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Exploring New Markets: Sri Lanka

Published: Oct 16, 2012
While USMEF has been actively marketing U.S. red meat in the ASEAN region for some time, it is an area of the world that requires ongoing exploration. Although most demand for U.S. meat is centered in traditional mainstay markets such as Vietnam, the Philippines, Indonesia and Singapore, economic growth in other southern Asian nations has led to expanded opportunities and potential export growth.

One such market is Sri Lanka, an island nation off the southeastern coast of India with a population of more than 20 million. Until 2009, Sri Lanka had been plagued by civil war and ongoing political conflict. The country was also devastated by a deadly tsunami in 2004, which killed more than 30,000 people and displaced about 1.5 million. USMEF recently conducted an in-depth market evaluation there with funding provided through the USDA Market Access Program (MAP).

Recently Sri Lankans have enjoyed a much more peaceful existence, which has led to economic growth and a revitalized tourism sector. Sri Lanka’s GDP grew by more than 8 percent last year to about $60 billion.

The country’s meat trade is still in its infancy, but both interest and infrastructure are in place. Currently, only Australia and New Zealand enjoy market access for fresh/frozen beef products. Trade data suggests Singapore and Malaysia are also suppliers, but product imported from those countries is believed to have originated from Australia and New Zealand. For example, Sri Lanka’s five McDonald’s outlets (with plans for another 15 locations) use beef patties imported from Malaysia. Import duties and fees on imported beef can be very steep in Sri Lanka – as high as 80 percent. While halal certification is not required, it tends to be a common customer preference as Sri Lanka’s population is about 8 percent Muslim.

“U.S. beef has been shut out of this market since 2003, but there are importers here who pre-date that ban and are still familiar with the quality of our product,” said Joel Haggard, USMEF senior vice president for the Asia Pacific region. “We feel there’s an opportunity to revisit this issue, and hopefully regain access for U.S. beef.”

Currently the imported pork market is even smaller, with this year’s imports through August totaling about two metric tons valued at $26,000 – mostly from Singapore. Lamb and mutton imports, however, totaled 115 metric tons valued at $527,000. Australia holds about 85 percent of this market, with most of the remaining product entering from Singapore.

For market evaluation activities, USMEF focused primarily on Sri Lanka’s largest city of Colombo, with a population of about 750,000 within the city limits and 1.5 million in its metropolitan area. Numerous supermarket visits revealed a retail sector that is growing rapidly and sorely in need of a wider range of products.

“Modern supermarket chains such as Keells and Cargills are operating in Sri Lanka, but rely mostly on domestic products,” said Haggard. “There are certainly growth opportunities in this sector for a wide range of U.S. products, including red meat.”

Haggard believes the biggest opportunity in Sri Lanka lies in that nation’s efforts to bolster tourism, which could make the hospitality sector a promising outlet for U.S. beef, pork and lamb.

“Sri Lanka has ambitious plans to make it onto the ‘A list’ of Asian tourist destinations, in line with Bali and several locations in Thailand,” he explained. “It certainly has the beaches, archeological and cultural sites and eco-tourism potential, but is really in need of infrastructure. One potential avenue for USMEF to pursue is Sri Lanka’s newly reopened Institute of Tourism and Hotel Management, located near the U.S. embassy. It was built 12 years ago, but has not been operational because of the political strife and economic difficulties situation. Sri Lanka’s Ministry of Economic Development has earmarked funds to revitalize this facility, and this could create a wonderful point of access to become involved with Sri Lanka’s hospitality industry.”

USMEF-ASEAN Director Sabrina Yin added that further processing is another area that offers potential growth in Sri Lanka.

“One of our original goals for this visit was to explore the potential market for U.S. pork for further processing,” she said. “Keells and Cargills are Sri Lanka’s most prominent meat processors. They sell modest volumes of fresh and processed pork items through their own supermarket outlets, as well to third-party retailers. But a larger opportunity lies with exports to India, where both of these companies have established retail sales and distribution channels to major Indian retail chains. Much of this activity is with poultry, but there are growing opportunities for pork products.”

“With the current access challenges we face in Sri Lanka, this is a market that will require patience and some significant groundwork,” Haggard said. “But it is a country that is committed to growth and opportunity, and embracing trade is going to have to be part of that equation. It’s really exciting to see the opportunities that are unfolding here, for red meat and a host of other U.S. products.”