– Rizvi Zaheed
Executive Director, Hayleys Consumer Products Ltd. and
Member, Hayleys Group Management Committee Chairman,
National Agribusiness Council
Sri Lanka’s geographical location, high literacy rate, and her strong agricultural tradition combine to give our country a solid foundation for agro – based industry. Those strengths, coupled with good innovative
and creative marketing, steer the country’s agriculture and other sectors towards rapid improvement. That’s the way forward, says Rizvi Zaheed, Executive Director, Hayleys Consumer Products Ltd. and member Hayleys Group Management Committee. Mr Zaheed until recently served as the Head of the Hayleys Agriculture sector.
Talking to Business Management Digest, with top focus on the agricultural sector, Mr. Zaheed who is also Chairman of the National Agribusiness Council says’ companies like Hayleys with strong links to global markets are able to develop sustainable agri supply chains. However, he added that climate change impacts particularly during the past few years, have affected both agri consumer and markets. It was apparent even in the super market sector.
Despite this, a greater variety of products of high quality in fast-moving categories like wellness, health care, beauty care, baby care and nutrition – is now available in the market, offering a wide choice to consumers. A good distribution network from companies like Hayleys, ensures that consumer goods reach urban and rural markets in an efficient manner.
Following are excerpts of the interview:
Is there a growth trend in the consumer sector?
Overall, the consumer sector is growing and developing, despite fluctuations in household incomes
which are dependent on harvest income. Today, supermarkets and grocery shops offer an everincreasing variety of goods which will eventually improve people’s quality of life. This will lead to enhanced demand for innovative agri-based and lifestyle consumer products As a business we have to be fully tuned to consumers’ rapidly changing requirements. We use both formal and informal market research to gain constant insights and to feel the pulse of customer needs and wants.
Also, there are events such as ProFood – ProPack and Ag-Biz exhibitions which showcase a vast
variety of food and agri-based products. All of that is coming from understanding the consumer needs
by a fast developing agri business community. Today convenience overrides everything else in
choice of consumer goods. Even staple food items like vegetables which were sold in their natural
and unpackaged form are now marketed as value added products with innovative packaging for
theconvenience of consumers.
This is a reality that we in the consumer food industry have to understand and adapt to. Even a vegetable like Murunga/ Drumstick, is packeted for easy preparation.
Is there a growth trend in the consumer sector?
Overall, the consumer sector is growing and developing, despite fluctuations in household incomes which are dependent on harvest income. Today, supermarkets and grocery shops offer an ever-increasing variety of goods which will eventually improve people’s quality of life. This will lead to enhanced demand for innovative agri-based and lifestyle consumer products
As a business we have to be fully tuned to consumers’ rapidly changing requirements. We use both formal and informal market research to gain constant insights and to feel the pulse of customer needs and wants.
Also, there are events such as ProFood – ProPack and Ag-Biz exhibitions which showcase a vast variety of food and agri-based products. All of that is coming from understanding the consumer needs by a fast developing agri business community. Today convenience overrides everything else in choice of consumer goods. Even staple food items like vegetables which were sold in their natural and unpackaged form are now marketed as value added products with innovative packaging for theconvenience of consumers.
This is a reality that we in the consumer food industry have to understand and adapt to. Even a vegetable like Murunga/ Drumstick, is packeted for easy preparation.
What is your strategy to grow the business?
We are committed to consumer needs – based business growth, whether locally or globally. We innovate and it is evident that other consumer manufacturers also follow our
path.
It is our responsibility and task to sustain/feed the supply chain where we access raw materials and add value. When undirected or misguided supply chains go haywire the entire supply chain suffers the result. In the recent past rice farmers shifted to crops such as pumpkins and tomatoes due to irrigation difficulties, creating a surplus of these crops. In such situations it is important that we, as responsible agro – based companies, use these opportunities in the agriculture sector to innovate and make
value-added products.
For example, as pumpkins could be used as a base for soup, R&D becomes vital to develop the right product. Such high level R&D is key to convert these raw materials into sustainable finished products.
Our processes benefit both the consumer who gets a value-added high quality product and the farmer who gets a good price for their produce.
Is your food export sector performing well?
The export sector in general is doing very well. We innovate. In our export agriculture businesses,
we export high value-added products like pickled gherkins to Japan and a host of other high value agri based products to global markets.
Agriculture exports have a big future. Even at government level, there’s a national export strategy, where priority is given to agriculture value addition. And to support that, companies are encouraged to do research and come up with products that will earn more foreign exchange.
Pineapple is one such crop that could be developed for export with high value addition. But supply is not
consistent. The government is promoting production villages and our company is working with the
government to increase production in these villages, spread throughout the country.
New crops like avocado can be cultivated in the low grown tea and rubber plantations, but it requires
considerable investment.
What are your plans for developing the sector?
We are trying to get more land from the government to proceed with cultivation, because the government has access to all those lands. Our model has always been the out-grower programs, because limited land in our country restricts companies from owning large acres of
land. We have nucleus farms and out grower programs to link the farmers and buy back arrangements
for continuous supply of produce. The industry is endeavouring to replicate this model.
So while the export sector in general is on an upward trend, we face issues with our supply chain. Sourcing large volumes to cater to export markets on time is yet a challenge and the situation is exacerbated by climate change impacts. Yet the issues are resolvable and requires commitment by all stakeholders.
Do you supply goods to international brands?
