Business
Sri Lanka’s confectioners, bakers facing raw material shortages
Industry’s exports to 55 countries at massive risk
by Sanath Nanayakkare
Christmas and New Year shoppers are likely to face disappointment as shops and supermarkets across the country won’t be able to stockpile bakery and confectionery products for the festive season due to a looming raw materials shortage in the supply-chain.
Although concerns about the Covid-19 pandemic have begun to recede, the mounting fallout on the supply chain has emerged as a new risk to the confectionery industry affecting not only manufacturers and consumers but thousands of employees making a living from the industry.
Wheat flour supply is already down by 25% on top of the scarcity of sugar, major fats and oils used in the industry as well as LP gas, The Island learnt.
“Confectioners face difficulty in sourcing the wheat flour, sugar and fats required to make their products. This has severely affected our manufacturing and distribution schedules. The ongoing shortage disruption is the biggest risk we see to the sustainability of our businesses both in the domestic market and our significant export market as we export our products to 55 countries including the European countries, the U.K., Canada, Australia, New Zealand, Ghana, Myanmar etc. Lanka Confectionery Manufacturers Association (LCMA) Chairman S.M.D. Suriyakumara told The Island yesterday.
“This predicament has been triggered by a lack of quality flour, sugar and fats caused by the impact of foreign currency shortage on relevant imports and global commodity price hikes. If this trend continues, consumers may not be able to find the products they like in supermarkets in the festive season as we won’t be able to work constructively with our retailers,” he warned,
“At a time the small and medium scale enterprises (SMEs) in the sector are striving to emerge from the pandemic more resiliently, major suppliers of the industry may raise their prices in the run up to the festive season due to rising inflation and foreign exchange shortage that negatively impact their imports. Like all industries, we are managing a number of challenges at the moment, but an impact on the availability of raw materials will be particularly hard to deal with, therefore, we urge the authorities to make effective intervention in order to mitigate the fallout,” Suriyakumar said.
“The confectionery industry consists of companies producing biscuits, cookies, cakes, wafers, toffees, chocolates, desserts, snacks, ice cream and even noodles. This industry was built on many decades of hard work and we produce over 85,000 tons of confectionery per year. Hence supply disruptions and increased costs will cause significant stress and impose additional burdens to both the manufactures and the consumers of these products,” he noted.
“The Sri Lankan confectionery industry has flourished over the years against foreign competition and has successfully retained 100% Sri Lankan ownership. It provides local consumers with products that equate with international brands or perhaps even better,” he said.
“Prima Ceylon (Pvt) Ltd and Serendib Flour Mills provide the industry with good quality wheat flour and they increase prices whenever they deem it necessary. Six months ago, they jacked up the price of wheat flour by 45%.”
“However, right now, we have to be more concerned about the supply and availability of raw materials than the cost because we have to retain our export market which is in constant, stiff competition with other competing global manufacturers in countries such as India and Malaysia among many others.”
” Another issue is the logistics obstacle related to our export business. Finding freight containers to dispatch our exports and then having to load them with enough products amid this raw materials shortage adds insult to injury. However, we have not given up hope. We are determined to keep on doing business even within lower profit margins and the challenging operating environment because we have to try and retain our export market share.”
“Here in Sri Lanka, it’s likely that this supply disruption and resultant shortage of confectionery products could add one more to the list of existing queues for milk powder, LP gas, Kerosene oil, cement etc.” he said.
“The industry employs over 50,000 people directly. As a result of the shortages, we have had to cut down production by about 25% which in turn has led to layoffs of employees. It’s needless to say how a layoff would affect employees and their families. Hence we urge the authorities to ensure that the confectionery industry won’t be in for long-running supply shortages,” Suriyakumara said.
Meanwhile. the representatives of the Lanka Confectionery Manufacturers Association (LCMA) and All Ceylon Bakery Owners’ Association (ACBOA) told the media last week that suppliers of wheat flour are unable to cater to the requirements of the industry as the lack of US dollars has made imports a challenge.
