South Asia’s Organic Orchard – In conversation with Saaraketha Organics co-founder Charitha Abeyratne Hettiarachchi – By Shiran Illanperuma
Source : Biznomicsmagazine
When Saaraketha Organics began business, exports accounted for the majority of the company’s sales. However, consumer tastes have shifted in recent years and the company now caters to both local and foreign markets (namely the Middle East and European Union). Like most local firms in the production economy, the last few years have been tumultuous for Saaraketha, with many highs and lows, bringing with them new challenges and opportunities. The COVID-19 pandemic, followed by a foreign exchange and currency crisis would be a lot for an entrenched corporation to bear, let alone a young SME. A firm believer in domestic value addition and sustainability, Saaraketha co-founder Charitha Abeyratne Hettiarachchi spoke to Biznomics about contemporary challenges faced by entrepreneurs in the agricultural sector.
The following are excerpts:
A structural problem of the Sri Lankan economy has been low-value addition in exports leading to chronic trade deficits. What is Saaraketha Organics’ strategy for adding value to its exports?
Saaraketha was focused on value addition from the outset. We work with smallholder producer groups all over the country who form our supply chains. Hence, the primary products we source mostly are non value added. In terms of the export market our endeavour has always been to try and add value to the products that we get across to our global consumers. The value addition strategies that Saaraketha has employed include basic processing, communicating the origins of the product and the value chain, organic integrity being ensured through international compliance and certification, customised packaging to enhance shelf-life, as well as communicating the brand equity.
In the initial stages, as a business we focused on primary products such as fruits and vegetables. Even in this domain of fruits and vegetables we adopted a strategy of retail packaging, ready to consume, triple washed, sorted and graded which not only assured convenience and differentiated standard to an end consumer, but it also packaged in better shelf life, better quality, and a new product in this space of fresh produce. For example, our vegetables are packaged into standardised volume packs, which are already pre packed, triple washed, ready to consume, and barcoded. All a consumer needs to do is pick up and check it out; as opposed to the traditional model of selecting your vegetables, going to a weighing station, getting it weighed, packaging it into another carry all bag and taking it home.
Our value additions have been in the form of convenience and also customer assurance. We’ve added on traceability, from the source of origin right up to the consumption point; communicating credibly through block chain enabled technology, about not just the products life cycle but about the impact the purchase decision of the consumer has upon other important areas such as environment and social sustainability.
Saaraketha has employed different strategies that enhance the final value of the product and we continue to innovate. Now we are in a stage where we are looking at further product value additions in terms of products that are dehydrated and powdered and packaged in retail form. We are looking at different product developments that contribute further value addition to the raw materials that come from rural Sri Lanka.
Sri Lanka today has only a handful of globally recognized product brands. How important is branding and marketing to Saaraketha’s strategy for market share?
Branding and marketing is fundamentally important and this has been the journey we undertook from the very early stages. We wanted to create a brand that had integrity, a brand that was synonymous with quality and identified with good, clean, ethical products. We’ve been humbled with the brand equity we have been able to create as a green field business that commenced operations about 9 years ago. From then on to now, we’ve been able to create a very strong brand presence not only in Sri Lanka but also in the offshore markets that we operate in. Where our products, even in the categories of fresh produce goes branded to those markets, hence our consumers in our offshore markets and our large importers and distributors who are our customers do not buy commodity products from us but they buy a branded “Saaraketha” product.
It’s a “Saaraketha” product that they seek, because of the credibility of the brand that we have been able to establish. The integrity of quality and the value chain where the brand communicates not just attributes of the product, but also all aspects of the value chain – the producers, the environment, the processes and the loving nurturing and caring that our smallholder farmers employ to get a product across to what is non-traditional markets for them; such as the global markets we operate in.
So yes, branding has been an integral strategy which has helped us to take this journey forward in leaps and bounds, because we focused on developing a brand identity which was not just a fly by night product selling strategy, but first to establish a credible, stable name for ourselves which is now beginning to pay back.
The market for organic agricultural products is growing around the world. What can Sri Lanka do to distinguish itself from other suppliers in an increasingly competitive market?
