Pepper farmers’ bonanza

Chairman, The Spice Council, Sarada De Silva addressing the Annual General Meeting said pepper farmers have benefited from increased farm gate prices.

Price of pepper which was around Rs. 150 per kg 18 months ago has almost trebled during the year and has now settled to around Rs. 350 per kg. This has extremely benefited the producers in the districts of Matale, Kandy, Kegalle, Badulla and Ratnapura.

It is imperative that the increased earnings of the producers be channeled to upgrading of their production facilities and increasing the productivity of the plantations.

With sound agronomic practices and investment, it is easily possible to double or even treble the current yield per hectare of 500 kilos. In competing countries like Malaysia and Vietnam yields of over 2500 kilos per hectare have been achieved.

Cloves have not performed as expected due to lower levels of farm gate prices. Compared to the previous year it declined in volume and value.

Cinnamon is the largest spice exported accounting for 50% of volume and 60% of value. Producers in the districts of Galle, Matara, Ratnapura, Kalutara and Hambantota have benefited from the 30% increase in the farm gate price during the past 18 months. The national average yield per hectare is around 500 kilos. There are plantations that achieve 1000 kilos per hectare.

With sound agronomic practices and proper extension services it is easily possible to double this yield.

The demand from overseas markets has increased but we are unable to meet this increased demand due to the acute shortage of cinnamon peelers.

If adequate peelers are available we can increase our production by 30% in the short term and increase export earnings by another USD 20 million or Rs. 2250 Million.

Production cost increase

Though farmers have been benefiting from increased prices for their products, the ever escalating production cost have been a problem, particularly the increased cost of fetriliser has become a major issue. We need to find permanent solution and find alternative soil enrichments other than chemical based fertilizers.

De Silva recollecting on the situation prior to the formation of the Spice Council stated that industry was fragmented with the Department of Export Agriculture delegated with functions of production and production based research, Export Development Board helping the industry with export marketing, Spices & Allied Products Producers’ and Traders’ Association attending to the private sector interests.

The Spice Council comprises of all key industry private and public sector stakeholders. This has been an effort on the part of all stakeholders in the Spice industry to bring the Spice Council to the level it is today.

He also made a special mention of Dr. P. B. Jayasundera, Secretary to the Ministry of Finance (MOF) and Chairman National Council for Economic Development (NCED) for accepting the proposal the Spice Council made through the NCED Export Cluster and Agriculture Cluster most of which were incorporated in the National Budget. Without the assistance from Dr. Jayasundera and the staff of MOF and NCED the Spice Council would not have been successful in achieving these results.

Three key strategies were undertaken in the areas of increasing Production and Productivity, Quality improvements and Collectivisation of small producers and Value Addition and Brand Marketing.

Production and productivity

The Spice Council has encouraged the Department of Export Agriculture to improve and extend the reach, of their extension service to the producers to improve Production and Productivity. Their efforts are now bearing fruit and likely to see the results in 2008. It has also started a reward scheme for farmers who undertake better agronomic practices.

Quality improvements and collectivisation

The Spice Council has assisted Wijith Jayatilleka to set up a model Good Manufacturing Processing Centre for Cinnamon in Kosgoda. This is a first of its kind in Cinnamon in the world. Chairman stated that he is happy to inform that it has now obtained HACCP food safety standard. Export Development Board also extended its assistance with Rs.1 million.

The Spice Council has also set up a Model Spice Processing and Training Unit in Gallekoluwa a remote village in Matale. The farmers have been collectivised into a Company with investments from them as well as the Spice Council. The Competitiveness Programme of USAID financed the cost of construction, spice drier and training on a cost share basis.

The total investment by TCP of USAID was Rs. 1.8 million.

Internet facilities have been provided and these farmers are able to obtain International Pepper Community prices online.

The Spice Council has been working with GTZ Value Chain Promotion Component to document the detailed Value chains of Cinnamon and Pepper with the assistance of all stakeholders. In the last year.

