State farms to be seeded with private capital

By Asantha Sirimanne

The Public Enterprise Reform Commission is hoping to stimulate the non-plantations agriculture sector by bringing in private capital and new technology to seed production, and commercial farming.

The PERC is currently short listing bidders to the Pelwehera and Hingurakkoda seed paddy farms.

"We are hoping to attract some value added type of investors who can bring in new technology," PERC Director General Mano Tittawella told "The Sunday Times Business."

More than a dozen private companies have so far expressed interest in the two farms. The two farms will be test cases in a programme to privatize a number of other commercial farms owned by the agriculture ministry.

"This will be an initial attempt," Mr. Tittawella said.

"This will be a good start for the rest of the farms to be put into private hands. Hopefully we will have people who will make use of the budget package for agriculture."

The last budget introduced sweeping new incentives for the

agriculture sector. Non-plantation agricultural production including research on high quality seed and seed production on a commercial scale is eligible for a 10 year tax holiday. Investment tax allowances of upto 100 per cent of assessable income were also available for agricultural projects.

Cultivation under poly-tunnels, projects for the development of agricultural marketing and storage infrastructure are also eligible for investment relief and are also allowed to import freezer trucks duty free.

The privatization of government owned fertilizer firms will also be done along with the farm units as part of the overall agricultural privatization.

The PERC is also drawing towards the end of the plantations sell-off, which the Asian Development Bank has described as being one of the world's largest agricultural privatization programmes.

PERC is now selling off residual stakes in privatized plantations. Recently a 39 per cent stake in Maskeliya Plantations fetched Rs 170 mn. The PERC is also systematically listing plantations in the Colombo Stock Exchange. Many of these plantations companies are expected to diversify into commercial vegetable, fruit and other projects.

At the moment the PERC is trying to find a buyer for Elkaduwa Plantation for which there has been very little interest. The two coconut plantations whose privatization was stalled, have been taken off PERC's hands.

"The Ministry of Plantations has decided that they will have a different plan for their privatization," Mr. Tittawella said. The managing agents for the coconut plantations went to court after the ministry of plantations ended their management agreements.

The managing agents were originally eligible for first refusal of the plantations because they were managed profitably but the sales were not completed on schedule.

Recently the Ministry of Plantations said residual plantations owned by the SLSPC and JEDB would be given to small holders.

At a later stage the PERC would also look at selling off National Livestock Development Board Farms.

Though small, these farms have so far been an alternative source of supply to the two large private sector suppliers of day-old chicks and feed for the poultry industry.

With Sri Lanka regarded to have weak consumer protection monopoly and merger laws, there have been accusations of anti-market practices levelled against large players in the poultry industry.

Apparel associations sound warning

Three leading apparel associations in a joint statement, has appealed to Industries Minister C V Gooneratne to take steps to ensure that existing manufacturers will not be adversely affected when quotas are allocated to the proposed 50 garmenet factories.

The Sri Lanka Apparel Exporters Association, Sri Lanka Chamber of Garment Exporters and the Sri Lanka Garment Buying Officers Association say that so far, the Textile Quota Board (TQB) has managed quotas in a transparent and fair manner under the minister's guidance.

"Any form of outward and short sighted distribution of quota at this stage, which would cause hardship to the existing manufacturers should be avoided, particularly in the face of the challenges which lie ahead," the associations said in a letter to the minister.

They also highlighted the difficulties the industry underwent when the 200 Garment Factory Programme was initiated, and expressed the hope that history would not repeat itself with the 50 garment factories.

Whilst assuring the Minister that they are not opposed to the establishment of new factories, they say it is their duty as responsible associations, drawing out on their previous experience, "to highlight matters regarding quota distribution which require careful consideration at a time when a new scheme is due to be launched".

Coconuts go places

By Mel Gunasekera

Plans are underway to shift coconut cultivation to non-traditional areas like the Mahaweli region, as cultivable land within the triangle is limited.

The Coconut Cultivation Board (CCB), has established a nursery in Ulhitiya, Mahaweli B region, to cultivate coconut using scientific methods to enhance yields.

The future of the coconut industry lies in the Mahaweli region, as the region is blessed with virgin soil ideal for coconut cultivation, a Plantation Ministry official said.

With traditional coconut land being increasingly fragmented for housing and development, it is inevitable that the coconut industry re-locates to non-traditional areas.

But lack of water is preventing cultivators from taking the initiative to grow coconuts on a large scale, the official said.