Actually most of our goods go to international brands in Japan, US, Europe etc. to companies like Sanyo
Foods, Walmart, McDonalds, Burger King, Subway, Nestle, Unilever, Heinz and such international food – based companies. When you target international brands, you acquire reliability and reputation. Maintaining quality and safety standards is most important for agriculture-based processed foods. But the key aspect is innovation and market intelligence on customer preferences locally or globally. The world is changing rapidly and our challenge is to apply the market intelligence to our supply chain in a
sustainable way.
Any other international brands you are targeting in the future?
There are many international brands looking for good quality products. At the same time,
international brands constantly look at expanding their market to Sri Lanka through partnerships
with us. For example, brands from companies like Proctor and Gamble, and S C Johnson for household
products. Now there are even Indian and Bangladesh companies that are developing, so that this link
between Sri Lanka and those counties is also getting stronger because of the free trade agreements which
we too should promote.
There is a concern that free trade could create unnecessary competition for local businesses. But if
we are strong and innovative, then there’s no reason why we cannot compete.
All these endeavors are aimed at providing people with a better quality life! We assist farmers by
getting them a better income by paying high prices, sustainability and by moving them away from the
poverty trap
What kind of assistance do you offer farmers and out growers?
Most of our work is linked to farmers, because farmers don’t know consumers’ requirements. It’s
the intermediaries, big companies and even the Small and Medium Enterprises who have access to these needs, and who should be advising farmers on their crop. Then this whole value chain for the agriculture sector can be made stronger, which will benefit farmers, companies and most importantly,
the consumers.
A very important fact is to ensure that farmers have the right information on what to produce and when.
We sign a purchase contract with them. We also provide training on correct methods of growing,
achieving higher productivity, safe methods of using agro-chemicals.
When did Hayleys get into the agricultural sector and what were the products?
It’s more than 50 years, quite a long time. Initially, before we got into exports, it was provision of agri inputs and we provided agricultural knowledge and extension services in collaboration with the Department of Agriculture. It was over 30 years ago that we started buying back arrangements for agriculture crops. Today, although paddy is a big crop, farmers have moved away to many other cash
crops as well.
Do you see an increase in the number of farmers?
That is a problem because the youth are not interested in farming due to various issues. Also, when these droughts and climate changes occur in an unpredictable manner, farmers are unable to cultivate and they seek alternate employment.
Senior farmers of course don’t have many options, but the youth who are GCE O/L or A/L qualified find other jobs as manual labour and even some become three-wheeler drivers.
However, it’s not really cause for concern, because even with a lesser number of farmers, a bigger
harvest can be achieved with the use of advanced equipment and machinery.
What we have to encourage is agricultural entrepreneurs. Earlier if there were 100 farmers, and today if there are only 10 modern agri entrepreneurs, that is better. It is better to have a few scientific and intelligent entrepreneurs than large numbers of farmers. That way land and crop productivity can be encouraged.
You have a wide range of products and services catering to agro based industry. What was the origin of your business and what was the process of linking your services to the agri value chain?
Hayleys started with exporting fibre-based products in 1878 but today has 16 large sectors providing a wide range of products for both local and global customers. Nearly 30 per cent of our population is involved in agriculture – an ideal base to make use of. However, do to so we have to support and uplift the agricultural sector. State support is provided in the form of subsidies and agriculture policy. Thereafter it is up to the agro – based manufacturers to take over and invest in the sector like Hayleys does, to create investment opportunities for these innovative products.
What is the technology available to beginners to enter the agri sector?
Universities provide agricultural degrees and biotechnology degrees. O/Levels and A/Levels, curriculums include agriculture studies, encouraging students to get into agriculture in a modern way and view Agri-Technology as a valued career. Another key consideration in agriculture is consultation with people. Whether in policy making or other changes, people must be consulted. It’s like marketing; Getting input and feedback from consumers is important. In this way people become aware of the agri technologies available in the country.
What about traditional farming? How do you market such produce?
They are identified as niche markets. With traditional farming, quantity/volume is low. Cost of the production is high and price to consumer correspondingly high. Only a high-end market will be able to afford such products. Natural products can be marketed as high end and high priced with innovative packaging, good label information, etc. It has to be effectively marketed through e-commerce.
What are the current challenges in your mainline of business?
They are mostly related to the supply chain. Also government policy, infrastructure issues and climate change are serious challenges. But biggest challenge is supply chain issues. That is the smooth supply of raw materials of the right quality at the right time. Managing costs for any business is a challenge.
Inflation, fuel price hikes etc affect our cost of production but we cannot burden our consumers with our increased costs. We have to keep prices reasonable for the consumer. Innovation and creativity is required to manage cost of production and these productivity improvement and cost reduction initiatives are now part of business processes.
What are the challenges in the agriculture sector?
Fortunately, Sri Lanka has a strong agricultural tradition. As such many threats could be mitigated. The major threat comes from the climate change and cultivation materials which can survive with less water have to be used. Innovation in bio technology and other agri technologies are required to manage this.
The climate change is a threat to our cultural practice of growing paddy where we overuse water through flood irrigation. With floods our harvests are ruined and with severe drought we encounter the same plight. When the country faces a scarcity of crop we are compelled to import from India, Pakistan, Bangladesh, Myanmar, etc. And if those countries also have shortages, then we face a real serious situation of food supply and food and nutrition security.
Your future plans?
The whole concept of global supply chain is to make it into regional supply chain. For example, our companies can have access to markets globally, because of our international exposure and contribution. So if we cannot grow in Sri Lanka, to sustain our markets, we must establish links and partnerships with regional countries. So, we have bases in countries such as Bangladesh so that the necessary linkages
are in place. We are targeting similar ventures in Myanmar, Thailand and Cambodia. That’s our plan; going from being Sri Lanka centric to regional centric.