"It may be a turbulent time but there's hope for the future"/
Rajendren Gnanasambanthan on Sri Lanka's pulse market

Rajendren Gnanasambanthan is a highly experienced leader in Sri Lanka’s pulses sector. Through more than three decades of trading, lobbying and advocacy, he has built a deep understanding of the market, including institutional dynamics, policy, and long-term trends. 

Rajendren, could you start by telling us a bit about your background and the history of Gnanam Imports?

Yes, so my career started back in 1987, here in Sri Lanka. I was trading in essential foods like spices, pulses and fish. That was 35 years ago. Since then, we have grown in size and strength. We’ve established an island-wide network of customers and partners; we have over 200 employees and three warehouse facilities, collectively amounting to more than 100,000 square feet. 

Outside of my work as a trader, I’m heavily involved in Sri Lanka’s trade sector. For the last six years, I have been serving as president of the Essential Foods Commodities Importers and Traders’ Association. I’m also the Vice Chairman of the Import Section within the Sri Lankan Chamber of Commerce. 

Through these roles, I have an opportunity to represent Sri Lanka’s businesses and work with the government to help address some of the challenges we face.

That’s a lot of experience. So pulses are a major part of Gnaman’s operations today. Which pulses do you specialize in and in which markets?

We import a lot of whole lentils, mostly from Canada and Australia, as well as  chickpeas from India, Australia, Ukraine and Russia, and a small amount from Argentina and the United States. We also bring in green lentils. So we source and import products across a range of countries, which we sell here in Sri Lanka.

Do you source any products locally?

Yes, but that is quite a recent trend. A few years ago, we used to import a lot of green mung beans and black gram. But in 2019, the government implemented laudable policies to support local farmers and reduce imports of these goods. So now we buy these products from Sri Lankan farmers.

What has that shift been like for you? Has it been consistent in terms of product quality and price?

I would say that our domestic production capacity and capability has not yet fully matured; we are still trying to develop. Before the height of the Civil War (in the 1990s), we were self-sufficient in black gram and green mung beans but both supply and demand were disrupted during the war, which led to us becoming reliant on imports. 

That’s a really helpful historical perspective. How is the government supporting local producers to increase output?

There are some initiatives in place, such as disbursing seeds to farmers, but we’ve been struggling with unpredictable seasonal changes in recent years. Heavy rainfall has destroyed a lot of crops. Our own government has identified climate change as a major risk factor for the development of farming in Sri Lanka and is taking measures to mitigate it. 

A lot has been made recently of the government’s emphasis on organic farming and the impact of these policies on agricultural output. The government recently paid $200 million in compensation to farmers whose crops failed under the policy. What’s your take?

It’s a complex issue. There are a lot of different stakeholders and interests involved. What I would say — which everyone acknowledges — is that the policy hasn’t obtained the results that were expected. I believe that the primary reason may be due to the fact that, over the years, our farmers have gotten accustomed to using fertilizers to increase yields. It’s unfortunate and, in my view, it has certainly contributed to the higher food prices we are seeing, particularly for vegetables and rice. 

Gnanam is a major pulses importer in Sri Lanka. Can you give us a sense of who your customers are and an overview of consumer demand for pulses in the country?

Sure, we do most of our business through a network of around 1,500 wholesale retailers spread right across the country. So they buy from us then sell it on to consumers. 

In terms of that consumer demand, I’d say the most important thing to know is that Sri Lanka is a very health-conscious country. It’s very normal for people here to boil some green mung beans and black eyed peas with spices and chili as a breakfast meal. Within schools, pulses are a staple of children’s diets at lunch; parents and teachers are very conscientious about children’s diets and that translates to high demand for pulses.

We are a country of around 22 million — that’s about 5 million households — and we are importing 15,000 metric tons of lentils per month and 1,500 tons of chickpeas. 

Does the high level of demand mean that higher prices in the global pulses market affects the Sri Lankan economy quite severely?

Definitely. The December inflation rate was 14 percent — that’s a record for us. We are facing food shortages and people’s purchasing power has been reduced severely. 

What’s driving this economic collapse?

Our economy is very dependent on tourism and remittances from emigrants (a lot of them in the Middle East). The pandemic has affected people’s ability to travel in and out of the country, which reduces our export earnings and foreign reserves, leading to increased pressure on our currency. 

How is this crisis affecting pulses traders?

The major issue we’re facing is timely access to US dollars. Local demand for chickpeas and lentils is strong — like I said, pulses are part of people’s daily diets. But many importers are facing challenging times to conduct their business operations due to the non-availability of dollars. Hopefully, we will be able to overcome the situation with the continued assistance of our government.  

The other problem is at the ports. The fees we’re being charged, as well as the rise in global shipping costs, are really hitting us hard. There is some financial support available from the government but it can be difficult to access this through the commercial banks. Sometimes they don’t have foreign currency to disburse.

Well, to finish on a more optimistic note, can you tell us what you see as the major opportunities in Sri Lanka’s pulses sector for 2022?

Well, I’ve been in this market for a long time — more than 30 years — so I am inclined to take a long view on things. Yes, we are facing a lot of (well-documented) challenges right now but I think about where we have come from as a country. Sri Lanka used to export black gram to India and sesame seed to Korea and China - we were completely self-sufficient. That is no longer the case. But I am absolutely convinced that the knowledge and potential is there. 

What we need is the resources and support. I think this is a great time for international investors to look at Sri Lankan farming for great value. The government wants to see growth in the sector and they are cooperating with the private sector. I think there are a lot of opportunities on both the production and trading side and I’m looking forward to making the most of them with Gnanam group.

JS: Thanks Rajendren, great talking to you!