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Thursday, 7 August 2014 00:21 - - {{hitsCtrl.values.hits}}
Value and volume
Zaheed also spoke of two issues that needed to be fixed to greatly improve the export market for locally grown fruits and vegetables.
According to him value addition can increase marketability and the price international customers will be willing to pay for exotic fruits by a considerable amount and developing the capacity of local farmers producing these fruits and vegetables to meet the export market needs will open up new export opportunities.
Zaheed conveyed this point by saying, “In Shanghai we see fresh fruit in value added form, some of those fruits are sourced from countries like Ecuador and South America and avocados are sold for about $ 4-5 per fruit. They have an amazing middle class with huge buying power. The Sri Lankan Pine Apples provides interesting market opportunities we can plug into if we can provide the volume. They don’t want to buy a few cartons they want to buy five containers and they want this every month. The opportunities are out there if we can produce the volume.”
Creating trust
Speaking of Nestlé’s own integrated business practices, Nestlé Lanka PLC Managing Director Ganesan Ampalavanar said, “Shared value is not a CSR project. It’s the way we do business. It’s built on the fundamentals of compliance, sustainability and creating shared value. We’re influencing 20,000 families directly. This trust factor is huge and 90% of our collection is outside the Western Province.”
He also reiterated the importance of integrated growth mentioned in the keynote speech saying, “If the economy wants to grow at $ 7,000 per capita it cannot be centred around the Western Province. There has to be an inclusive growth model which structures around a majority of Sri Lankans.”
Building trust among customers is also an important part of taking these industries to the rural areas as E-Wis Information Systems Ltd. Chairman/CEO Sanjeewa Wickramanayake spoke of how this has been an issue he has taken great steps to overcome.
“I take my Colombo customers to Hambantota every Friday. We have taken over 200 customers and had some fantastic presentations. For me the trust is in Colombo. We should be willing to share business available in Colombo with the regions.”
Addressing social issues
Selyn Handlooms Director – Business Development Selyna Peiris pointed out that when integrated with the rural culture the industry can be used to uplift the society and deal with various social and environmental issues.
“There are many human and environmental issues that we can address through this industry. We run as a social enterprise. We use a commercial strategy to maximise the influence towards people and the environment as it’s the nature of our business.”
She added to this point by saying: “There are about 1,000 people working with us, most of them are between 45-60 years in age. Women of this age would usually have no opportunities to work and face problems such as alcoholic husbands, an abusive set up and a restrictive culture. They can stay at home and be with their children, and not have to go abroad to work. On a good month our workers earn about Rs. 30 to 40 thousand in the comfort of their own homes.”
Economic scale
The panel provided ideas on how to meet the challenges faced when competing with countries such as India that cannot be matched on the economic scale. According to Zaheed, the solution can be found in bulk production and focusing on niche markets.
“The solution is twofold, we need to focus on bulk product, catered to the big processes in countries like the US and, focus on profitable niche markets. We need to constantly find ways to put down your cost of production. Doing a lot of research and development and putting the cost down will help. We should also look into branding, value addition like Dilmah has done. This is a path we will take as we go on.”
Also with labour in countries such as China becoming more expensive, Sri Lanka can focus on cost reduction and productivity and place itself in a position to compete with market giants, as Wikramanayake pointed out. “China is getting expensive. Competing with China, we are on par with them in some aspect such as quality and by increasing our productivity, we can achieve more. We used to manufacture about 60 computers a day and we have increased that to about 520 computers a day.”
The matter is not so simple for industries such as handloom where the value of the product requires the preservation of the traditional modes of production. As Peiris added, “Handloom is labour intensive. We used to hand dye but now we use machine. We can’t achieve a very high level of efficiency because hand loom requires that it needs to be handmade. The demand is there but we have to say no some of our biggest clients and chose to be more into a more specialised, niche fair trade kind of markets.”
Becoming self sufficient
The total dairy requirement of Sri Lanka is about 990,000 litres and the actual collection is still only at around 284,000 litres which is still a long way away from being self sufficient. As Ampalavanar pointed out, “We have a long way to go before we become self sufficient. The government wants to make Sri Lanka self sufficient. I think we are on the right trajectory but it won’t happen as fast.”
He added: “We need to be part of the solution rather than the problem. We buy at a higher rate from the farmers even if the world market is cheaper. This is a huge commitment on our part. The government is supportive of this but the solution cannot come from nestle alone. There are four to five other private sector of milk collectors. Perhaps by forming a consortium all of us can make a huge commitment, not turn down even one litre.”
Land allocation
Considering the issue of land allocation, Wickramanayake reflected on challenges he had to face when moving his factory to Hambantota,
“Though we say we want to go to the region the question is the region ready to accept us? Bad publicity in the media about companies and factories has made the people in those areas think it’s something is wrong. I have had to deal with issues like, ‘do we produce radiation in our factories?’ I had to go to the villages and allow groups to visit my factory and got tests and certification”
As Peiris added, drawing examples from the Seyln production strategy, “We convert their homes and part of their land into factories. If you are to venture into any kind of business I think it will be a challenge to have such an access. Reception to change is difficult and you have to cater to their needs and not your needs.”
Ampalavanar added to the discussion saying, “We need to make Sri Lanka the easiest place to do business in the South Asian region. We should not look at India, but Thailand and Malaysia who are both ahead of us in ease of doing business.”
