IFC urges Sri Lanka spices sector to harness AI, value addition for export growth

Sri Lanka and Maldives Country Management Unit Operations Officer Rukshila Gooneratne

Sri Lanka’s spices industry must move beyond traditional commodity exports and harness artificial intelligence (AI), traceability, branding, and value addition to capture premium global markets, International Finance Corporation (IFC) Operations Officer for Sri Lanka and the Maldives Rukshila Gooneratne said.

Addressing the 42nd Annual General Meeting (AGM) of the Spice and Allied Products Producers’ and Traders’ Association (SAPPTA) last Friday, she said the sector was at a critical juncture as Sri Lanka targets $ 36 billion in exports by 2030, with spices identified as a priority export sector under the National Export Development Plan (NEDP).

“The next phase of growth for our spices sector may not come solely from increasing volumes. It will come from increasing value; from premium positioning, innovation, branding, new products, and new markets,” Gooneratne said.

She said Sri Lanka’s centuries-old reputation for spice quality provided a foundation for competing in markets, where consumers increasingly demand information on origin, sustainability, production practices, and traceability.

“The future belongs not simply to those who produce more but to those who produce better, innovate faster, and build stronger brands,” she stressed.

Gooneratne also positioned AI as a potentially transformative tool for an industry dominated by agricultural producers, traders, and exporters, arguing that technologies once accessible mainly to large multinationals were increasingly available to small and medium-sized enterprises (SMEs).

She said exporters could use AI and data analytics to understand customer preferences, forecast international demand and prices, identify emerging markets, optimise logistics, improve supply chains, monitor crop and climate conditions, detect quality issues before shipment, and automate regulatory documentation.

“In the next five years, the most successful exporters may not be the largest ones but the smartest ones,” Gooneratne said, urging the sector to combine Sri Lanka’s agricultural expertise with 21st-century technology.

She also identified AI and technology as a means of attracting younger people into agriculture by creating new career opportunities in areas such as data analytics, drone operations, precision agriculture, supply chain management, and sustainability.

Her comments came against a backdrop of renewed but still fragile economic recovery, with Gooneratne noting that Sri Lanka’s economy had proved more resilient than expected following the 2022 crisis.

She said growth exceeded expectations at 4.2% in the second quarter of 2026, while foreign reserves had risen to $ 6.9 billion by end-August, equivalent to around three months of imports. A fiscal surplus of Rs. 1.4 trillion had also been recorded during the first half of the year, driven by higher tax revenues.

However, she cautioned that growth was projected to moderate to 3.6% for the full year amid the impact of the Middle East conflict, particularly higher fuel prices, alongside the anticipated effects of El Niño.

She said for the spices sector, climate risks were particularly significant, with lower reservoir levels potentially affecting crop yields while higher energy costs could further raise production and processing expenses.

Gooneratne said the World Bank Group was seeking to support the sector as agriculture remains one of four priority areas under its five-year Sri Lanka strategy.

The World Bank’s agriculture program is aimed at improving productivity, market access, and climate resilience, while strengthening irrigation and water management, climate-smart agriculture, farmer-buyer partnerships, agricultural insurance, data systems, and quality infrastructure covering testing, certification, traceability, and food safety.

The IFC has already supported Sri Lanka’s cinnamon industry by helping strengthen quality standards, traceability, certification, and market access, including support for the Geographical Indication (GI) framework for Ceylon Cinnamon.

Gooneratne said GI certification had helped growers and processors access premium European Union (EU) markets, while the program had also supported smallholder farmers, value-added innovation, and employment, including through training for female cinnamon peelers.

She urged the industry to build on such initiatives by moving into higher-value products, including essential oils and extracts, functional foods, natural health ingredients, sustainable and organic products, and branded consumer goods.

Pointing to Vietnam, India, and New Zealand, she said successful agricultural exporters had not abandoned their traditional strengths but had built productivity, logistics, branding, innovation, and international market integration around them.

“For centuries, Sri Lanka’s spices have connected this island to the world,” Gooneratne said, arguing that the same sector now had an opportunity to play a much larger role in Sri Lanka’s next phase of export-led growth.

The challenge, she said, was no longer simply to export more of what Sri Lanka already produces, but to create new sources of value from the country’s existing agricultural resources, expertise, and reputation.