The Ceylon Cinnamon Association today said that Sri Lanka’s Cinnamon Industry stakeholders have hailed the recent Budget proposals particularly the establishment of a Cinnamon Development Authority and expect the Ceylon Cinnamon brand to receive its due recognition.
Following is the statement released by the General Secretary of the Ceylon Cinnamon Association Professor Jayasiri Lankage with regard to proposals in the Budget in relation to the cinnamon industry.
Ceylon cinnamon to receive its due recognition /Cinnamon Industry stakeholders hail the Budget Proposals specially the establishment of a Cinnamon Development Authority
In presenting the Budget proposals of 2016 Hon. Finance Minister announced that Sri Lanka has the monopoly for the supply of “True Cinnamon” with over 85 percent supply share in the world market. Value chain of cinnamon is under many different agencies which stifles the growth of this industry. Therefore, I propose to set up a Cinnamon Development Authority with private sector participation to bring all activities in the value chain under one entity and I propose to allocate Rs 50 million for this purpose. Further, in order to enhance the skills required for cinnamon industry, the Cinnamon Training School (CTA) will be expanded. I propose to allocate Rs 50 million for this purpose. Given that value addition in this cinnamon industry is at a minimal level, it is proposed to allocate a sum of Rs. 50 million to National Science Foundation to fund research undertaken on cinnamon and cinnamon related activities.”
Importance of the Cinnamon Industry
The present government has very correctly understood the importance of assisting the Cinnamon Industry. Successive governments that came to power after independence has failed to realize the fact that Ceylon cinnamon spice has been one of the most important items of export in the early evolution of trade. The cinnamon that attracted the colonial powers to the country during the 16thcentury and the most sought after cinnamon has been classified as a minor export crop and later as an export agricultural crop.
Not only that major export crops cultivated in Sri Lanka such as tea, rubber, coconut and cashew are excluded from this list of export agricultural crops. They are classified as Plantation Crops and placed under the purview of the Ministry of Plantation Industries. Though the Department of Export Agriculture in their website http://www.expoagric.lk/ has categorized cashew as an Export Agricultural Crop (EAC) it is assigned to a separate Ministry for Supplementary Plantation Crops. The very basis of classification of Export Agricultural Crops is anomalous. Some of them are classed under Plantation Crops.
The creation of different Government Departments and Authorities in charge of these crops without an overall national policy has hindered the development of the spice sector. Although there are many state institutions responsible for the development of this sector, no significant growth has been achieved since independence. “During 1975 the ratio of cinnamon to cassia in the total world export was 53:47.The ratio came down to an average of 19:81 in the 1980s and in the 1990s the ratio further came down to 13:87 of the average world export of 75,763 t. of cinnamon and cassia.” (Madan and Kannan)
Cinnamon a major source of revenue
During the early period cinnamon was collected from chenas (henas), home gardens (gewatu) and wild natural groves in the central hills of Sri Lanka. During the time of Sinhala Kings the mainstay of state revenue had been the taxes on land and its produce. Cinnamon was the major annual land tax (kada rajakariya) or the source of revenue of the Sinhala kings. King Rajasingha I ( A.D. 1581-1593) organized (Mahabadda) the Cinnamon Department under a Chief Revenue Officer named Maha Vidane.
During the Portuguese, Dutch and British rule they re-organised and continued the Cinnamon Department under a Maha Mudali, but placed at its head a European officer called Cinnamon Captain. The British Governor Frederic North assumed the Title of ‘Cinnamon Captain’ himself in 1799.
This shows that amount of importance the foreign rulers placed on the cinnamon industry to enhance their trade in this commodity, which fetched very high price in that era.
Cinnamon Development Authority
The crying need for an Cinnamon Authority has been made my all stakeholders for the last 25 years as the industry is scattered among many government institutions and ministries hampering the true potential of the growth of the industry. Cinnamon is unique from other spices and agricultural crops as it is indigenous to Sri Lanka producing more than 90% of worlds production and the only monopoly Sri Lanka has.
