Rishad, officials barrel down to world’s largest lentil op to stabilise Lankan FMCG sector

Saturday, 8 March 2014 00:00 - - {{hitsCtrl.values.hits}}

70% lentil imports are in “whole”, needs processing
You have done good work for the industry: Rishad
Better tariff can help our lentil production costs: PS&PI’s Dr. Saleem
This processing is more complex than we initially thought: Secy Anura

What has now become the world’s largest red-lentil processing operation, set up with an initial push by the Ministry of Industry and Commerce that called on 5 March for urgent Ministerial attention on the national lentil tariff structure. With his top officials, Minister of Industry and Commerce Rishad Bathiudeen speeded to a technically sophisticated lentil plant in the Colombo suburbs on 5 March as a result to assure the stability of the domestic FMCG market due to any potential shortfalls. “We have now almost lost our cost advantage due to recent tariff revision given to split red-lentils. We import whole red lentils and this recent tariff advantage is not given to such imports. We import, process the whole red lentils to become split red lentils right here in Sri Lanka by our $ 7.2 million sophisticated plant, which is the world’s largest red-lentil splitting facility with nine running production lines with its own powerful colour sorter,” urged Pulses Splitting & Processing Industry Ltd. Chairman Dr. A.C. Saleem located at Gonalawa, Sapugaskanda. PS&PI’s Dr. Saleem was addressing Minister Bathiudeen and his top officials who made an urgent visit to the $ 7.2 million value addition plant operated by Pulses Splitting & Processing Industry Ltd. According to Dr. Saleem, his privately owned Pulses Splitting & Processing Industry Ltd. is a major player in Sri Lanka’s agro-commodity sector, supplying sorted quality red-lentils under two brands-“Leaf” and “Trophy”; the BOI considers the operation as a national asset; it is the only one of two agro-processing BOI ventures in Sri Lanka (other BOI venture in agro-commodities processing being Prima Ceylon Ltd.). PSPI is specially licensed to issue its output to the domestic market due to the importance of red-lentils to Sri Lanka, which is a staple food in Sri Lanka second only to rice. Lentils are also at the top tier of the 12 food items list in Sri Lanka, and is categorised as “essential”. PSPI has more than 55% of Sri Lanka’s annual domestic red-lentil market share by its processing of imported whole red lentils and processing them right here with a value addition of 15% or more. Red-lentils are a widely used staple food in Sri Lanka and the majority of Lankan households consume it at least once a day. In 2011, on average, Sri Lanka imported $ 6.3 million of whole red lentils/ Masoor dhal per month while $ 2.2 million is spent monthly for split red lentils. More than 70% of red lentil import expenditure went to whole red-lentils. From 2008-2013, Sri Lanka’s red lentil consumption has grown by an estimated 20% from its early totals. “We registered with the Ministry of Industry in 2007 for a manufacturing license. At the start the duty for our whole lentil imports and split red lentil importers stood equally at Rs. 6 per kilo but this was not sustainable for us since we have processing costs. Once we made representations to the Government, they realised that we are a national asset under BOI due to our 55% supply strength our ability to prevent market price escalations and in 2008 we were afforded a new HS code with tariff protection of Rs. 4 less in comparison to tariff of split red lentil importers (at any given time). “This measure helped us to grow our industry, giving employment to more than 300 and we thank the Government for the continuous relief and support to our industry. These reliefs ultimately help the Lankan consumer so that red lentils market is always stable with affordable prices-We continued with the next six years of hard work and created the world’s largest red-lentil processing facility in Sri Lanka that you see today. Agro commodity processing students from Canada, US, and Australia are now regular visitors to our $ 7.2 million value addition plant for their study field tour. The other countries are now learning from us about pulse processing. But on 6 February 2014 the revision on red-lentil import tariff closed our cost advantage and now we are unable to supply to the domestic market at the same affordable rate to Lankan consumer. Minister Bathiudeen, we have now almost lost our cost advantage due to recent tariff revision given to split red-lentils. We import whole red lentils and this recent tariff advantage is not given to such imports. We import, process the whole red lentils to become split red lentils right here in Sri Lanka through our plant, which is the world’s largest red-lentil splitting facility with nine running production lines with its own powerful colour sorter. We also contribute to exports by sending our excess production to Middle East. Also due to TIEP scheme support by the Ministry of Industry we secured export earnings of $ 89.5 million (Rs. 11.7 billion) for Sri Lanka since 2008 to the present. We urge Minister Bathiudeen and your top officials to intervene and help stop a possible price escalation of red-lentils in the local market,” said Dr. Saleem, and added: “International agro-commodity prices, including lentils, can be very volatile but more importantly, quick delivery of it is very challenging since any shortages in Sri Lanka cannot be met immediately until shipments come –which can take close to one month. But with our 12,000 ton total buffer stock capacity, thanks to the three 100 metre tall silos built at a cost of $ 750,000 with Swedish technology, we no need to place urgent lentil import orders-There is no need to worry since being the biggest supplier to Sri Lanka, we make sure we have at least three months’ buffer stocks of what we process here. But since this February’s tariff revision, we have stopped importing whole lentils for processing here as the import duty costs are causing losses for us, with our buffer stocks starting to be at unhealthy levels. As industrialists thankful to the government for support, we would like to keep the authorities informed of the urgency of this situation and we urge Minister Bathiudeen to intervene in this. Lankan lentil demand, especially with the arrival or large number of tourists after end of war, has grown almost by 30% in recent years.” “I am so pleased to see that a factory that started with my Ministry’s support in 2007 is today a world leader and even contributing to our exports. You make our industries proud. The Government’s pledge is to support contributing industries such as yours. Therefore my officials and I are always ready to assist you,” said Minister Bathiudeen. “I also assure you that the Government did not aim at imposing duties selectively and the February duty revisions were for the benefit of Lankan consumers in general. Still, I shall immediately request my top officials to start interacting with the relevant government agencies to address on your behalf. I shall also brief our Economic Development Minister Basil Rajapaksa in this regard,” assured Minister Bathiudeen. Secretary, Ministry of Industry and Commerce Anura Siriwardena said: “We are pleased to see your strong contribution to our industry development-specially in the technology you invested by yourselves. It is interesting to note that you are using state of the art tech to process lentils for the local market. No one believes that processing and splitting lentils is such a complex process-taking more than two days to process each lentil for the consumer with all the needed accelerators being infused at given locations. We shall commence liaising with relevant government agencies in this regard under the guidance of Minister Bathiudeen.” Also present on the occasion with Minister Bathiudeen were Additional Secretary, Ministry of Industry and Commerce Asitha Seneviratne.