The Spice Council has addressed some of the constrains that have been identified. The Spice Council was also assisted by GTZ in developing the standards for Good Agricultural Practices for cinnamon and pepper.

The Spice Council has also worked with GTZ Promotion of Micro Small and Medium Enterprise Development on a proposal of the Spice Council to establish a Cinnamon Training Academy. All private sector funding is in place and awaiting the release of Rs. 3 million from Sri Lanka Export Development Board.

The proposal of the Council to establish GMP Cinnamon processing centers, nine investors have started work and will invest more than 45 million and GTZ will invest 20 million.

The DEA has been actively working on collectivising producers in the last two years to form farmer groups and association. The extension services provided to these groups will see positive results in the near future.

Value addition and brand marketing

From both the task force and cluster reports it was clearly evident that Sri Lanka will not be a mass producer of spice like India, Vietnam and Indonesia.

Strategy The Spice Council undertook was value addition and niche markets. In order to increase value addition & branding The Spice Council has undertaken a series of activities and he highlighted few of them.

A study of the North American Market for Value Added Spices and a technology study to manufacture and process these identified value added spices were undertaken. This was followed up with two successful visits to the United States by Spice Exporters and Processors to promote Ceylon Spices in the niche and value added markets in both the east and west coast.

As a result of these efforts The Spice Council obtained membership of the American Spice Traders Association and was invited to make a presentation on Ceylon Spices at their centenary celebrations in April in California.

Jointly with the Tourism Cluster and TCP, The Spice Council arranged for a team of food writers and chefs from United States to visit Sri Lanka to savour Sri Lankan food based on Ceylon spices to write and promote in the United States, Ceylon Spices, culinary experience and the hospitality industry. Most of these programmes were supported by the TSC of USAID on cost share basis.

The Industry have successfully bifurcated Cinnamon from Cassia in the World Customs Organisation’s Harmonised Code. Credit for this success should go the Department of Commerce (DOC), Department of Customs and the cinnamon industry stakeholders.

He also thanked the Department of Commerce for the speedy action taken in tackling the SO2 issue with regards to Cinnamon in the European Union. The Spice Council as a member of European Spice Association (ESA) was informed by ESA the commendable way Sri Lanka handled the SO2 issue with the European Union.

The Spice Council has obtained membership of the European Spice Association and attended their annual sessions in June in Munich.

The Spice Council has also been invited to join the International Organization of Spice Trade Associations (IOSTA).

De Silva stated that he is happy to announce that the industry has been successful in defending the Cinnamom Zeylanicum name in the International Standards Organisation’s Cinnamon standard. Due to untiring efforts of Prof. Jayasiri Lankage representing the Spice Council and SAPPTA as the only Sri Lankan delegate, he had to single handedly defend our name at the meeting in Paris. Chairman appreciated the assistance given by Chairman, Sri Lanka Institute of Standards Dr. A. R. L. Wijesekera.

He further stated that Sri Lanka need to finally get this name cleared at Botanical Congress and that the industry appreciates the efforts of Hemakumara Nanayak- kara in appointing a committee chaired by the Director General of the Peradeniya Botanical Gardens to finalise documents to be presented to the Botanical Congress soon.

There is an important issue with regards to cardamom. About 350 acres of cardamom in the Maturata is affected by an attack of thrips. This is not the first time; thrips have attack cardamom or other crops in Sri Lanka. The whole area needs to be sprayed for it to be controlled.

The Spice Council has discussed this serious issue with the Director DEA he is willing to bear the cost of the chemicals identified and the spraying will be done by the producers.

The director is awaiting the approval of secretary of the ministry. Chairman requested the Minister for his speedy intervention in this regard. Chairman also stress that the DEA must supervise the spraying.

De Silva further said that looking to the future The Spice Council wish to consolidate its success and correct failures.

Particularly the Eastern province and Moneragala, one of the poorest districts which has a lot of potential for the spice industry. The Spice Council hopes to work with the Rubber Cluster and Wellassa Rubber Co to intercrop spice with rubber and also with USAID project of connecting regional economies next year.