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By T.D.R.S. Mario de Alwis

Though spices and allied products have been classified as minor export crops, this segment of agri-exports has over the years steadily contributed towards the country's export earnings. With the change of policy on land ownership and estate management in the sixties, the decline of this sector took place. Though several subsidy and other schemes have been offered to motivate growth in this segment. Sri Lanka has not accrued the full potential in this trade.

Singapore is the largest exporter of value-added spices from Asia, though technically the country does not grow any crops. Depending on its geographical location ideally suited for imports from Indonesia, Malaysia and China, the country re-exports products after value-adding, to Europe and North America.

Similarly, Sri Lanka is situated ideally adjacent to India, Pakistan , Nepal and Bangladesh so that it could access material from those countries for value-addition together with its own Spice crops.

The country is also quite accessible from Indonesia, Thailand and Malaysia where it could access further material to value add to its current Spice crops making it probably the best single location in Asia for value-addition of Spices or for that matter, other agro crops.

It is felt that the country does not have any strategies or forum for development of this industry on a long or short-term basis. All development oriented incentives are mostly focused on cushioning small scale growers for the short term benefiting only political agendas and does not sustain this sector on a long-term basis.

Immediate steps should be taken to set up a committee to focus the nation on the subject and draw up some type of Action Plan for short, medium and long-term growth of this industry which would not only derive some very healthy economic benefit but would also create employment generation and regional recognition could also be achieved.

The major constraints in the industry stem from the fact that individuals or companies involved in the business do not see consistency in raw material supplies or general policy. Due to this reason, there is no large scale investment in this sector for example imports of other commodities needed for value-addition or imports of shortfall of Sri Lankan supplies to meet international commitment have been periodically controlled and changed which has affected long term relations with international buyers and the country has lost credibility and a reliable quality supply source.

It was once well-known that Sri Lanka produced quality spices with high essential oil yield which are its main flavouring component over the years while the quality of Sri Lankan products has dropped, Global food sanitation controls and quality standards improved drastically. Most local organisations which are involved in these areas of Quality Control, Standardisation and Certification, still use parameters which are totally outdated or are unaware of the current requirements and not focused on this very important matter at hand.

Sri Lanka was a signatory to the GATT Agreement of the World Trade Organisation where a minimum sanitary level of all commodities has been specifically laid down. Most exports from Sri Lanka are below these standards and will face tremendous pressure once the mandatory dates are set into place and we are unable to meet these norms.

No steps have been taken whatsoever to educate the relevant parties in regard to these matters and focus all resources to overcome this problem. The current practice of export of various types of qualities for example, light pepper berries for the essential oil market will affect the long-term impact of Sri Lanka's spice export.

It is felt that steps be put in place urgently for minimum quality standards for exports which though politically unpopular, will cater to the long term interests of the country and help each and every beneficiary of the trade on the long term. The local tax structure encourages self-employment projects by a minimal slab system of GST which affects already set up industries which are unable to compete with such disadvantage of 12.5%.

As there is no input credit in the agro industry, the further growth of this sector is in danger. Labelling laws do not allow Sri Lankan companies to sell in the local market products (with the same label) which may be exported to another country.

This affects the cost factor for most products marketed by exporters while imports have a distinct advantage.

The industry is interested in the levelling of the field with equal opportunity. While it is understood and accepted that the country's industry, government and people have to co-operate to build their future it is essential that national policies with regard to individual key focus industries should be immediately formulated and put in place.

Though such policies may not necessarily sustain instant political gain, it is a price that good governance would demand and would amply benefit all parties on the long-term rather than encourage cronysm which is the bane of the current short term policies of the country.

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