“Prima Ceylon and Serendib Flour Mills are only able to cater to 75 percent of the wheat flour requirement at present and it is feared the supply would further contract in the coming months. Even if we procure wheat flour at higher prices, the two suppliers are unable to meet our demand. The explanation we received was that they did not have enough US dollars to import the required quantities of wheat flour. This puts us in a very difficult situation,” they said.The LCMA cautioned that in addition to the likelihood of smaller manufacturers shutting down businesses which would result in job losses, the export market too would suffer a negative impact as production would have to be limited. It is becoming impossible to operate in the current context as there are shortages of rice, sugar and gas also.” they said.According to media reports, the ACBOA and LCMA have informed all relevant authorities about the issue. Anyhow a solution is yet to be found.
LCMA Chairman S.M.D. Suriyakumara concluded by saying that if the industry faced severe levels of shortages, it would affect not only confectioners and bakers but also employees, consumers and our export earnings.”
To catalyze bilateral trade and investment and drive regional economic integration, the Consulate General of Sri Lanka in Mumbai facilitated a series of high-level strategic engagements between The Ceylon Chamber of Commerce and leading Indian commercial institutions on May 13 and 14.
The delegation from The Ceylon Chamber of Commerce was led by its Chairman Krishan Balendra, CEO of John Keells Holdings Pvt Ltd and comprised a distinguished group of Sri Lankan industry leaders from Hirdaramani Group, Maliban Biscuit Manufactories (Pvt) Ltd, Sierra Cables PLC, A. Baur & Co. (Pvt) Ltd, Jetwing Travels (Pvt) Ltd, Ceylon Biscuits Ltd, Hayleys PLC, Vidullanka PLC, MAS India Clothing (Pvt) Ltd, Tudawe Brothers (Pvt) Ltd, David Pieris Holdings (Pvt) Ltd, Bank of Ceylon, Aitken Spence PLC, LTL Holdings Ltd. and Orel IT Pvt. Ltd.
On May 13, The Confederation of Indian Industry (CII) and The Ceylon Chamber of Commerce jointly hosted the ‘India–Sri Lanka Business Forum: Partnering in Sri Lanka’s Growth and Investment’ and an exclusive CEO interaction in Mumbai. The forum convened senior government officials, policymakers, and industry leaders from both countries.
These included, among others, High Commissioner of Sri Lanka to India Mahishini Colonne; Consul General of Sri Lanka in Mumbai Priyanga Wickramasinghe; Senior Economic Advisor to the President of Sri Lanka Duminda Hulangamuwa; Secretary (Protocol, FDI, Diaspora & Outreach) and Chief of Protocol Government of Maharashtra Rajesh Ravindra Gawande; Co-chairman, CII Western Region Sub-committee on International Trade & Investment and Chief Executive Officer, Polycab India Ltd. Anurag Agarwal; Chairman, CII Western Region Sub-Committee on Tourism and Hospitality and Executive Director, Kamat Hotels India Ltd Vishal Kamat and Secretary General & CEO of The Ceylon Chamber of Commerce Shiran Fernando.
Conversations centered on accelerating cross-border cooperation across high-priority sectors, including technology, manufacturing, healthcare, renewable energy, and digital transformation.
On May 14, the delegation engaged in productive Business-to-Business sessions with the IMC Chamber of Commerce and Industry, culminating in the formal renewal of the Memorandum of Understanding between The Ceylon Chamber of Commerce and IMC. The delegation also participated in an interactive session hosted by the World Trade Center (WTC) Mumbai and the All India Association of Industries (AIAI).
The two-day mission concluded with a robust exchange of views cementing a strong foundation for sustained bilateral collaboration and paving the way for a new era of industrial synergy between Colombo and Mumbai. (Consulate General of SL, Mumbai)
Demonstrating its commitment to supporting the nation’s next phase of economic transformation, Commercial Bank of Ceylon has become one of the first banks in Sri Lanka to enter into an agreement to establish a fully-fledged branch at Port City Colombo, marking a significant step in the Bank’s strategic expansion into the country’s emerging international financial hub.
