Sign up for our daily Newsletter and stay up to date with all the latest news!

Subscribe I am already a subscriber

You are using software which is blocking our advertisements (adblocker).

As we provide the news for free, we are relying on revenues from our banners. So please disable your adblocker and reload the page to continue using this site.

Click here for a guide on disabling your adblocker.

Sign up for our daily Newsletter and stay up to date with all the latest news!

Subscribe I am already a subscriber

Potentials and opportunities for Dutch horticulture in Sri Lanka

Agriculture has been a major pillar in the society and economy of Sri Lanka for a long time. Due to the country’s geographical position in the tropics with good temperature and light regimes and various climate zones, the conditions are favourable for 365 days / year crop cultivation. However, the development of an export oriented horticultural industry only started in the 70’s of the last century. In the 90’s substantial volumes of ornamental products were being traded between Sri Lanka and the Netherlands, focusing on the foliage and cuttings segment. The business went down in the first decade of this century, partly because of political and economic unrest during the civil war, but also because of international competition from other continents. Nowadays, doing business in horticulture has become more serious, especially since the end of the civil war in 2009 and the recent revival of the economy. Whereas only few Sri Lankan companies dominated the business in the 80’s and 90’s, recently new entrants came into the picture. The government of Sri Lanka plays an active role in helping the industry forward.

The economy of Sri Lanka shows positive figures. It has a lower middle income economy, but it’s on the way to become a higher middle income country. Its GDP grew by 7% in 2013, 7% in 2014 and 5% in 2015 to US$ 3,600 per capita in 2015. Inflation remains in the single digit levels, currently around 4%. Agriculture and food processing, tourism, textile / garments and commercial services (banking, logistics, telecom) are the core sectors in the Sri Lankan economy.

Sri Lanka exported floricultural products for a value of US$ 14 million in 2015, whereas it imported for a value of US$ 1 million, the majority of exports being foliage and cuttings. The Netherlands and Japan are the leading destinations. Export of cut flowers is rather small but trade towards the regional markets and the Middle East shows an increase. Within the group of importing countries of floricultural products from Sri Lanka, Saudi Arabia, UAE, Qatar and Kuwait grew to a market share of almost 25%.

Trade statistics indicate that there’s a potential for more trade of floricultural products between Sri Lanka and the Netherlands. The import from Sri Lanka was less than 1% of the total imports in the Netherlands in 2015, which implies there’s potential for growth. And the export from the Netherlands to Sri Lanka (either direct or through distributors or partners of Dutch suppliers in other countries) has much more potential as well.

Fruit and vegetables
Sri Lanka exported fresh and processed fruits for a value of US$ 212 million in 2015, whereas it imported for a value of US$ 68 million. Sri Lanka is a net importer of vegetables: its exports of fresh and processed vegetables in 2015 valued US$ 37 million and its imports US$ 392 million. Volumes and values of fruit and vegetables trade by far exceed the floricultural trade figures. The major buyers of Sri Lankan fruit and vegetables are regional markets: India, Maldives, Middle East countries and Malaysia. But also the USA, UK and other European countries are trade partners. Exports to the Netherlands is relatively small: US$ 2.5 million value of fruits in 2015, which is less than 0.5% of the total imports in the Netherlands.

Sector strengths and weaknesses
There’s an optimistic atmosphere in the horticultural industry. On the one side stakeholders are aware that Sri Lanka -although it has been exporting for decades - is still at an infant stage as an export country compared to global players and compared with some other countries in the region. There’re serious constraints. On the other side there’s eagerness to overcome these obstacles and to work shoulder to shoulder with the government and move further towards growth. The following characteristics of the sector are most relevant:
  • The Sri Lankan government plays a pro-active role, highly appreciated by the private sector. There’s room for improvement in infrastructural projects (especially airport facilities), applied R&D, promotion of advanced technology and streamlining of procedures (bureaucracy);
  • Availability of advanced technology in cultivation and postharvest, as well as knowledge and awareness with respect to the use of advanced technology, are at low levels;
  • There’s not a full coverage of all necessary supplies for advanced production and postharvest practices; room for improvement is mainly seen in modern varieties -especially in cut flowers and vegetables- and mid- and high technology for the cultivation phase -including greenhouse systems- and postharvest phase;
  • Over the whole horticultural industry the scale of production is rather small and cost prices are relatively high;
  • International connectivity by air and sea are good. The logistical infrastructure within the country is satisfactory; the main issue in the horticultural industry is the immature cold-chain all over the country: lack of refrigerated transport, storage and handling facilities;
  • Availability, quality and costs of labour at management level and work-floor level are satisfactory. At least they’re not seen as a limiting factor in the sector development. The education sector works hard on improvements in university and school curricula. However, in the eyes of entrepreneurs, graduates miss enough practical skills. That same counts for public extension services: manpower is well available but knowledge transfer capacity in advanced technologies is hardly there;
  • Sri Lanka is a Xylella free country, which gives comparative advantages as a supplier of ornamental products;
  • The marketing capacity of Sri Lankan entrepreneurs isn’t strong; it’s difficult to catch up with the latest trends, developments and market access requirements in high-end (export) markets and there’s no strong international exposure of Sri Lanka as a country with a horticultural profile.
Click here to download the report.
Publication date: