Financial Times

Hayleys conglomerate to benefit from agriculture tax breaks, expands production of vegetables
Tax benefits for agriculture announced in the budget will have direct benefits for the Hayleys conglomerate which is heavily involved in the sector. The five-year tax holiday for agricultural products effective from next April would be "very useful", according to Hayleys director Rizvi Zaheed. "The budget tax exemption is going to tremendously benefit our agriculture initiatives as they would be income tax free," he told The Sunday Times FT in an interview.

"Investments in agriculture involve a lot of risk in money and time. These tax benefits will encourage companies and entrepreneurs to enter the field and make it easier for them. And it is profitable as our experience shows. The key is to find the right model." The exemption of VAT on agri-seeds and plants would also have "very direct benefits," Zaheed said.

Zaheed, the Hayleys director in charge of the conglomerate's agro and consumer groups in its Inland Marketing sector and for Quality Seed in the agriculture sector, said their agriculture initiatives started about three years ago. The company was now planning to expand production after adaptive research and field trials proved successful in developing high yielding varieties of vegetables that can be grown in different agro-climatic regions and have export potential.

The trials help farmers to produce vegetables of consistent quality and in the required volumes all year round. Hayleys has an extensive out-grower network and it aims to expand production of vegetables and process them for exports to feed its subsidiaries like HJS Condiments, which supplies fast food chains like McDonalds and Burger King.

Hayleys already accounts for 20 percent of Sri Lanka's fruit and vegetable exports although the contribution to the group from its agriculture sector firms is still one of the smallest. HJS Condiments, 20 percent owned by Sanyo Food Products of Japan, is the largest exporter of gherkins from Sri Lanka and the second largest exporter of gherkins in Asia. It bottles fresh and pickled gherkins, silver skinned onions, chillies, pumpkin paste and other exotic vegetables.

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