Nov 23, 2015 (LBO) – Sri Lanka’s government will set up an authority to develop the cinnamon trade, its main spice export, along with strengthening research and undertaking an international branding exercise, the minister of finance said.
The spice trade in Sri Lanka dates as far back as 7th Century, but has underperformed in an economic sense, he said.
“The value chain of Cinnamon is under many different agencies which stifles the growth of the industry,” Ravi Karunanayae said delivering the budget speech of 2016.
“So I propose to set up a Cinnamon Development Authority with private sector participation to bring all activities in the value chain under one entity and we will allocate 50 million rupees for this purpose.”
Sri Lanka has a monopoly for supply of “True Cinnamon” in the world market which is the island’s largest export commodity in the spice sector, annually earning over 17 billion rupees (120 million dollars) in foreign currency.
Sri Lanka supplies 90 percent of the global cinnamon demand, and in 2014 exported 13,684 tonnes, slightly down from 13,866 tonnes in 2013. Sri Lanka exports cinnamon mainly to USA, Mexico, Peru and Colombia.
The industry has encountered problems due to inferior cinnamon in international markets, coming from other countries, creating a risk of losing Sri Lankan brand identity in the international arena.
The minister also proposed to develop the research in the industry.
“I further propose to allocate 50 million rupees to strengthen the Cinnamon Research Unit at the Department of Export Agriculture.”
“Government will collaborate with Spice Council to undertake a branding exercise of Sri Lankan spices globally, for which we are allocating 150 million rupees.”
He said that in order to enhance the production and generate more export revenue from the industry government land will be released to grow the spices.
“I propose to facilitate the usage of underutilized fertile government land to be leased out to the private sector to grow spices such as cinnamon, pepper, cardamom, nutmeg, etc.”
I also encourage Regional Plantation Companies to engage in contract cultivation, especially spices such as pepper, cardamom, he added.
Export earnings from spices increased by 63.3 percent due to the higher export volumes in March 2015, especially pepper and cloves, data from the Central Bank show.