Spice industry eyes $ 500 m in exports for 2019

Tuesday, 19 February 2019 00:07 -     - {{hitsCtrl.values.hits}}

  • Industry expects production to improve due to better weather 
  • Russia, Uzbekistan and Kazakhstan targeted as new markets 
  • Says pepper exports should be supported to increase earnings 
  • Spices recorded 11.6% drop to $ 330 m up to November


By Divya Thotawatte

The spice industry is looking to hit a revenue target of $ 500 million for 2019 helped by new markets, rupee depreciation and increased value addition, as well as increasing exports of pepper, cloves, and nutmeg, experts said recently. 

To achieve the revenue target of 2019, the spice industry aims to export cinnamon, as well as pepper, nutmeg, and cloves, to new markets such as Russia, Uzbekistan, and Kazakhstan, former Spice Council Chairman Nanda Kohona said on the sidelines of the launching ceremony of the Global Spice Road Symposium. 

He told Daily FT the industry would also be looking at increasing value addition to reach the revenue target, but Government support would also be necessary to succeed. 

According to the Central Bank, spices earned $ 330.3 million in the first 11 months of 2018 but it was an 11.6% drop when compared to the same period the preceding year. In November, spices earnings dropped from $ 33.7 million to $ 27.7 million, which is a reduction of 17.7%, data from the latest external performance report showed. 

“Most of our cinnamon is exported to Mexico and South American countries, and a fair percentage goes to the European Union. We’re looking at new markets like Russia, Uzbekistan, and Kazakhstan, which are coming up now and looking for spices from Sri Lanka. The demand is not only for cinnamon but pepper, cloves and nutmeg as well,” Kohona said.

He also noted that the industry is looking for mixed markets where high value addition is done. Mass markets are not an option, as the industry is looking for specialised products in terms of getting the best income. Kohona explained the importance of making the best use of local spices, such as exporting extracts from spices which have medicinal value, which are usually exported raw to other countries. 

“If you take black pepper, the highest piperine level is in Sri Lankan pepper. Extract that and market into the world, without exporting it raw and allowing another big producing country to get that benefit, which we can do,” he stressed. 

According to Kohona, although cinnamon was the highest income earner for the spice sector, the production of pepper is higher than cinnamon in Sri Lanka. Since the prices of pepper have gone down in the world market, most local farmers have neglected their pepper crops, which was a major loss for the revenue of 2018. Sri Lanka producers about 17,000 metric tons of cinnamon and 35,000 metric tons of pepper. The spice industry expects production to recover on better weather conditions this year.   

The spice industry of Sri Lanka is also facing other issues, such as limited land mass and low prices in Vietnam threatening the export of local pepper. He added that the turnover last year was good and the exporters benefited due to the rupee depreciation, but spice exports in terms of volume remained the same. He said that the crops of all the products will be good in 2019, but it was important that production increases.

He also appealed to the Government for support by removing restrictions, policies and red tape, while helping to increase value addition. Reducing the economic service charge and taxes from the industry was also suggested.

“We have already appealed to the Ministry of Finance. These are the things that should be given and it has to be a private sector and Government collaboration for it to work,” he added.