On behalf of the stakeholders of the cinnamon industry we express our gratitude to the Government for allocating funds to set up a Cinnamon Development Authority with private sector participation to bring all activities in the value chain under one entity and proposing to allocate Rs 50 million for this purpose. We believe that in order to develop any commercial ventures, the involvement of the private sector is crucial. When considering the obstacles we had to undergo in setting up the CTA this is a welcome measure on the part of the Government. ‘Good actions and intensions reap good rewards’.This authority must not be linked any other spice like pepper as we have even less that 3% of the world production in pepper.
Export Agricultural Crops
The Department of Export Agriculture (DEA) is empowered by the Parliament Act No 46 of 1992 of Government of Sri Lanka for the promotion of export agricultural crops. The Mission of the Department is to “Develop Export Agricultural Crop Sector for Enhanced Earnings of Foreign Exchange while Ensuring Improvements to Farmers’ Economy and Safeguards to Environment”.
According to the Department’s website http://www.expoagric.lk/ the crops that are perennial in nature other than Tea, Rubber, Coconut and Cashew, where over fifty per cent of their annual production is exported are considered as Export Agricultural Crops (EAC). The emphasis is paid to crops such as pepper,cinnamon,cardamom,clove,nutmeg,coffee,cocoa,citronella,lemongrass,vanilla,betel,arecanut and kitul etc.” Major export crops cultivated in Sri Lanka such as tea, rubber, coconut and cashew are classified as Plantation Crops and come under the purview of the Ministry of Plantation Industries. Though the Department of Export Agriculture has categorized cashew as an Export Agricultural Crop (EAC) again it is assigned to the Ministry for Supplementary Plantation Crops. The cinnamon that attracted the colonial powers to the country during the 16thcentury and the most sought after spice Cinnamon is classified as a minor export crop and later as an export agricultural crop.
The very basis of classification of Export Agricultural Crops is anomalous. Some of them are classed under Plantation Crops. The creation of different Government Departments and Authorities in charge of these crops without an overall national policy has hindered the development of the spice sector. Although there are many state institutions responsible for the development of this sector, no significant growth has been achieved since independence.
Lack of policy
This shows that with change of governments and for creation of ministries agricultural policy of the country has been changed without any valid reasons. Whenever a different party comes into power they abandon the policy formulated by the previous Government. This type of ad hoc decisions hindered the development of this sector. A number of Policies have been formulated during the past by the Governments when they were in power.
National Policy Formulation
National Policy Formulation process should be widely consultative. National Policy formulation and implementation should be carried out with representation and consultation with all the stakeholders of the spice industry comprising the private sector, public sector, professionals, industry experts, and consumer representatives. This should fit into the overall agricultural policy as an integral part of the national economic development and poverty alleviation. The Policy framework for cinnamon Industry should aim at value addition, organic cinnamon, accelerate the growth of cinnamon industry, create new employment for youth in cinnamon growing areas, and secure a fair standard of living for the growers and producers. Adhere to the other related National Policies that have been formulated on Land, Environment, Youth Employment, International Trade and Commerce.
In order to resolve the myriad administrative and management problems afflicting Cinnamon Industry the Government should commit itself to developing a National Policy. Learn from past experiences, study past successes and failures. National policy should harmonize the different interests of all stakeholders towards a common goal in support of sustainable development of the cinnamon Industry.
Cinnamon is the leading spice in terms of foreign exchange earnings and employment. Sri Lanka is the largest producer and exporter of Ceylon cinnamon (Cinnamomum zeylanicum Blume) in the world –claiming 90% of the world production. Presently the area under cinnamon cultivation in Sri Lanka is estimated to be 25,132 hectares, of which 75% of plots belong to small holders. The cinnamon industry in Sri Lanka brought US$ 833 Million in exports in 2010.
