingam Factory Manager Juchufy Fruit Based Industry

31 Mr. Balendran General Manager Karachchi South MPCS

32 Mr. S.Pirashanth Production Assistant Manager Katpagacholai

33 Mr. Nilhan Ekanayake Manager Administration / Export Lanka Canneries (Pvt) Ltd.

34 Mr. Asiri Silva Manager Export Administration Lanka Canneries (Pvt) Ltd.

35 Mr. B. Wijayarathna Secretary Ministry of Agriculture

36 Mr. T.H. Amarasinghe Director- Agriculture Technology Ministry of Agriculture

37 Mr. Sapumal Kapukotuwa Value Chain Specialist Ministry of Primary industries ASMP -World Bank

38 Mrs. Dawn. S. Austin Managing Director Nidro Supply (Pvt) Ltd.

39 Mr. S. Naguleswaran Owner of the Company Nutri Food Packers

mailto:[email protected]

40


No. Name Designation Name of Institution

40 Mrs. S. Kaileswaran District Director Office of the District Director of Agriculture

41 Mr. Chaminda Udakumbura Deputy General Manager - Administration Paddy Marketing Board

42 Mr. M.B. Loganathan Deputy General Manager Palmyra Development Board

43 Ms. Zahra Cader Senior Manager PricewaterhouseCoopers (PWC)

44 Mr. Sajith Gunaratna Deputy General Manager Prima Group / Ceylon Agro Industries Ltd

45 Ms. Sankeetha - Punkudutivu Food Manufactures

46 Ms.Thamilini - Punkudutivu Food Manufactures

47 Ms. Elavally - Punkudutivu Food Manufactures

48 Mr. Canagaratnam Sabeson Head of Key Accounts Renuka Agri Foods PLC

49 Dr. S.R. Rajiyah Group Managing Director Renuka Agri Foods PLC

50 Mr. Withanawasam - Rice Research & Development Institute

51 Mrs. Amitha Bentota Director-Rice Research and Development Rice Research and Development Institute

52 Mr.J.M. Karunarathna Manager Ruweena Products

53 Mr. Suresh A. Silva Managing Director/ Group Chief Executive S A Silva & Sons Lanka (Pvt.) Ltd.

54 Mr. Prabath Fernando Assistant General Manager- Finance S A Silva & Sons Lanka (Pvt.) Ltd.

55 Ms. B. Ameera Accountant Sivanarul Products

56 Ms. S.Anitha Accountant Sivanarul Products

57 Mr. Maliek de Alwis President Sri Lanka Food Processors Association (SLFPA)

58 Mr. Delano Dias Vice President Sri Lanka Food Processors Association (SLFPA)

59 Mr. Gamini Dharmawardena Director General Sri Lanka Standard Institution (SLSI)

60 Mr. Chinthaka Kulatilleke Head of HR & Administration Sri Lankan Catering

61 Mr. S.Lucia Selvakumar - St. Lucia (Pvt) Ltd

62 Dr. I.B.V.L. Dharmawadhana Animal Quarantine Officer The Department of Animal Production and Health (DAPH)

63 Mr. P. Vimalakrishna BDFO UNDP

64 Mr. M.Z.M. Farhad National Sector Specialist UNIDO EU/ITC/UNIDO Project Sri Lanka

65 Ms. Sumathy. L. Rajasingham National Quality Expert UNIDO

66 Mr. K Uthayakumar Secretary Vavuniya District Chamber of Commerce ,industry and Agriculture

67 Ms. Malani Baddegamge Director – Export Agriculture Export Development Board

68 Ms. S. N. Narandeniya Deputy Director Export Development Board

69 Ms. S.A.G. Anuradha Deputy Director Export Development Board

70 Ms. T. Wimalagunasekera Assistant Director Export Development Board

71 Mr. Yohan Silva Export Promotion Officer Export Development Board

72 Ms. Anuradha Ragapaksha Export Promotion Officer Export Development Board

41


APPENDIX 2 : INSTITUTIONAL ASSESSMENT RESULTS

Table 8 : Performance assessment of TsI from the processed food and beverages perspective

Name of institution DescriptionCoordination of interventions in sector

Human and financial capacity

Influence on sector development

Policy support

Ministry of Industry and Commerce

Department of Commerce

Overall function

Metrology and Testing Department

Ministry of Agriculture Department of Agriculture ( extension, post-harvest, tech transfers, training of processors, especially SMEs )

Formulation of policies Policies are not aligned with needs of exporters

But not necessarily positive since not in line with needs

Ministry of Plantation Industries

Coconut development authority Licensing / very regulated

Coconut Cultivation Board ( cultivation and extension and nursery management )

Ministry of Health, Nutrition & Indigenous Medicine

Food advisory committee ( policy formulation ) Not necessarily positive

Food control and administration authority ( enforcement )

Ministry of Primary Industries DEA ( cocoa ) But better performance for DEA ( mostly scientists )

Ministry of Rural Economy Department of animal production and health ( productivity improvement of livestock )