Our vision for Sri Lanka is to be the “Orchard for South Asia”. We are blessed with agro climatic conditions that allow us to produce most of the agricultural products around the year. And many tropical products that are being sought after in the Western markets today grow in abundance in Sri Lanka. We have a history of Ayurveda and hela weda which allows us an immense knowledge base that uses “food as medicine” in alternate therapy forms that are being searched for by Western civilisations today. The Eastern wisdom that many western consumers are seeking – as opposed to Western science – has a home in Sri Lanka.
We have a culture where our food serves as a base for good health. Hence we can differentiate ourselves as a very ethical sourcing destination, where Sri Lanka can avoid competing with the rest of the world on price points and the rest of the competitive landscape; but differentiate ourselves completely based on a compliant, ethical, quality product that we get across from a nation that has identified itself as having a holistic approach to food, wellness, and living.
We have an example in our own country of how an industry differentiated itself. Sri Lankan apparel has distinguished themselves to the world as producing Garments Without Guilt, which is their tag line. A compliance platform that is so robust that most global customers consider Sri Lanka the world number one ethical sourcing destination. This is a living example of how an industry has branded themselves. We too as a nation have the ability to do the same for our agriculture value chain. This is my vision.
Can you talk about the importance of technology in improving agricultural productivity and challenges in investing in such technology in Sri Lanka?
The Sri Lankan agricultural landscape is dominated by smallholder farmers. The agricultural value of Sri Lanka consists of very small parcels of land. Hence economies of scale have always been a challenge, except in the traditional plantation spectrum of tea, rubber, and coconut. The rest of the agricultural landscape continues to be dominated by the smallholder farmer, hence we have not evolved as an agricultural nation; as much as our rich heritage in agriculture have proven to us that we were once a nation that exported to the world. We were once known as the Granary of the East! Sadly, today we cannot claim that heritage, because we have not kept up with the same pace and the standards we set 2000 years ago.
The primary reason is that we have not evolved with the times. The use of modern technology is almost non-existent in the Sri Lankan agricultural landscape. It is important that while we go back to traditional methods, we also have a seamless balance of technology to ensure food security and innovation in this landscape. We need to be able to employ modern technology like microirrigation systems, drone technology that can assimilate data, climate controlled growing units, precision agriculture tools, which are just a few examples of what the western world does in terms of employing technology that allows us to challenge the boundaries of natural agriculture.
It is important to note that we have a long way to go and facilitate the adoption of technology, from simple, relevant, contemporary technologies to complex technologies that will make us differentiate and stand apart from the rest of the region. As a nation that has smallholder farmers, aggregating them and looking at cohesive production clusters that are empowered by contemporary technology, including artificial intelligence, that can be employed in this sphere of agriculture, is the future that I see for us to differentiate ourselves and establish ourselves as “The Orchard of South Asia”.
Organic certification can be a lengthy and costly process. What are the challenges in meeting these costs for a new company or a smallholder for that matter? And does Sri Lanka have the requisite facilities for testing?
Yes, obtaining Organic certification can be a lengthy and costly process. A virgin land that has not been cultivated before may take upto six months; however, if you have already used chemical fertilizers on the soil, it may take upto three years for your land to be eligible for organic certification. It is a very costly annual payment, which a smallholder farmer cannot bear.
Any new company who is focused on the export market will need to obtain these international certifications as the current Sri Lankan organic standards are not accepted in the international market. The current organic standards you may see in the Sri Lankan market, especially for fresh produce, are not backed up with laboratory testing; which is an absolute must if you are working with international markets. Hence, dealing inoOrganic is a continuous investment and tedious process.
As an exporter, what are some of your main challenges in staying cost competitive against firms in other countries. What kind of policies and infrastructure does Sri Lanka need?
At the moment Sri Lanka is extremely uncompetitive in the export market; especially for fresh produce, as we have had to bear the exponential growth in air freight rates. This makes reaching Europe, which is an ideal target market for local Sri Lankan produce, virtually impossible.
Other aspects that our country needs to reduce costs and wastage, would be to establish cold chain infrastructure from farm to table. Basically setting up cold storage at collection points and during transportation. This will minimize the current national post harvest loss of approx 40 percent, which in turn can drastically reduce the product cost.
I also believe we need “industry experts” in the right positions for decision making; policies set must be aligned with international standards, in order for companies to be able to compete in export markets. We need people who are in tune with current global trends and the ever evolving market needs. Also better branding of our local produce and marketing Sri Lanka as a one stop shop for a range of ethical, high quality produce.
