COSMI hails banning of spice re-exports

Sri Lanka’s Confederation of Micro, Small and Medium Industries (COSMI) yesterday hailed the government’s recent decision to block the re-export of minor export crops. 

COSMI President Nawaz Rajabdeen said this move would encourage Sri Lanka’s export crop growers and small and medium industrialists. 

More than 50 percent of Sri Lanka’s agricultural exports are spices and allied products. 

“The government’s decision to stop importing of pepper, dried areca nut, tamarind, cinnamon, nutmeg, mace, cardamom, cloves and ginger by a gazette is praiseworthy,” Rajabdeen said. He said by doing that the government has encouraged the local cultivators of minor export crops and small and medium-scale industrialists. 

“The entire sector suffered during the last 10 years as a few favoured parties were given the opportunity to import spices and re-export them without any value addition. It badly affected our local cultivators and MSMEs.

Although the relevant department issued a condition for value addition, no such value addition was seen to be made,” he noted. 

Threatening locally produced exports, Sri Lanka’s re-exports of all types have quietly increased over the last decade.

In 2007, only 1.46 percent of Sri Lanka’s total exports were identified as ‘re-exports’ but a decade later in 2017, such re-exports doubled to 2.88 percent of total exports. 

The value of all re-exports (including spices) jumped by a massive 400 percent in 2017, compared to 2007. 

Damaging the local spice exports further, due to lower cinnamon and cloves exports, a decline in Lankan spice export revenues too was seen in 2018.

Spices and allied product exports declined 11.53 percent year-on-year to US $ 361.1 million in 2018. The major market for Sri Lanka’s spice exports in 2018 was Mexico, followed by India and the US.