Finding niche markets
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Aldoris’s tuk-tuk with its merry tune could be heard from the beginning of the lane this Thursday morning.Stopping at our gate, he greets the trio with a ‘good morning madam’ and proceeds to display his breakfast food. He was indeed in a happy mood compared to the trio grumbling about the rising cost of flour-based food.
“Aldoris, paan gediyaka mila rupiyal thunseeyata wedi welada (Aldoris, has the bread price gone up to Rs. 300 per loaf?” asked Mabel Rastiyadu.
“Oya langa thiyena okkama kaema wala mila wedi
wenna athi-ne (All your food prices would have gone up),” noted Serapina.
“Ne Miss. Paan piti wala mila wedi wela ne. Eka nisa ape mila wenas wela ne (No Miss, wheat flour prices have not increased. So our prices remain the same),” said an ebullient Aldoris.
“Eh, paan milata wenna ethi, eth wena okkoma deval wala mila ihala gihin. Balannako biththara mila den rupiyal 65k ne eka biththarayaka (That may be for bread prices but everything else has gone up in price. Look at the egg price which is Rs. 65 per egg),” added Serapina.
At this point, the home phone rang. It was Kalabala Silva, the often agitated academic, and his topic of conversation was exports.
“Why can’t we increase our exports and reduce imports?” he asked.
“Yes, that is the way forward. But I think we need to concentrate on niche product exports and focus less on mass market items,” I said.
From paper manufactured from elephant dung and waste material, hand-crafted teas which have an aroma akin to walking into a tea factory and speciality industrial tyres to garments with special fibres to tackle sweat or be sports-friendly…..….Sri Lanka is never short of exotic products. Then we have Dilmah teas which have captured world markets with their extensive range of specially-crafted flavoured teas.
I have been a keen follower of Maximus, a company manufacturing handmade paper and value added products out of elephant dung and other waste matter and exporting 90 per cent of its products. Started in the late 1990s in Kegalle near the Elephant Orphanage which produces a plentiful supply of elephant dung, the company also has production facilities in other areas where there are elephant gatherings.
Earlier this week, I attended an interesting event where handmade teas by a group of tea estates were being promoted in association with a popular hotel brand. The experts brewed different types of tea that are painstakingly made by workers, not machine-produced, and one particular product stood out: It was the aroma that reminded me of being inside a tea factory!
With import costs far outstripping foreign exchange earnings from exports – even though the cumulated trade deficit during January-July 2022 narrowed to $3,637 million from $4,922 million recorded over the same period in 2021 – the strident call has been to increase the export base. President Ranil Wickremesinghe voiced similar thoughts in the recent interim budget 2020 presentation.
Fellow columnist Prof. Sirimal Abeyratne has also repeatedly suggested that Sri Lanka should be an export-led economy not an import-led one and this should be done on an emergency footing.
In the meantime, the hotel industry is also now, in a bid to save foreign exchange, trying to locally source at least 90 per cent of food and beverages. Millions of dollars for example are spent on fruit (apples, grapes, oranges) imports and hotel groups like Jetwing are promoting local fruits.
Continuing our conversation, Kalabala recalled the famous cry in the 1980s of “export or perish” made during the tenure of the late Lalith Athulathmudali as Trade Minister.
“I remember some time ago, we had an Export Council of Ministers. We need to revive this structure,” he said, echoing similar sentiments made by National Chamber of Exporters of Sri Lanka (NCE) President Ravi Jayawardena during a recent ceremony to launch the 30th NCE Export Awards.
Thus the only way, most people believe, out of the economic and forex quagmire is to export, export and export. That’s the only way we are told, and that’s absolutely true.
As stated earlier, our exports are nowhere near import costs – in fact, import costs are more than double export values. Renowned economist Dr. W.A. Wijewardene, in a recent interview, said rather than follow the path of mass market products for export, Sri Lanka should cotton on to the global supply chain and feed products coming out of giants India and China. Traditional exports like tea or garments won’t bring us the results that we expect.
For example, electronics like mobile phones and laptops need parts and Sri Lanka can be a part of the supply chain. We need to import the raw material from abroad and add value through local labour and expertise. But for that to happen, Sri Lanka also needs to bring in flexible economic policies to import raw materials while at the same time allowing imports of products that are too costly to produce at home, even for the domestic market. Our niche market exports must reach a stage where merchandise exports and service exports like remittances, IT and tourism far outstrip import costs. That’s the way forward.
And for that to happen, Sri Lanka needs to prepare a check-list of niche market exports that the country can produce. With the 2023 budget presentation due in November this year, the government – as far as possible in consultation with other political parties and stakeholders – needs to immediately appoint a committee to prepare products and items that can be sourced locally to feed the global supply chain and present this list with suitable incentives to encourage investors. This should be presented in the budget. These details should also include potential markets (gathered with the help of trade offices in our overseas embassies).
We need a policy of importing products/produce that are cheaper for consumers here, rather than costly producing them locally and channel all our resources to producing high-value items that will compensate against the cost of imports.
Newer export items like IT services and tourism should be targeted to bring in a total of at least US$10 billion, several years down the road. But we need much more than that to transform the economy to being less reliant on imports – and like the example from the hotel industry – source as much as possible local items for consumption.
Winding up my column, Kussi Amma Sera brings in my second mug of tea, saying: “Paan mila wedi wela nethi eka gena api isthuthi wenna oney (Thankfully bread prices have not gone up).”
I nod in agreement but my mind is elsewhere: My wish list for Sri Lanka is for the nation to be transformed into a vital source of products feeding the global supply chain.
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