Q: Which factors have impacted the business in recent times?
A: The lack of demand for tea and rubber in international markets along with lower prices has been a salient factor impacting business. Although as producers we witnessed a rapid depreciation of the rupee, the full impact of this is yet to be felt.
I’m confident that tea will rebound rapidly but the recovery in rubber will take longer due to global demand factors. The plantations industry could be one of the largest export earners provided that the economic climate is conducive.
Industry players need to be cognisant that they’re competing globally; therefore, both productivity and costs must be competitive. The industry requires an infusion of new technology such as irrigation, mechanisation and smart agriculture techniques, which the state should facilitate.
Q: How would you describe the state of business in the country?
A:Local developments such as the rising cost of production and inconsistent government policies are affecting corporates.
Overall, the state of business in the country could be better. We should create a climate that encourages investors, and is devoid of bureaucracy, bottlenecks and inconsistent policies. Sri Lanka continues to leverage on advantages arising from proximity to larger neighbours.
Q: And has the business grown over the past 12 months or so?
A: The rubber business has been challenging in the last seven years or more. Although some companies are moving away from rubber cultivation, we maintain a balanced portfolio of crops and businesses, which has been our chief strategy.
Land and manpower are major assets for Aitken Spence Plantation Managements. Despite the challenges, we’re constantly transforming and differentiating ourselves.
Aitken Spence Plantation Managements forayed into new business avenues that promise returns on every inch of land it owns. We’ve embarked on cultivating berries for the local market and eventually for export, and importing blackberries for the first time in Sri Lanka in consultation with foreign experts. The company has also expanded into growing cinnamon.
Moreover, we entered into a joint venture with a Chinese company to sell Ceylon Tea in China. Although the Chinese economy has been sluggish, we expect greater value from our foray into China.
Q: How is the company faring under existing macroeconomic conditions?
A: Elpitiya Plantations was the last regional plantation company (RPC) to be sold with no takers. Despite its history, it is now amongst the top three RPCs. Our company remains on the threshold of transformative strategies that we implemented – and these strategies are expected to bear results in the next five to seven years.
The aim was to move from being commodity based to a more stable business that’s less dependent on the climate while escaping the commodity trap in which the export sector has been entangled. We will pursue nontraditional avenues for diversification and expansion.
Q: What steps must be taken to encourage more companies to list on the stock market?
A: Greater confidence is needed in the state of the economy to encourage investment, which in turn would spur companies to list.
In the last several years, we haven’t witnessed a stable stock market due to macroeconomic issues. Many plantation companies are listed but don’t trade actively given the nature of business and performance of the sector. Plantation companies should be the first choice for retailers and investors in the stock market.
Q: Should organisational performance and environmental sustainability go hand in hand?
A: Being in the plantation business, sustainability is critical and interwoven in our strategies. Corporate governance, business ethics and corporate sustainability are features of a strategy that is driven from the top.
Q: And what are the major projects undertaken by your company in this regard?
A: Aitken Spence has invested in the first ever waste to energy project, which will solve Colombo’s garbage problem. Hydro and solar power is an area of strategic investment for Aitken Spence Plantation Managements. By the end of next year, we will generate over two megawatts of solar power.
As a company, we’re aligned to six of 11 Sustainable Development Goals (SDGs) – creating jobs, youth empowerment, rainwater harvesting, and improving soil and irrigation.