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| Wednesday, 1 September 2004 |
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Mouth-watering economic potential in Lanka's processed food by Chandani Jayatilleke
By 2010, thirty Sri Lankan companies should be coming to the forefront of the world's food processing industry. This is the target set in keeping with the National Agri Business Council's mission to create one million additional jobs, in the rural areas of Sri Lanka. To achieve this, the industry has set a fast track and about 10 companies have already taken this challenge quite industriously. Sri Lanka has plenty of processed food companies ranging from small to large. "But at present we have only about 10 companies taking this challenge. These companies are into the biscuit, chocolate, spices and the ice cream business," Mario de Alwis, Past president, Sri Lanka Food Processors' Association and an active member of the industry told the Daily News. Having set the target, Sri Lanka is largely looking at the regional market rather than the European markets. The regional market is seen as being 'very promising'. "We have a consumer base of over two billion in the region, of which 25% can afford processed food. So far, we have been concentrating on European markets and not looked at the regional market in a significant way," de Alwis said.
According to current statistics, the processed food market in Sri Lanka is about 2 to 3 million urban consumers. "This alone is not a healthy situation. We have to go beyond this point to a larger market area, which in turn, would help our farmers in a great way," he said. Building a 'brand image' is a huge task for the processed food industry. Keeping this in mind, the processed food industry has launched an annual event. Named Pro foods, Pro pack 2004, the event was held at the Sirimavo Bandaranaike Memorial Exhibition Centre recently for the third year. It was organised by the Sri Lanka Food Processors Association and the Sri Lanka Institute of Packaging in partnership with the Federation of Indian Chambers of Commerce and industry. "The purpose of this event was to establish a brand image for the industry and make it as our window to the regional food chain and offer incentives to buyers. In the event of creating a local brand image we have achieved a lot. This was evident at the show as many local visitors came to our stalls and discussed our products." In this year's event there were established brands, large and medium companies and many small-time producers too. There were also a good number of foreign companies, many from India. "We believe that foreign companies should also participate in such events, so that we get a better idea of our competitors and products," he said. Undemanding consumer Our biggest challenge in the industry is the 'undemanding consumer'. Our consumers are not demanding more value addition and effective regulations in the processing food sector. Consumers should make an attempt to know more about the companies that produce their favourite brands. "Consumers should also have a basic idea about how much the Government is getting from the company, how much the company earns as foreign exchange, and whether the companies give better prices for the farmers for their goods. This will help create a better dialogue between the producer and the consumer.If this is done, it won't be that easy for a company to take the consumer for a ride. Our consumers should organise themselves to make these demands," de Alwis said. Higher standards "As long as consumers accept a product given by the producer, without question, they will continue to produce the same. At the same time, the consumers also should support local manufacturers, by purchasing locally produced items. They should also read labels beyond large texts, and ensure that the brands they support come from the companies which follow ethics and pay their taxes and stick to good governance practices. They should also check if these companies support the local communities as a social responsibility." Healthy processing Certain sections of the consumers have negative ideas about processed food. However, processed food in the modern day is prepared under strict hygienic conditions. In the early days, food was processed in two ways - drying (dehydration) and salting. Then, man discovered the freezing method, then came preservation by adding chemicals and the latest is the safest - sterilisation which is a natural method. Without additives, we can totally take the bacteria away from the food through this process. But this has to be done with utmost care. Does it affect nutrients? No, there are methods to do this process under lower temperature in a acceptable gas system, so that nutrients can be protected, de Alwis said. To ensure quality and the standards of the processed food, the industry conducts food excellence awards, on an annual basis. Producers "As producers we need to strengthen our bonds and learn to share knowledge, techniques etc. We should also try to give the best to the consumer rather than securing benefits through unethical means. We should not offer substitute products for a lesser price. The industry also needs to work within the supply chain and create good traceability. The manufacturers should help the national effort to create employment, support the rural supply chain, and help reduce the cost of living whenever, possible. There are certain companies which are not paying taxes. They give price reductions which are very unfair by the tax-paying producers. Industry developments Coinciding with the Pro foods, Pro pack event, there were programs to educate the industrialists in technology and export markets - how to export to the EU, the product line and quality etc. "We got down two foreign experts for the workshop. And our counterparts in the packaging industry are also involved in many different activities in this connection. These were being organised to impart knowledge and proper industry practice." Unfortunately we don't see knowledge being valued in our industry. This is why we have not done well in certain agricultural industries. We have been pressurised by many competitors in East Africa for tea, Thailand and the Philippines for coconut, Thailand, Indonesia and Malaysia for rubber, and Vietnam for spices. We had a share of 6% in the world market in these sectors earlier, but today, it has gone down to 1 to 1.5 percent, he said. To address some of these issues, three years ago, the industry set up a Task Force. We also started working with the BIMSTEC-EC. Since we took over the chairmanship (because we wanted to do better) we have achieved several firsts. Now there is another challenge - how to take it further. We have a small base and a small market within the country. Therefore, we need to break into the regional markets. We also have uneven tax structures. We have conservative banks. We pay bigger interest rates. We have high electricity charges and we have inexperienced management to work with. Specially in small-time industries, when young graduates get trained to handle management jobs, they move to big companies. Many small companies always lack management experience. Future "We need the Government to recognise the processed food sector as a value addition sector. We need to import certain raw materials to support the industry, for instance, coriander. We have a monopoly glass industry and they have limited designs. With these designs alone, we cannot compete. "We also have a plan to revive some large companies which have been closed due to financial and management constraints," de Alwis said. |
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The region also receives more than 30 million tourists a year. Thailand
alone receives 10 million tourists. "Considering these numbers, South
and East Asia is a potential market for quality processed food," he
said.