Traditionally, Sri Lankan tourism has had a strong import component and little synergies and linkages with the domestic economy. But the concept of Saraii village seems different. In what ways can we incorporate the agricultural sector more strongly with tourism in order to uplift small producers?
Saraii was founded on the principles of the triple bottom line, allowing a traveler to enjoy an authentic local experience. We were very conscious that not only the food that was served, even the accommodation, the environment, all constituted a completely local touch. Therefore in the construction, the material that was used were mostly sourced from the local environment, the people who were employed to construct were local artisans and locals from the community. The food we serve is sourced largely from the local environment and the experiences that we offer are also community immersion and community based where it allows for completely authentic experiences.That is Saraii!
In terms of Sri Lanka, my personal view is that we have so much to offer, and sometimes I wonder as to why we take the easy route of relying on many imported products, without which many chefs especially in the hotel industry almost find it impossible to operate. When we have an abundance of fruit and vegetables in our country, we rely on imported fruit and imported vegetables, which are sometimes canned for months, or brought frozen. This practice to me is a crime, as there are so many alternatives that Sri Lanka has to offer.
When we have so many primary industries that can support and contribute and already contribute; there are very artisanal products that are uniquely Sri Lankan, even cheeses, butters, and other aspects of very authentic Sri Lankan products, we rely on processes and imported products, largely for convenience, as well as because we have been used to it for all this time.
Now is a time, more than ever, for the Sri Lankan small and medium enterprises and industry stakeholders to be aligned to support the tourism industry through a whole portfolio of products that can be of international standard, but locally produced.
We may especially need to focus on 100% locally sourced menus that can support the tourism industry. Where alternates for products that are imported are consciously developed, supported and aligned for the tourism value chain. This is the way forward in the challenging times we are facing, with the foreign exchange crisis and imports being a challenge. This is the time, if ever, for us to look at a local production economy. Not just the production of anything and everything, but production of high quality products that can be substitutes to what has hitherto been products that we could not do without; to support tourism.
We have a very robust clothing industry, from which we could support many of the inputs from linen requirements to all of the other aspects of a hotel; then we have a fantastic craft culture in the country, where many of the enhancements that go into beautifying and making a hotel or guest room can be supported. 70% to 80% of these products are currently imported. We could produce them in Sri Lanka.
Of course we can produce all of the inputs into the kitchen. We need to look at an entirely differentiated range that can also constitute a unique experience for the foreign traveler, instead of offering him the same type of food that they have been used to in their countries. When they are on holiday in Sri Lanka; we could offer them differentiated fusion food with a very unique Sri Lankan touch. This is the time for us to align all of the other contributing industries, to support tourism through a unique Sri Lankan production drive.
Saraii embodies a simple example of what I spoke about. At Saraii all of our vegetables and fruits are locally sourced from farmers around the resort, who have been encouraged to cultivate using organic methods of cultivation, and we have fresh products on a daily basis that we are able to source.
Our integration with the community extends to all of the other inputs we source, like freshwater fish, which are from the local fishermen; with whom we also work offering unique excursions to our guests. One such excursion is the “Anglers Potluck”, which is fishing with a local fisherman who will take you in his canoe at sunrise, help you catch fish, and cook it for you on the lake bank, which is a unique and local meal. Similarly, most of our interior decor for the hotel is sourced from local artisans. We offer this as an experience for our guests to go see how these artisans work and how they produce their products. We work with local buffalo curd making homesteads. Most of the people in the area who do this, do it as a small cottage industry. We take our guests to see how buffalos curd is produced in a tiny little cottage home and these are the very people that supply curd and treacle to Saraii.
Most of our menus are differentiated and curated to offer local ingredients. We discourage sourcing products that are not regional. For example, we do not offer lettuce in our salads which is found in most hotels; instead we use local wild greens that even many locals don’t know about. Similarly, the vegetables that are used have a local touch alongside a fusion that to suit the western palate.
These are some of the little things that we do. The toiletries that we offer are all sourced from local artisans who make 100% natural toiletries. We do this to offer a unique experience and to support local communities that we work with. That’s a simple example of what we can do at each of our levels and the potential of an industry coming together, creating value chains of smallholder producers from the very communities that they are in, is huge in terms of what we can do to transform the tourism landscape.