However, CCB Chairman, Dr. Sunil Jayasekera said, the lack of water could be overcome by using various irrigation methods.

"It is not the area that you cultivate coconuts that matters, cultivators could also get a higher yield, if cultivation is done in a scientific method. The industry must learn to survive as a commercial industry without subsidies from the government. But cultivation must be done in a scientific manner," he said.

Sri Lankaís total coconut production for 1997 was 2,600 mn nuts.

However, in 1996, the country experienced a relatively low coconut production of 2,546 mn nuts, which reflected a 7.5 per cent decline, compared to the production of 2,755 mn nuts in 1995.

The decrease in production has left a surplus of 508 mn nuts for the industrial processing sector. This had an impact on the coconut oil manufacturing sector, which recorded a drop of 36 per cent in production in 1996. There was a less impact on desiccated coconut production in 1996, with a drop of only 9 per cent as compared with the production in 1995.

The production of coir fibre and coir products has also shown a corresponding decline in 1996, in harmony with the diminished production in the kernel product sector. Shell products however, showed a 2 per cent increase over the production in the previous year.

Despite the decline in coconut production in 1996, Sri Lanka was able to maintain its usual portfolio of export products and continued to maintain its position as a key player in the international coconut trade.

Overall, a range of 23 high quality products were manufactured and exported to 90 destination worldwide.

The total export earnings derived from all coconut products amounted to Rs. 8.3 bn (US$ 150 mn) in 1996, compared to Rs. 7.1 bn (US$ 140 mn) in 1995, a 16 per cent increase.

While the nut equivalent of the total kernel product exports in 1996 was 508 mn compared to 608 mn in 1995, the increase in export earnings from kernel products in 1996 was 31 per cent over 1995, reflecting both higher unit prices and greater emphasis on value added products.

The volume of major coir fibre products exported in 1996 was 10 per cent less than 1995, and the total export earnings also showed a decline of about 2 per cent.

Export of shell products in 1996 rose by 2 per cent over 1995 in volume and 11 per cent increase in export value.

Sri Lankaís annual coconut production varies widely between 2000-3000 mn nuts, due to variation in rainfall, fertiliser use and agronomic practices implemented by the growers.

Considering the estimated coconut extent as 437,000 ha (average 150 palm/ha), and a national production of 2,500 mn nuts, the estimated productivity is 38 nuts/palms/year, i.e. about 3 nuts/bunch, as each coconut tree produces one bunch per month, Dr. Jayasekera said.

Present average of 3-4 nuts per bunch is very low, as any land could have at least few palms yielding 10 nuts or more a bunch every month, irrespective of landscape and climate.

"Research shows, potential for 30 nuts/bunch, but in good estate average is 15 nuts/bunch," he said.

Hence it is clear that by increasing the per palm yield (productivity upto 10 nuts/bunch) it is possible to achieve a national production of 5,000 mn nuts through scientific growing of coconuts.

"To be productive, each coconut seedling planted should come into flowering in 4-6 years and should produce bunches with 10 nuts or more after 8-12 years, every month, irrespective of landscape and drought," he said.

Thus the short/medium term objective of the CCB is to increase the productivity (10 nuts per bunch per month) in the existing coconut cultivation by implementing beneficial scientific technology such as judicious use of bio/organic/chemical fertilised, mulching, soil/water conservation techniques.

Our long term strategy is to use only genetically superior high quality seedling, growing coconuts in home gardens to achieve self-sufficiency in smallholder sector, use of large planting hole to alleviate soil/water problems, while extending the coconut cultivation to non-traditional areas such as Mahaweli region, he added.

New tea broker gets green light

The newly set up tea broker, Asia Siyaka Commodities (Pvt.) Ltd. has been has been licensed by the Tea Board to commence business.

The company is a joint venture between Asia Capital and the break away top management of Forbes & Walker Tea Brokers. Siyaka is a Sanskrit term denoting one's own strength or effort.

Earlier a court order has been sought by another tea broker to restrain the Tea Board from issuing a license. However the court did not grant interim relief. The primary application is to be heard on March 18.

Before the company can participate in tea auction it has to gain membership if Colombo Tea Traders Association. The first auctions after Asia Siyaka's licensing comes up this week.

"We are in business as of now," Asia Siyaka Chief Executive Ravi Kumaratne told The Sunday Times Business.

"The auction is only one way of selling tea. A broker can trade by private auction and also forward contracts," he said.

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