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Sri Lanka to relax import rules for processed food exporters

ECONOMYNEXT – Sri Lanka is proposing to make it easier to import planting materials and fresh produce like coconuts, fruits and vegetables in order to attract investments and boost processed food exports, a national export strategy document has said.

"The supply of raw material must be secured in order for the sector to have the means to meet strong international demand and to upscale these industries," the processed food export strategy document said.

The Department of Agriculture is expected to amend quarantine laws by 2022 and simplify procedures to introduce and import high-yield seed crops in order to improve supply of fruits and vegetables for food processing.

"…a major issue affecting productivity as well as output quantity is the restriction on introduction of new varieties," the strategy document said.

"Some Sri Lankan varieties have comparatively low productivity. For example, coconuts produced in Sri Lanka have a longer ripening period and are about half the size than those produced by major competitors such as Thailand.

Quarantine regulations are stringent and importing new varieties is a lengthy and difficult process.

"In addition, some quarantine regulations are today obsolete and concern diseases that no longer pose a threat".

Local crops are extremely vulnerable to weather conditions.

"Some of these weather conditions are seasonal and thus predictable. However, variations of weather conditions year-on-year have increased unpredictability and strongly affect the price of local raw material.

"As a result, local produce prices fluctuate much more than global market prices. Sri Lankan food processors have no mechanism to facilitate the replacement of their local raw material supply with imports during off-season periods," the strategy document notes.

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The proposed changes will allow food processing companies to import fresh inputs like coconut, fruits and vegetables whenever local supply falls.

Import tariff reforms will be headed the Ministry of Industry and Commerce which will also amend an existing Temporary Import for Export Processing scheme by 2022 to simplify processors.

Sri Lanka aims to revise import tariffs to facilitate investment in food and beverages processing by providing access to processing and packaging machinery, packaging materials and raw materials, the strategy document said.

"Importing materials needed by food and beverage processors off-season is currently restricted, even when local produce is not available.

"Local producers need to produce large quantities of raw materials in order to supply their market; currently they are only able to supply a small portion.

"The rates of tax applied to imported products and materials add to the issue, as they are inconsistent, make imports too costly and decrease Sri Lanka’s comparative advantage," the processed food export strategy document said. (COLOMBO, 05 October 2018)

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