By: Staff Writer

January 21, Colombo (LNW): Sri Lanka’s dairy industry is facing a major crisis, with around 14,000 small-scale farms shutting down and milk production declining sharply as revealed by the Committee on Public Accounts (COPA) in Parliament.

The country’s liquid milk production has dried up in the wake of US intervention to boost industry with a grant of US$27 million two years ago..  

While officials from the State Ministry of Livestock Department blamed the closures on animal theft, the MPS expressed skepticism.

They argued that other factors, such as the destruction of grasslands and land-related issues, likely played a more significant role.

The COPA emphasized the need for the Department of Animal Production and Health to maintain accurate and clear data on the industry. This data is crucial for understanding the root causes of the crisis and formulating effective policy responses.

Minister of Agriculture Mahinda Amaraweera, who also attended the meeting, acknowledged the decline in milk production received by Milco, the country’s largest dairy processor. He stressed the importance of implementing the Artificial Insemination Programme and formulating a National Policy on milk production to address the challenges facing the industry.

The death of 104 Australian goats imported for breeding raised concerns about animal care practices. COPA members urged the department to ensure proper care and management of imported livestock to prevent similar incidents in the future.

 The Diary industry in the verge of collapsing two years after U.S. and Sri Lanka signed a Memorandum of Understanding (MOU) with the Sri Lankan Department of Agriculture, for a $27 million project that aims to double the milk production of Sri Lankan dairy farmers participating in the U.S. Department of Agriculture’s “Food for Progress” initiative.

In close partnership with the Government of Sri Lanka, the project began in late 2017 and has already benefited 25,000 Sri Lankan dairy farmers, increasing their milk production by an average of 68 percent to date.

 An estimated 80,000 Sri Lankans will ultimately receive assistance from this program, as part of the United States’ continued efforts to support food security and economic growth in Sri Lanka.  After unforeseen delays including the COVID pandemic, the U.S. Embassy and the Sri Lankan Department of Agriculture finalized this partnership agreement . 

Ambassador Chung stated, “This $27 million contribution is a prime example of the United States’ multi-year commitment to promoting sustainable economic development in Sri Lanka. 

Food for Progress’ Market-Oriented Dairy Project partners with a U.S. non-profit organization called the International Executive Service Corps to help Sri Lankan farmers increase dairy production by providing them with the skills they need to improve farm operations and management.

It will also provide better access to financing, so farmers can expand their businesses and reach new markets.

By: Staff Writer

January 21, Colombo (LNW): Sri Lanka is implementing geographical indication (GI) for cinnamon, where the country has a 90 percent market share, with 45 farmers and processors being formally recognized in an initiative supported by Washington-based International Finance Corporation, palmation industry ministry sources said.

Sri Lanka cinnamon obtained GI certification in 2022 with support from the UN Industrial Development Organization (UNIDO). The certification provides a competitive advantage, helping increase market differentiation, and allowing for a premium price from the consumer.

“To better position and promote high quality exports of Ceylon Cinnamon, the IFC … recognized the first batch of Geographical Indication (GI) certified Ceylon Cinnamon growers in the country,” the IFC said in a statement.

“We want to better position this unique spice for the authentic, quality it brings by reaching across high-value global markets,” said Alejandro Alvarez de la Campa, Country Manager for IFC Sri Lanka and Maldives.

As part of the project, market research provider Euro monitor International carried out an assessment to identify high-value markets for Ceylon Cinnamon. Australia, Brazil, Germany, UK and the USA were identified as potential markets.

Sri Lanka is establishing a dedicated Department for Cinnamon Development to support the growth and exports of cinnamon. The new department was proposed by President Ranil Wickremesinghe and Plantation Industries Minister Ramesh Pathirana.

President Wickremesinghe highlighted cinnamon’s potential as a valuable economic crop during the 2023 budget announcement. He said that cinnamon is one of Sri Lanka’s most important export crops and that the new department will help to boost the industry and create jobs.

The Department for Cinnamon Development will be responsible for a range of activities, including: providing technical assistance to cinnamon producers, suppliers, and exporters, promoting research and development in the cinnamon industry,marketing cinnamon to new markets and  improving product quality and value through diversification.

The establishment of the Department for Cinnamon Development is a welcome move for the Sri Lankan cinnamon industry. The industry has been facing some challenges in recent years, including a decline in exports and competition from other countries. However, the new department is expected to help to address these challenges and boost the industry.

Ceylon cinnamon, which is native to Sri Lanka, is considered to be the finest quality cinnamon in the world. It is known for its delicate flavour and aroma. The new department will help to promote Ceylon cinnamon to new markets and ensure that it continues to be a valuable export crop for Sri Lanka.

By: Staff Writer

January 21, Colombo (LNW): Export Development Board (EDB), Sri Lankan Universities and Associations Joined forces to strengthen ornamental fish Industry and boost Exports.

Since its establishment, the Sri Lanka Tropical Fish Exporters’ Association (SLTFEA) has maintained close collaboration with essential stakeholders, including breeders, growers, suppliers, and diverse Governmental and non-Governmental entities, to ensure the protection of the industry.

Although Sri Lanka’s ornamental fish exports are currently limited in quantity and value compared to its total exports, there’s enormous untapped potential in this sector.

This potential is due to the country’s rich diversity of 111 ornamental fish species thriving in various aquatic environments, including freshwater, brackish, and marine habitats.

