Thursday, August 11, 2022
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Sri Lanka confectionery industry suffers 30 percent production drop

Sri Lanka’s confectionary industry has suspended the production of several of its most popular product ranges to prioritise the manufacturing of ready-to-eat items, which is becoming a popular option as the country continues to face severe shortage in gas.

As the cost of raw materials and fuel are increasing at a pace that industries cannot cope with, the Lanka Confectionery Manufacturers Association (LCMA) said stakeholders have started discontinuing production of ranges, especially easy-to-make desserts, and are instead focusing on keeping the production of items such as biscuits.

The confectionery industry has seen a 30 percent drop in overall production so far, as a reflection of multiple challenges they endured amidst the worst economic crisis.

The us $ 150-200 million worth confectionery industry — had been struggling for the past two years to import raw materials, deal with the exchange rate, source fuel and find containers to ship their goods to export markets on time.

“We have seen a 30 percent drop in overall production so far. With no concrete plan from authorities on how to fix the problems, the stakeholders fear the production will further drop to 40 percent by next week,” Lanka Confectionery Manufacturers Association (LCMA) President S.D. Suriyakumar.

Due to the shortage of ingredients, such as wheat, and increase in production costs, many manufacturers have halted operations. This has led to a drop in supply of confectionery items in the market.

The industry increased the price of its products by 30 percent last month. According to Suriyakumara, the hike has had little impact on sales.

“People don’t have a choice. There is no gas to cook food. Bakeries and eateries have closed down. Biscuits are a new staple now.

The LCMA head shared that following the further increase in the price of flour, which went up by Rs. 40 per kilogram yesterday, the industry has no choice but to pass it on to the consumer.

About 50,000 direct employees and over 500,000 informal workers have been discontinued due to the inability to maintain costs.

Suriyakumar said the initiative to promote confectionery products in new markets will be done as a private-public partnership (PPP) with support from the Department of Commerce.

“At the early stage of our export industry, our products were only sold in areas where ethnic groups were residing, but now our products are in leading supermarkets such as Tesco, Lulu and Walmart, to name a few. We export to over 50 countries at present,” he added.

In November 2021, the industry said they were looking to move production to more favourable overseas locations.

However, the decision was later reversed after considering the impact it would have on the livelihood of over 550,000 people engaged in the industry and overall economy.

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