Currency devaluation benefits processed food industry

Indunil HEWAGE

The devaluation of Sri Lankan currency will benefit the local processed food industry which has been battered as a result of lack of free market conditions in the last couple of years.

Exporters have not been able to maintain their competitiveness on a global basis as a result of this and exporters are now hopeful that there will be room for them to go for long-term investments without many hindrance.

Sri Lanka Food Processors' Association Past President Dhammika Gunasekara said as far as Sri Lanka is concerned, the outlook of the processed food industry is good. "However on a global basis the country is not in a position to earn more dollars for many exporting food products. The depreciation of the Lankan Rupee will somewhat help exporters to address pressing issues in the industry," he said.

Nevertheless, efficient factors particularly, labour, energy, underutilization of lands, cost of capital, insufficient use of advanced technology will be the other factors which hold back industry growth to a great extent.

The Rs 338 million local processed food industry is grappling with the unavailability of research and development activities and the inability to commercialize the existing R and D into a practical way. Even though the government spends a large amount of money to provide the fertilizer subsidy for agricultural products, production of agriculture industry is not sufficient to cater to the local demand as well as export requirements. Hence, potential investors are reluctant to put money on mega projects as a result of lack of raw material input in the country, Gunasekera said.

Gunasekara said the processed food industry exports' rose in the recent months attributable to increased food exports volume such as coconut and spice.

National Chamber of Exporters of Sri Lanka President Sarath de Silva told Daily News Business that the underutilized and neglected plantation lands if allocated to the Sri Lankan entrepreneurs, as proposed by the budget, can solve the raw material production base required in a agricultural economy like Sri Lanka.

A special university for skills education which will enhance the quality and practicality of our outcoming youth and their willingness to work in any field is also very positive.

SME entrepreneurs and students oriented towards Research and Technology now has access to the university, almost free to do the research which otherwise would have cost them and, the reduction of taxation thereon is also a very positive factor, he said.

The depreciation of the Rupee by 3% is a very appreciative step.

"Even in the case of low yielding, undeveloped varieties of fruits and vegetables, the importation in collaboration of research institutes abroad and under the inspection of the Sri Lankan experts, the mother stock of the planting material is a must and, we see in this budget, room to work with these aims and, the same extents of Mahaweli bank or the recently liberated North and East lands, if cultivated with the use of proper technology, with a stress on organic and where possible avoidance or use minimum balanced chemical usage, we would be the leading rice exporting country in no time ," de Silva said.