Fruit and vegetable processing Food technology and machinery Food ingredients Packaging techniques Organic farming Organic produce Tea exports Agro chemicals Herbal products Manufacturing & trading FMCG products Other

Exploring Dutch investment & trade opportunities for Sri Lanka !

Historically Sri Lanka was predominantly an agricultural society. The agricultural sector still holds a prominent position with a contribution of 18% to the country's GDP.

However the demand for the traditional exports such as tea, rubber, spices etc are being fiercely challenged by more competitive suppliers in the region. Therefore whilst the production of agricultural commodities remains greater focus is being shown to master value added Products, to create a competitive niche for the local produce. Marketers of agricultural products have agreed that Sri Lanka has become famous, not only for producing quality products but for producing cleaner products by adopting sensible production methods. Tea, Spices, coconut kernel products, some varieties of yam, fruits and vegetables fall into this category.

Sri Lanka has been famous for its spices since ancient times.. and it was this repute that brought the Dutch to our shores several centuries ago. The important spice crops in Sri Lanka comprise cinnamon, pepper, clove, nutmeg and mace. Many small scale enterprises have become reliable suppliers to the world market. Most enterprises have received ISO 9000, HACCP and GMP certification from the Sri Lanka Standards Institute that acts as the certification body in Sri Lanka.

A wide variety of tropical, sub tropical and temperate fruits and vegetables are grown in different agro ecological regions in Sri Lanka.

Exploring Sri Lankan investment & trade opportunities for The Netherlands!

Potential areas for Trade

The Netherlands is the fourth largest importer of tea within the European Union and 16th largest importer in the world. Imports stayed mostly unchanged between 2001 and 2005, totaling EUR 59 million / 33 thousand tonnes. Imports of black tea increased by 2% annually. The four main tea suppliers are Germany, India, Sri Lanka and Indonesia. However only India and Germany expanded their import market share. Whilst Netherlands is dependant on these countries for the raw produce it has several major players who have mastered the art of tea processing. The Pure Black tea holds a large market share of about 70% but has been declining in favour of fruit and herbal teas. Herbal teas are becoming a part of the mainstream tea market, and many different kinds are sold at supermarkets. Sri Lanka’s tea industry had marginal growth. Whilst Sri Lankan companies in the tea trade could look to develop the Dutch market by exploiting the repute of Ceylon Tea as the “best tea in the world” they could also explore the opportunities to tie up with a Dutch partner for flavoured and herbal processed teas.

Growing interest has been evinced in Coconut toddy. The traditional beverage of Sri Lankans for over twenty five centuries, Toddy is obtained by tapping the young flowers of the coconut palm. Yeast present in the sweet sap ferments the sugar into ethyl alcohol. Toddy contains proteins, vitamins, minerals and 6.8% ethyl alcohol. Processed king coconut drink, the refreshing water found inside the nuts of the king coconut palm has been a Lankan favourite for centuries. The Medicinal uses of king coconut milk in preventing dehydration, increasing blood circulation and acting as a Urine antiseptic are being explored as differentiators that could well create a competitive advantage. Organically cultivated and processed spices have a rising share in the world market. There is potential to export spices in value added forms such as powders, mixes, essential oils and oleo-resins. As the world's largest producer of true cinnamon, accounting for more than two thirds of world production, Sri Lanka has the potential to add more value to cinnamon by making powders or tablets which have a high demand in South America and Europe. Sri Lanka has already produced and exported two value added products from 'goraka' and 'gotukola'.

A key import sector from the European Union is prepares foods stuffs; beverages, spirits & vinegar, tobacco and manufactured tobacco substitutes.

In the year 2006, there was a significant growth in the import of Potato seeds to Sri Lanka. The total import value of potato seed from the 25 EU member states was 1.4 million and the Netherlands was the main exporting partner at EUR 1.1 million.

Other products of significant value imported to Sri Lanka was the inflow of

• EUR 3.6 million preparation of cereal, starch, milk; pastry cooks
• EUR 2.6 million worth of sugar and sugar confectionary products
• EUR 1.3 million coco & cocoa preparation products

Potential areas for investment includes supply of inputs, development of physical infrastructure, transfer of technology and provision of support services in particular and agriculture in general.

Supply of Inputs

Netherlands could make a significant contribution by assisting in the produce of high quality seeds/planting materials, commercial seed production (eg. hybrid seeds) and propagation of high quality planting material using bio technology such as tissue culture and grafting. The supply of Packaging materials, Bio Fertilisers, Tools and machinery used for Agriculture and Agro industries are also areas which could do with Dutch input and expertise.
The supply of Packaging materials, Bio Fertilisers, Tools and machinery used for Agriculture and Agro industries are also areas which could do with Dutch input and expertise.

Development of physical infrastructure

Dutch prowess in logistic organization would be of added advantage in areas of properly designed and well managed market places in strategic locations with parking, water, electricity, toilets and access roads, production of Cold storage facilities, Pre-cooling facilities, Warehouses and Facilities for sorting, grading and packing, Expertise and input in designing/sourcing refrigerated or air conditioned transport for horticultural and other perishable products and industrial sites with specialized warehouses, cold storage and waste disposal facilities that the agro-industries require are also of great import.

Technology transfer

Dutch know-how in Intensive cultivation under controlled conditions : cultivation of high value crops such as bell pepper, strawberry etc. and also tissue culture plants under green houses, poly tunnels, with drip irrigation and the use of advanced technology for fertilizer application has great viability in the Sri Lankan context. Insights to developments modern packaging technology, Processing and value addition Food products and Processed fruits and vegetables: Canning and bottling would be greatly beneficial to the Sri Lankan economy.

• Food & nutrition power house : natural, nutritional and high-quality products and ingredients.
• Specialized baby food and clinical nutrition products.
• Specialized process food
• Expertise in R & D (research & development ) : product innovation.
• Equipment for food processing and packaging

Support services

• Public-Private research/extension programs on cost-sharing/ costrecovery basis
  
• Cost recovery based testing and certification: various inspection, testing and certification services in the food and agricultural sector.
  
• Forward contracts: for agricultural produce to guarantee an acceptable price for both the seller and the buyer in the market.