Spice industry maintains positive performance in 2012

By Cheranka Mendis

 The current year has been a successful and eventful one for the local spice industry and stakeholders are anticipating a slight increase in spice exports by the end of the year in comparison to 2011.

While sentiments remain positive for the industry, which consists of cinnamon, cardamom, clove, nutmeg and mace, pepper, cocoa, coffee, betel, ginger, turmeric, etc., it was cautioned to be vigilant about rising theft and to push forth the importance of good agro practices to further increase production.

Speaking at the Annual General Meeting of The Spice Council, Council Chairman Sarada De Silva on Wednesday expressed that even though the industry faced tough times in the first half of the year, with production and exports declining as a result of the drought, the industry has been able to bring up the numbers on par with last year’s value by September.

 Productivity concerns

Despite industry issues, producers have received high process obtained by exporters for their spices in the last three years, De Silva said. “However this is not favourable to long term competitiveness of our spices in the world trade,” he noted. “Our main problem is production and productivity. Many export inquiries cannot be fulfilled due to insufficient volume and quality issues.”

The industry believes that with good agronomic practices, production can be increased by 50% within the sectors. The council works in close coordination with the Department of Export Agriculture (DEA) on issues relating to production, extension and production based research to establish and implement such practices. However the DEA needs to be upgraded in order to strengthen service delivery capacity to deliver better services to asses growers with improved technology and agronomic practices, he said.

Theft

Theft on spice plantations is now an escalating issue with the organised robbery not only robbing crops but destroying vines and trees during the process. It is a major drawback to growers attempting to increase extent of production and De Silva expressed the need to revisit the archaic laws and penalties to find a solution to the issue.

“First it should be a non-bailable offence and penalties should be increased from the current level and or make it compulsory prison terms.”

 Lack of employees

The industry, like many others, is also affected by the shortage of skilled personnel. De Silva posed the option of retaining women who leave the island as housemaids and teaching them to work in the spice industry. He reflected that those seeking employment as housemaids overseas are paid less than US$ 150 a month, which could easily be earned by working in the spice sector. “We propose that the Government does not allow anyone to go overseas for employment for less than US$ 250 or more. We are able to pay these salaries in the industry.”

The council is also looking at mechanisation to address the shortage issue. A project is currently being discussed with Moratuwa University Faculty of Engineering, Toyohashi University of Technology in Nagoya, Japan and Industry and Commerce Ministry for mechanisation of harvesting, peeling and product development in cinnamon.

Land issues

While such issues remain to be sorted, the industry is also grappling with issues relating to non-availability of land for commercial agriculture. While large tracts of land are given to foreign investors, local entrepreneurs do not get lands as they require, he said.

“We do not object to foreign investors investing, but we request that the local investors be treated in the same manner. We also seek long-term loans at internationally competitive rates to invest in the spice industry.”

Public-private partnership

The industrialists are keen to set up a cinnamon and other spice processing factories and infuse new technology to purchase raw spices from smallholders to produce value added spices acceptable to international standards provided land and financing facilities are made available.

The council is to set up a Cinnamon Training Academy with assistance from the World Trade Organisation – Standards & Trade Development Fund, United Nations Industrial Development Organisation, and Food and Agriculture Organisation totalling US$ 83,000.  The Government is funding Rs. 45 million from the EDB through the Ministry of Industry and Commerce and the industry is funding Rs. 31 million for the process.

“Under the CTA we will train stakeholders in the cinnamon industry from nurseries to harvest and produce ISO and health standard certifiable products and are also looking at training the required cinnamon technicians to produce hygienic products.”

It has been identified the industry needs to upgrade cinnamon peelers and technicians to recognise their contribution and give them dignity. The council together with Ministry of Technical Training held a series of publicity campaign to boost the image, he said. A series of workshops was also held bringing together all stakeholders from peelers, growers, processors, and exporters to Government officials.

De Silva stated that Ministry of Economic Development will undertake a three-year project to boost the industry. The Spice Council has purchased two acres of land in Kosgoda, Balapitiya in the Galle District for setting up the Training Academy as part of the industry contribution towards the Ministry work. The council has requested the Government for five hectares to establish a cinnamon plantation for practical training.

De Silva also spoke of the importance of the Pure Ceylon Cinnamon Lion Logo, which was launched in June last year. While the logo is currently registered in the EU and USA by the EDB, the logo’s legal owner, work is underway to register it in Mexico, Colombia and Peru, the country’s main cinnamon markets. Branding pepper in a similar manner is next, he said.

To promote cinnamon, the council has initiated a project to conduct clinical trials in cinnamon as a cure for diabetes and controlling lipids under funding from Agricultural Ministry.

Along with the Bank of Ceylon, the council is developing five model spice villages. “The bank has agreed to give low cost loans at 9% interest to the spice sector.”

Branding and value addition

For the industry to move forward, the concept of branding and value addition must be adapted into the system. There is a threat of foreign companies coming into dominate the value addition sector and Ceylon spices losing both value and identity.

De Silva said: “Unless we add value and brand, we will be caught in the vagaries of the bulk market at the lower end of the value chain and will not be able to assure sustainable reasonable prices to producers. The possibility of value addition is enormous. While many companies have realised this and are working towards it, we urge others to follow suit.”

De Silva acknowledged that above all what the industry needs is more facilitation and not more controls to hamper industry progress. “Due to our lobbying the Government has approved Rs. 45 million from the national Budget towards the industry,” De Silva said. “We are thankful for this.”