14 May 2011

Ceylon Cinnamon Enjoy Global Demand and Account for Half of Sri Lanka Spice Export Earnings

13th May 2011, www.island.lk

Cinnamon exporters at a meeting with the Industry and Commerce minister said Sri Lankan cinnamon did not require any promotional activity because it enjoyed high demand in international markets, so high that Sri Lanka cannot meet the demand, while cinnamon peelers were enjoying high salaries due to labour shortages, with industrialists reluctant to ‘share revenue’.

Rishad Bathiudeen, Minister of Industry and Commerce met with members of the Advisory Committee on Spices and exporters earlier this week at the Export Development Board premises in Colombo.

"Our spice industry needs to re-invest its profits, so that the industry can continue to grow. 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 families too would benefit," the minister said.

The committee members informed the minister that no ‘special marketing efforts’ to promote Sri Lanka cinnamon were necessary in the global marketplace since it enjoyed high demand, far exceeding the current supply volumes. "An additional 10,000 tonnes of cinnamon would be required to meet this demand," they said.

The committee members said that of the 30,000 hectares of cinnamon grown in Sri Lanka, 20 percent were peeled twice a year and 70 percent were peeled only once a year, thereby incurring potential foreign exchange 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.

Committee members said that high labour costs were a serious problem. 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, who runs spice and Ceylon cinnamon export firm Intercom Limited.

According to Export Development Board of the Ministry of Industry & Commerce, 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 topmost exporter of Ceylon cinnamon having 85 percent of world market share for ‘Ceylon cinnamon’ while having 14.5 percent market share in overall world cinnamon market. Mexico is Sri Lanka’s main cinnamon export destination followed by USA. More than 85 percent of locally produced cinnamon are exported.

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 have to bear additional charges for safe destruction of the entire shipment, a member said.

Related Info :

Sri Lankan Spice Industry Records 65.56pct Growth in 2010

Sri Lanka Spices to Have value Addition. Spice Council Website Launched to Provide Market Information

Sri Lankan Spices Can Double Per Capita Incomes in 5 Years

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