Ministry of Science, Technology and Research

Sri Lanka Accreditation Board

National Science Foundation ( research )

Ministry of Fisheries and Aquatic Resources Development

National Aquaculture Development Authority

Department of fisheries

National Aquatic Resources Research and Development Agency

Higher score for research

Ministry of Labour Department of Labour ( labour law issues )

Not necessarily a good influence

Trade support

Department of Animal

Production and Health

Animal quarantine and inspection services

SLSI Standard division : have committees, among them :Standard formulation committee ( advisory committee )

Paddy Marketing Board Licensing authority for milling paddy

Safeguarding farmer and consumer ( standard price setting )

Assuring food security ( secure levels of stocks for the country ) ; setting threshold for export

42


Name of institution DescriptionCoordination of interventions in sector

Human and financial capacity

Influence on sector development

CCC Steering committee for food and beverages ( provide trade services )

Especially on policy

National Chambers of Exporters

Under the governing council, specific representation for processed food and beverages

Issue-based response

Export Development Board

Board of Investment Investment facilitation

Industry Development Board Industry infrastructure development and facilitation

business support

Sri Lanka Food Processors Association

Entire sector ; more SMEs compared to CCC ( local market and export )

Volunteer based staff

Largest processed food exhibitions

Lanka Fruit and Vegetable Producers, Processors and Exporters, Association

A representative body of fruit & vegetable producers, processors and companies ; advocacy ( export oriented )

Seafood Exporters Association

Advocacy and implementing regulations and management practices

Sri Lanka Desiccated Coconut Millers’ Association

National Agribusiness Council

USAID initiative ( early 1990s )

Academia and civil society network

Industrial Technology Institute, Food Technology Section

Packaging Services

Provides research, technology, and technical training and consultancy to companies in the food industry on cereal and bakery, food microbiology, fish processing, fruits & vegetable processing, post-harvest technology, etc.

Coconut Research Institute Conducts research ( agronomy, crop protection, plant physiology, soil and plant nutrition, coconut processing, etc. ) and provides relevant training ; develops policies for the sector

State universities Most universities offer post-graduate diplomas/MSc. programmes and also conducts research : Universities of Sri Jayawrdanepura, Peradeniya, Wayamba, Ruhuna, and Sabaragamuwa

Basic theory is good, but advanced knowledge and practical understanding is lacking

Rice Research & Development Institute

( Department of Agriculture )

Conducts research of vertical improvement ; soil fertility and its sustainability ; pest, disease and weed management ; post-harvest and grain quality and production technologies

Institute of Post-Harvest Technology

( mostly for rice processing )

Providers of post-harvest technology of rice/other grains, field crops, fruits/vegetables and spices through research, training/extension, consultancy/ advisory services

Veterinary Research Institute Quality assurance for livestock products and animal feeds and feed ingredients and research

MRI Clinical trials ; only approved laboratory for all processed food products and all raw materials that are used ( not enough ; currently Food Act of 1980 is being amended to include new laboratories )

Institute of Food Science and Technology

Coordination between universities and private sector ( new institute 4-5 years old )

Sri Lanka Institute of Packaging

Exhibition and technical training

43

[ rEFErENCEs ]

REFERENCES

Export Development Board. 2017. Industry Capability Report, Food and Beverage Sector. Colombo. http : // www.srilanka-business.com / pdf / industry_capability_reports / food-and-beverage-sector-2017.pdf

IBIS World. 2017. IBISWorld Industry Report, Global Fruit & Vegetables Processing. New York. http : // www.proman.fi / sites / default / files / Food %20 %26 %20beverage %20glob-al %20report %202010_0.pdf.

IMAP. 2010. Food and Beverage Industry Global Report – 2010. Dover. http : // www.proman.fi / sites / default / files / Food %20 %26 %20beverage %20global %20report %202010_0.pdf.

Mintel. 2017. Global Food & Drink Trends 2017. New York. www.mintel.com.

Moreau, Roland. 2016. ‘As Packaged Food Growth Engines Falter, what are the Next Growth Drivers?’ Passport, 17 October. Euromonitor.com.

Murray, Sarah. 2016. ‘The World’s Biggest Industry.’ Forbes, 15 November. https : // www.forbes.com / 2007 / 11 / 11 / growth-agriculture-business-forbeslife-food07-cx_sm_1113bigfood.html.

http://www.srilankabusiness.com/pdf/industry_capability_reports/food-and-beverage-sector-2017.pdf



http://www.proman.fi/sites/default/files/Food %26 beverage global report 2010_0.pdf



http://www.mintel.com

Ministry of Development Strategies and International Trade

Sri Lanka Export Development Board

Developed as part of the EU-Sri Lanka Trade-Related Assistance project, funded by the European Union (EU)

Sri Lanka Food Processors Association

Lanka Fruit & Vegetable Producers, Processors and Exporters Association

Download - Government of Sri Lanka NATIONAL EXPORT STRATEGY OF SRI ... · Technical assistance for the design of this document was provided by Charles Roberge, Alexandra Golovko, Ayanthi Gurusinghe,

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