Ceylon Cinnamon 'Lion' logo to go global:

Spice exports up by 27 percent

Pre-export stages under review:

Sri Lanka's spice industry is progressing well but it needs to invest its profits back into the industry to achieve stable growth. We should thank the spice producers for the forex revenues they bring in, said Industry and Commerce Minister Rishad Bathiudeen.

The Minister said this while addressing the Spice Industry Advisory Committee last week at the Export Development Board premises in Colombo.

Minister Bathiudeen expressed satisfaction and thanked for the increased forex brought in by the spice industry. "Our spice industry needs to re-invest its profits, so that the industry can continue to grow," he said. "The Divi Neguma programme of the government could be used to increase our cinnamon production by getting the households to grow cinnamon and various other spices which will in turn benefit these families," he said.

The committee members also informed Minister Bathiudeen of various promotional activities that the EDB and the spice industry has undertaken in the past few years. The future promotional activities include the launching of the Ceylon Cinnamon Lion logo locally in the next two months by President Mahinda Rajapaksa and thereafter to be launched internationally at the Anuga Trade Fair in Germany and IFT in New Orleans, USA. This will be followed by registering the Ceylon Cinnamon Lion logo in the main consumer markets.

"Sri Lanka can still sell an additional 10,000 tonnes of cinnamon easily if we can produce it," the producers said. "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 of the Industry and Commerce Ministry, Sri Lanka's total spice exports value in 2010 stood at US $ 165 million and 51 percent of it belonged to Ceylon Cinnamon (US $ 84 million). 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 noted for its traditional quality (Ceylon) cinnamon having 85 percent of world market share for cinnamon. 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 is 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, of Intercom Limited.

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 sterilization process facilities at pre-export stages.

A committee member said that post-harvest drying of spices before 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. In such a case the Sri Lankan exporters have to bear additional charges for safe incineration of the entire shipment, a member said.