Special marketing efforts for cinnamon, spices

Sri Lanka's spice industry needs to re-invest its profits ensuring industry growth. We also need to thank the spice producers for the forex revenues they bring in, says Industry and Commerce Minister Rishad Bathiudeen.

The Minister was addressing the Advisory Committee on Spice on May 11 at the Export Development Board premises in Colombo. Minister Bathiudeen expressed satisfaction and thanked for the increased forex brought in by spice industry. "Our spice industry needs to re-invest its profits back, so that the industry can continue to grow," the Minister said. "The Divineguma programme of the government could be used to increase our cinnamon production by enlisting the households to grow cinnamon and various other spices so that the families too benefit," the Minister said.

The committee members also informed Minister Bathiudeen that no 'special marketing efforts' on Lanka cinnamon are necessary in the global marketplace since a high demand for cinnamon far exceeding the current supply volumes is already evident. Sri Lanka can still sell an additional 10,000 tonnes of cinnamon easily if the country can produce it, they revealed. "We need to double our capacity so that we will be able to meet this extra demand," Minister Bathiudeen said. According to the Export Development Board Sri Lanka's total spice exports value in 2010 stood at US $ 165 mil and 51 percent of it belonged to Ceylon Cinnamon (US $ 84 mil). Spice exports earnings increased by 27 percent in 2010 in comparison to 2009 while cinnamon exports revenues too increased by 13.3 percent compared to 2009. Sri Lanka is the topmost exporter of cinnomon with Ceylon cinnamon having 85 percent of world market share.

Mexico is Sri Lanka's main cinnamon export destination followed by USA. More than 85 percent of locally produced cinnamon are exported.

The committee members said that of the 30,000 hectares of cinnamon grown in Sri Lanka, 20 percent are peeled twice a year and 70 percent are peeled only once a year, thereby incurring potential forex losses. "10 percent peeled once in two years, if peeled at all," a member said. According to them, Sri Lanka's cinnamon industry needs another 10,000 peelers due to worker shortage. Currently, a cinnamon peeler earns between Rs 30,000 to 45,000 per month, with a mere three months 'on the job' training.

The Committee members voiced that high labour costs are a serious burden. Unlike in tea and rubber industries, there is a serious shortage of cinnamon peelers in Sri Lanka leaving the existing peelers to charge exorbitant amounts for peeling. Cinnamon peeling is skilled work and the communities involved in it for generations have begun to demand income sharing and no less. "We share a minimum of one-third (33 percent) of our cinnamon sales revenue with the peelers on a daily basis and some producers are compelled to share as much as 50 percent of their revenues" said Sarada M De Silva, whose spice and Ceylon cinnamon export firm "Intercom Limited" is ISO and HACCP certified.

Minister Bathiudeen was also informed by the Committee that the Sri Lankan spice volumes (including cinnamon) for export, despite their high quality, are facing the risk of rejection in tough international market segments such as North America, due to the lack of various essential cleaning and sterilisation process facilities at pre-export stages.

A committee member said that post-harvest drying of spices before the export is essential and if any moisture is left in the commodities, the export shipment could be rejected and compelled to be incinerated at the importers' end. The Sri Lankan exporter then have to bear additional charges for safe destruction of the entire shipment, a member said.