A collaborative effort led by the Export Development Board (EDB) alongside Sri Lankan Universities, The Tropical Ornamental Fish Association and Sri Lanka Ornamental Fish Farmers’ Association have organized a one-day workshop on 11th January 2024.

The main aim of this workshop was to help improve the export potential of ornamental fish, support grassroots development, and enhance the abilities of exporters.

This initial stage of the workshop is directed at esteemed universities such as Uwa Wellassa University in Passara, University of Ruhuna in Matara, Rajarata University of Sri Lanka in Anuradhapura, and University of Wayamba in Kurunegala.

The day-long program has covered several essential topics, discussing selected research findings. Areas of focus include live feed production, Best Management Practices (BMPs), high-density packaging, aquatic plants, aquascaping, and insights into export procedures.

Sri Lanka has gained recognition in the global market for exporting top-quality tank-bred fish and wild-caught marine species. In 2022, the Sri Lankan ornamental fish industry achieved impressive annual export revenue of USD 22 million.

While 70% of the overall production comprises freshwater fish species, there exists substantial room for further growth. Expanding production and enhancing quality standards are crucial to meet the current global market demands and standards.

The ornamental fish industry comprises various stakeholders, including fish breeders, farmers, out-growers, middlemen, collectors, and exporters from different parts of the island.

However, operating within a highly unpredictable business environment poses continuous challenges.

The major hurdles often encountered involve a lack of initial knowledge, lower production quality, and insufficient fish feed supplies.

 Overcoming these challenges is vital, as it aims to provide the necessary support to these stakeholders, enabling them to enter and thrive in the competitive international market.

A recent report shows that in 2022, the export value of ornamental fish reached Rs. 7,143 million. The market for these fish was valued at $ 6.8 billion in 2019 and it is estimated to grow significantly, reaching around $ 11.3 billion by 2025.

By: Staff Writer

January 21, Colombo (LNW): Successful implementation of the Master plan for Consolidation of Non-Bank Financial Institutions (NBFIs) introduced by the Central Bank in the latter part of 2020 helped to build the confidence of the sector.

On the non-bank finance companies, the Central Bank will implement what it referred to as phase II of the master plan for consolidation of the sector, commencing 2024.

It said that under phase I of the master plan, which is nearing its completion, it watched seven transactions being fully completed, with another two underway.

While reiterating once again the importance of consolidation in the banking sector for higher scale, efficiency and strength, the Central Bank said it is going to implement the second phase of the consolidation master plan for the non-bank finance company sector in earnest.

However, the continued need for consolidation exists in the licensed finance company LFCs sector to ensure resilience.

Further, the Central Bank also intends to bring amendments to the existing regulatory framework of the sector, considering the current market developments. 

Therefore, Finance Business Act No. 42 of 2011 and Finance Leasing Act No. 56 of 2000, which together cover most of the functions of the non-bank finance sector, will see the introduction of or being revisited of their rules and regulations to improve the sector stability while strengthening the supervisory review process.

Consolidation in both the banking and non-bank finance company sector has been a recurring theme during most of the recent communications by the Central Bank, as it aims at further strength and stability in the two sectors, particularly at the latter, considering some pockets of weakness there.

Announcing the medium-term monetary and financial sector policies for 2024 and beyond, the Central Bank last week said it expects to facilitate market-based consolidation among small and mid-sized banks or between them and other suitable financial institutions via mergers and acquisitions.

Prior to 2015, the banking and non-banking sector embarked on what some referred to as forced consolidation to build five larger banks and 20 large finance companies in the country, to make them ready to fund the mega projects in post-war Sri Lanka.

However, the approach changed from a more of a regulator-driven consolidation to market-driven consolidation from 2015, with the new government coming into power, although the results were slow and less.

Although this took a back seat during the last couple of years, due to the pandemic-driven stresses and resulting economic crisis, which put an enormous strain on both sectors, Central Bank Governor Dr. Nandalal Weerasinghe said their next big focus is going to be the banking sector consolidation, soon after restoring the strength and stability of the sector in its current form.

January 21, Colombo (LNW): The International Monetary Fund (IMF) has expressed cautious optimism regarding Sri Lanka’s economic recovery, emphasising the pivotal role of tax reforms and fiscal discipline in navigating the nation through its profound financial crisis.

IMF Senior Mission Chief to Sri Lanka Peter Breuer underscored the significance of tax administration in addressing the revenue shortfall that has contributed to the ongoing crisis.

He called for heightened compliance, condemning tax evasion and emphasising that any uncollected taxes increase the burden on other taxpayers.

Breuer commended the Sri Lankan government’s commitment to halting further tax concessions and highlighted planned reforms to enhance transparency in this regard.

Notably, the tax revenue-to-GDP ratio has decreased from 11 per cent in 2019 to a mere 7 per cent in 2022, resulting in a substantial funding gap.

The IMF mission chief outlined an ambitious trajectory for increasing tax revenue, targeting 9 per cent of GDP in 2023, 12 per cent in 2024, and 14 per cent in subsequent years.

While acknowledging the challenges posed by tax increases, Breuer emphasised their necessity for Sri Lanka’s long-term financial stability.

He provided details on the government’s reform measures, citing changes to personal income tax and corporate income tax implemented in 2022.

He also mentioned the planned introduction of a progressive property tax in 2025, emphasising its role in creating a fair taxation system where those with more valuable properties contribute proportionately higher taxes.