Cinnamon export earnings to target $1bn by 2020

25 October 2012 03:29 am

Sri Lanka's sole export market monopoly commodity, cinnamon, aspires to generate value added export earnings of US$ 1 billion by 2020, The Spice Council (TSC) Chairman Sarada De Silva stated.

“Ceylon Cinnamon that has roots dating back to 1500 B.C., is a key underutilized potential that can facilitate export revenue earnings in the years to come,” United Nations Industrial Development Organisation (UNIDO) Regional Director Ayumi Fujino said.

With an annual turnover of US$ 80 million, the industry caters to over 90% of the world's cinnamon market.

Currently, Sri Lanka's cinnamon industry is faced with immense challenges that deter prolonged global market penetration.

Despite global prices doubling over the last three years, high cost of production, lower volumes and poor quality of food and safety standards, have led to the deterioration of market share to the synthetic substitute cassia cinnamon.

An acute shortage of trained labour, coupled with the social stigma surrounding the cinnamon industry, hinders progression in the export markets.

A UN report estimates that only 65% of cinnamon capacity is being processed, while the industry lacks over 35,000 skilled workers to carry out harvesting and production activities.

“Cinnamon is grown, harvested, processed, value added and exported entirely by the private sector. The industry supports over 350,000 families in excess of five districts. However, we are faced with a sheer corrosion of quality in products that stems through the production chain from the cinnamon peeler,” De Silva added.

Addressing these issues, a three-year long public-private partnership (PPP) was signed by TSC, several government authorities and the UN representative bodies- the UNIDO and the World Trade Organisation (WTO)- with a project finance of US$ 1.43 million.

The main outcome of the Enhancing the Compliance, Productive Capacities and Competitiveness of the Cinnamon Value Chain in Sri Lanka project will be the establishment of a nationally and internationally accredited training center to enhance the manufacturing and production skills of the cinnamon processors and producers, while further improving food safety, hygiene and quality compliance standards of the value chain.

External financial and technical support will amount to US$ 830,000- the majority of which is provided by the WTO- with several governmental bodies imparting the remaining funds.

Additionally, the PPP aims to obtain GI protection for the Pure Ceylon Cinnamon mark in international markets. This aims to facilitate market differentiation and promotion of Ceylon Cinnamon from its artificial counterpart, cassia.

“The project aims to support the cinnamon industry stakeholders to enhance the competitiveness of their value chain, restrain market deprivation and support the weak value added segment,” UNIDO Industrial Development Officer and Project Manager Ali Badarne stated.