Cinnamon industry in crisis, says Council

The global financial crisis has affected the cinnamon industry drastically. The producers who were getting around Rs. 850-900 per kg of fine grades cinnamon have now come down to a level of Rs. 500-525 per kg. The course cinnamon, which was selling around Rs. 600-650 per kg has come down to Rs. 350 per kg, the Spice Council spokesman said.

“These are extremely uneconomical levels for the producers. Even at Rs. 500 and 350 respectively the producers are finding difficulty in being able to sell the produce.

The dealers and exporters are facing severe cash flow problems due to their inability to sell their stocks that they are having in hand even at a loss. Exporters say that for the last 4-5 weeks no export orders have been received. “The buyers have still not paid for most of the exports already made and they have delayed or cancelled the earlier orders placed, that were to be shipped.

Since the major buyers are from Central and South America they too are facing the global financial crisis and are unable to meet their current commitments or place new orders.

The cinnamon industry which consist of 80% small-holders who are in serious difficulties and are unable to meet their day-to-day needs and also are unable to pay the cinnamon peelers and workers and this would lead to a lot of social unrest amongst the cinnamon peelers, workers and smallholders.

Cinnamon Smallholders and peelers have already decided to have a protest march and also seek the blessing of the Seenigama Devale on the December 27 to resurrect the Cinnamon industry.

The Spice Council draws the urgent attention of the Government, the officials and the agencies concerned to the plight of the smallholders, workers and cinnamon peelers in particular and the whole cinnamon industry in general of the crisis situation it is facing currently.

If these trends are to continue in the next 2-3 months the cinnamon industry will have a natural death. The Spice Council wishes to suggest to the relevant authorities to immediately fund a minimum price support scheme for the cinnamon producers, 30% price support on fertilizer used and give the exporters and dealers who are carrying large stocks a relief on interest paid to the banks.

It is also recommended to give fresh interest free capital from January 1, for exporters and dealers to purchase the cinnamon produced by the smallholders. A charge of cess will only add to the problem of the smallholders as the cess will be passed down to them.

This scheme should be implemented through a committee appointed by the President consisting of officials of the Treasury, Ministry of Agriculture, Export Development Board, Department of Export Agriculture, The Spice Council, Ceylon Cinnamon Association and Cinnamon Cultivators Association and Experts of the cinnamon industry.

The Spice Council thanks the President for instructing the Department of Export Agriculture and other Government officials to use the Cinnamomum zeylanicum Blume as the botanical name of cinnamon at the meeting held recently.