Sri Lanka’s canned fish industry on the brink of collapse
Sri Lanka’s canned fish manufacturers are now grappling to survive due to a flood of imported canned fish as a result of lowering import duty.
The Finance Ministry has reduced the import duty to Rs. 50 from Rs. 102 per kg bringing down the price of canned fish which has resulted in the flood of imported salmon tins in the local market.
These importers have been benefited by this move as they have been able to increase their sales by selling canned fish at a price lower than locally manufactured canned fish.
The gap between the selling prices of imported salmon tin and locally produced one was around Rs. 22, a local manufacturer said adding that Sri Lanka’s “import substituting” canned fish manufacturers have been hit badly due to drop in their sales.
Actor turned canned fish manufacturer Kamal Addaraarachchi, who is also the Secretary of Canned Fish Manufacturing Association, said that they have urged the government to increase import duty to the previous level and protect the local industry.
He noted that local manufacturers cannot compete with the large importers following the huge reduction in duty.
According to Sri Lanka customs statistics, canned fish sufficient for the whole year has already been imported and stored by local traders.
Sri Lanka spends US$ 64 million annually for canned fish imports, he said pointing out that five local manufacturers are supplying their products to the local market especially to Sathosa outlets at present.
He disclosed that it is very difficult for them to get their payments from Sathosa as its management is delaying it.
A group of leading commodity suppliers has already informed in writing to the President and the Prime Minister that Lanka Sathosa is delaying their payments running up to millions of rupees accumulated over the past couple of years.
They are also contemplating legal action against Sathosa management for breaching supplier’s contracts.
The state-run retailer is now trying to sell more high-margin grocery items in order to be profitable without paying dues to its suppliers, he alleged.
Importers are selling a tin of salmon at a price of Rs. 150 although the fixed price should be Rs. 160, he said revealing that local manufacturers are now on the verge of collapse.
“Our factories are now about to close down as the production is under-utilised at present due to large stocks being imported from countries such as China, Chile and Thailand,” he complained.
On the other hand these big traders are taking advantage of Document Acceptation system of commercial banks when importing canned fish in to the country.
Under this system they will be able bring down their stocks without spending a cent on the guarantee of repayment within three months, six months or one year.
It has given them a huge advantage in import trading, he said pointing out that it is essential to ban this system to protect local industrialists and prevent the foreign exchange outflow.
The Association has brought this practice to the notice of the Ministry urging the government to immediately prohibit it.
This would help to resurrect the local canned fish industry within one year, he said.