Financial Times

Plants, flowers being patented abroad by foreign firms
The dilemma of Lanka's floriculture industry
By Iromi Perera
Binara is a flower that is indigenous to Sri Lanka. Around seven years ago, a group of floriculturists from Denmark on a visit to Sri Lanka took back with them a sample of it, bred it, produced it and today has patented it.

This is not a rare occurrence as Sri Lanka has a very wide gene pool, which is not being made use of fully by local companies and therefore makes it difficult to prevent foreigners from taking them abroad.

There is no patenting procedure when it comes to foliage in Sri Lanka. This is a problem as Sri Lanka's many indigenous plants are being taken abroad and patented. Dilip De Silva, President of the Floriculture Produce Exporters Association, said that a lot of people protest that native plants are being taken abroad but nothing is really being done about it. When a company develops a new plant and sends it to another country, there's no stopping anyone from multiplying it and making money out of it.

The floriculture industry in Sri Lanka started around 23 years ago and was a very small industry with just a few companies. Today it is a very significant industry, touching close upon one billion rupees on exports last year. There are 3500-4000 people directly involved in the industry. While the floriculture industry was not taken very seriously for some time, its contribution to the economy was highlighted in last year’s budget.

According to De Silva, there is a huge growth potential for this industry in Sri Lanka. If this potential is fully met, the turnover can be doubled. The industry's global growth rate is about 15 per cent annually but in Sri Lanka it has been 4-5 per cent over the last few years.

De Silva says that there are a number of reasons as to why the industry is not growing at the rate it should be growing. One of the main reasons is that capital is extremely high in Sri Lanka.

Competition from China is also another problem, as cost of production there is low and they are supplying to the same markets as Sri Lanka. "If we are to bring down the cost of production we have to expand," said de Silva, adding, "But expansion is limited because of the finance problem." Freight costs are another major problem for the industry as there is no preferential rate for perishable cargo. The cost of freight is about 40 per cent of the selling price of the products.

The industrialists have been lobbying for preferential rates for many years. They believe that they could be much more competitive in the global markets if this is given.

"It is very difficult to grow as an industry when the government is inconsistent with its policies," said de Silva, speaking on the inconsistent policy issue in Sri Lanka, which is a major problem for this industry. He added that while companies may grow individually, it is difficult to grow as an industry.

Inadequate institutional support from government agencies such as the universities and the Department of Agriculture is yet another issue for the industry. De Silva says that there should be a unit where the exporters can go to if they have problems and get technical assistance, advice, etc.

One reason that Sri Lanka is surviving in the global markets is because of quality. According to de Silva, a good example is the Japanese market, which is more stringent on quality than the European Union. "This is where we have scored because our exports to Japan have increased in the last 5-6 years. That speaks well of our quality control," said de Silva.

There is a constant demand for new products and new varieties in the global market. De Silva says that all the local companies are doing 90-95 per cent of the varieties exported from Sri Lanka as there is a very wide gene pool in Sri Lanka, and a wide variety of plants, which can be made commercial products. This is quite beneficial to the Sri Lankan industry and must be made use of.

De Silva is the Managing Director of Serendib Horticulture Technologies (Pvt) Ltd, which was formerly Ceylon Tobacco Company Foliage, till it was disinvested by CTC in 1999. De Silva, who was the General Manager of CTC Foliage at that time, took over the company. The company's main project is in Kalagedihena, on 22 acres of land. There are also nurseries in Ambewella and Chilaw.

The company's research laboratory takes local indigenous plants and tries to make a commercial plant option from them. The main purpose of the laboratory is breeding. Two million plants that are developed at its tissue culture lab are exported every year and the company is hoping to increase this to three million in 2005-2006. It was started in March 2004 and is the only private research lab in Sri Lanka.

They export to Holland, Denmark, the Middle East, Japan and other countries. According to de Silva, the company is currently doing some joint ventures with some Middle Eastern companies.

They are working on a new concept and investing in tissue culture labs, which will be under the management of Serendib Horticulture and funded by their Middle Eastern counterpart.

The company was the recipient of three awards at the National Business Excellence Awards 2004 organized by the National Chamber of Commerce. They were- ‘Best company in the small sector,’ ‘Best Global Reach’ and Best Company in the Agriculture, Fisheries, Livestock, Mining and Quarries category.

Back to Business