The Sri Lankan cinnamon industry is facing huge issues due to low quality exports and also and intense, unhealthy and unethical competition.
A kilo of cinnamon which was around 10 to 13 US dollars a few years ago has now come down to around 8 to 9 US dollars mainly due to new players entering the market and lowering the prices to sell their low quality products easily.
It is rumored that cinnamon exports are being used for money laundering purposes with connections with the underworld.
When contacted the founder Chairman of the Spice Council, Sarada De Silva said that unlike other agricultural exports, Sri Lanka doesn’t have to lower prices for Cinnamon since Sri Lanka holds the monopoly in cinnamon exports to the world.
The export figure for cinnamon exports in 2018 was USD 259 million and up to July 2019 (half way) it’s only USD 97 million clearly indicating the revenue dip. Due to intensive competition among a few exporters each offering prices below the others, the cinnamon market has been reduced by over 30 to 35% this year.
This unhealthy trend is reducing the export revenue and foreign exchange to the country. Also there are rumors that cinnamon exports are being used to launder black money.
Sri Lanka accounts to around 80% of the total exports of cinnamon to the world and main exports are to Mexico, Peru, Colombia and USA.
Only a few countries like Madagascar and Seychelles have cinnamon but they are yet to match the high quality of Sri Lanka cinnamon. “All the good work done by cinnamon industry over the years is negated due to a few unscrupulous exporters”.
However this does not mean that Sri Lankans can sell cinnamon at exorbitant rates because importers will then start looking at other alternatives instead of using cinnamon which was similar to what happened to crude oil.
The lowering of prices will have effects to the economy since 350,000 families depend on the cinnamon industry. It should also be mentioned that 70% of growers are small and medium sector and the low prices will have a major negative impact on their income.
He said that the way out of this scenario is to introduce a minimum export pricing formula and implement the SLS 81 product standard for cinnamon compulsory for export of cinnamon.
“We have met Finance Minister, Mangala Samaraweera last year and explained of this and he was good enough to make SLS 81 implementation compulsory in the last budget in addition two other projects for cinnamon in the budget.
“It is high time the ministries and also the export development board start getting involved in this to implement the price formula and also have quality standard for cinnamon exports and start protecting this export commodity”
“We urge the government to speedily implement the gazette notification as per budget proposal to make SLS 81 mandatory for export of cinnamon to stop adulteration and exporting inferior quality.
“Government should appoint a committee to implement a minimum export price scheme and the SLS 81 standard for the export of cinnamon and reviewed quarterly. This committee should include officials of Customs, DOC, DEA, ITI, SLSI, Spice Council, Cinnamon Training Academy, SAPPTA and Import and Export control Department.
There are rumours of the smuggling of cheap cassia in to the country and adulterating with Lankan cinnamon which is exported damaging the goodwill of Ceylon Cinnamon.
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