The agreement was signed by Sanath Manatunge, Managing Director/CEO of Commercial Bank, and Xiong Hongfeng, Managing Director of CHEC Port City Colombo (Pvt) Ltd. The partnership further reinforces Commercial Bank’s position at the forefront of Sri Lanka’s evolving financial landscape.
The proposed branch will function as a fully-fledged banking branch, offering a full spectrum of products and services tailored to the needs of corporates, investors, businesses and retail customers operating within the Port City Colombo ecosystem. These will include digital banking facilities, trade services, foreign currency transactions, corporate banking solutions, deposits, lending, card services and remittance facilities.
By establishing a presence within Port City Colombo, the Bank said it aims to further strengthen its ability to support cross-border business and investment flows while positioning itself to meet the sophisticated requirements of global investors, multinational corporates and high-net-worth individuals expected to operate within the Special Economic Zone.
Commenting on this ground breaking initiative, Sanath Manatunge, Managing Director/CEO of Commercial Bank said the Bank’s decision to establish a fully-fledged branch within Port City Colombo reflects both its long-term confidence in the project and its readiness to support the evolving needs of a globally integrated financial ecosystem.
“As Sri Lanka’s largest private sector bank with a strong track record in serving corporates, international clients and high-value businesses, we see Port City Colombo as a pivotal development in the country’s economic future,” he said. “Our presence within this Special Economic Zone will enable us to seamlessly support cross-border transactions, facilitate international trade and investment, and deliver world-class banking solutions backed by advanced digital capabilities. Being one of the first banks to formalise plans for a full-service branch within Port City Colombo reaffirms our role as a pioneer in driving financial innovation and supporting national development.”
A 269-hectare extension of Sri Lanka’s central business district, Port City Colombo is being developed as a multi-service Special Economic Zone designed to serve as a regional financial centre, business and lifestyle hub. One of the largest public-private partnership projects in the country, it is envisioned as a catalyst for high-value investments, underpinned by advanced infrastructure, cutting-edge technology and a progressive regulatory framework.
“Our role as master developer goes beyond building the city itself. It is about creating the foundations for a functioning international business and financial hub,” said Mr Xiong Hongfeng, Managing Director of CHEC Port City Colombo (Pvt) Ltd. “The establishment of institutions such as Commercial Bank within Port City Colombo is an important part of that process, because it brings real operational depth and credibility into the ecosystem from an early stage. It reflects the broader momentum behind the project and the growing shift towards a more globally connected, investment-driven economy in Sri Lanka.”
Sri Lanka’s renowned specialty tea brand “Singharaja Wiry Tips,” produced by Lumbini Tea Valley Ceylon, has won two major accolades at the prestigious “The Leafies International Tea Awards” held recently at Fortnum and Mason in the United Kingdom.
The award-winning low-grown Ceylon tea secured the titles of “Best Ceylon Black Tea” and the overall “Best of All Black Teas,” emerging as the top black tea entered at the international competition.
With these latest honours, “Singharaja Wiry Tips” has now earned its 43rd and 44th international awards, further strengthening its reputation as one of the world’s most highly awarded black teas.
Classified as FBOPF EX SP (Flowery Broken Orange Pekoe Fannings Extra Special), the tea is named after its distinctive golden-tipped wiry leaves and unique flavour profile derived from the ecosystem surrounding the UNESCO World Heritage-listed Singharaja Rainforest, which borders the Lumbini plantation.
Lumbini Tea Valley’s latest innovation, “Lumbini Screw Buds,” also received high commendation at this year’s competition, highlighting the company’s continued excellence in producing premium Ceylon teas.
Chairman and Managing Director Chaminda Jayawardena, who accepted the awards in London, credited the achievement to the dedication of the Lumbini workforce and the support of nearly 1,800 tea farmers supplying high-quality green leaf harvested using the traditional “two leaves and a bud” method.
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