According to the statistics available approximately 31,000 hectares of Cinnamon are grown in the country producing around 16,000 metric tons annually of which exports over 12000 metric tons of cinnamon bark in different grades per year mainly in bulk form. This industry employs about 16,000 cinnamon processors involving 350,000 families.
Historically Cinnamon spice has been one of the most important items of export in the early evolution of trade. Sinhala kings sold cinnamon to the merchants who came to Colombo and other ports at a very low price. There are records of trade in Ceylon cinnamon in Roman times. Cinnamon originating from Sri Lanka was recognized as of superior quality and also referred to as “sweet cinnamon” Cinnamon and Chinese cassia found their way to the Middle East at least two centuries before the Christian era. It was mainly by sea route that the spice trade developed.
The Phoenicians were expert sailors and they were traders including spices. Arabians were also engaged in direct sailings to the East to collect spices about 2000 years before the Christian era. They concealed the origin of Ceylon cinnamon from the western world for many centuries in order to enhance the value of cinnamon. It is said that at one time cinnamon was valuable than gold. The Arabs, who traded in it with the Greeks and Romans but they kept the source, a closely guarded secret to maintain their monopoly. They brought the spice via overland trade routes to Alexandria in Egypt, where it was bought by Venetian traders from Italy who held a monopoly on the spice trade in Europe.
It was the quest for spices that led to exploration of the world in the 15th century. Cinnamon was the most important spice that attracted the Westerners to the country. According to Baldaeus “Cinnamon was the ” Helen or Bride” for whom, the Netherlanders and Portuguese had for so many years contended.” Dr. Colvin R de Silva in his Ph.D.thesis Ceylon Under the British records that “If the vagaries of wind and wave brought the Portuguese to Ceylon the lure of cinnamon kept them in the island”.
The Portuguese established a monopoly in Sri Lankan cinnamon trade from 1506 to 1656.Then the Dutch captured the Portuguese establishments in 1658 secured the monopoly of cinnamon trade. With the British invasion of the country in 1796 the monopoly of cinnamon trade changed hands again. During the closing years of the British Period the profits derived from the trade monopoly of cinnamon were reduced and also due to the abolitionist attitude of Governors Horton and Colebrooke it was finally abolished in 1833. By this time European consumers had become satisfied with the cheaper substitute Cassia from China and Malayan Archipelago and Sri Lanka lost the Cinnamon market in Europe.
Distinctive Features of Ceylon Cinnamon
The value of Ceylon Cinnamon cultivated in Sri Lanka is due to the quality of bark and specially the presence of aroma giving volatile compound known as “terpenoids”. The presence of terpenoids gives the Ceylon Cinnamon its characteristic flavour profile. The high quality of the bark of Ceylon cinnamon is influenced by the soil and the climatic conditions. Dry soil like silver sand (maradan vali) and frequent rain are conducive to the production of finest quality cinnamon. This finest quality cinnamon is of a thin smooth bark, with a pale brown colour, highly fragrant odour, sweet, warm and pleasing aromatic taste.
Its flavour is due to the presence of chemical constituents called “terpinoids” which are totally absent or present on only trace quantities in cassia. Cinnamon produced in Sri Lanka is offered to the market in the form known as ‘quills’ have their characteristic organoleptic properties, as well as a smooth tender pale brown appearance.
Cinnamon Training Academy (CTA) Limited
Cinnamon Training Academy (CTA) Limited, Public Company was incorporated in Sri Lanka on 13th June 2006 and registered under the Companies Act. The Shareholders of the company are members of the Ceylon Cinnamon Association (CCA) and The Spice Council (TSC) who are dedicated for the development of the cinnamon Industry. The main objective of the CTA is to train adequate number of cinnamon processors under international food standards and issue nationally accredited certificates to them. Inadequate number of cinnamon processors restricts the cinnamon industry’s production capacity and hoping to increase the cinnamon exports by 30-50% within the next few years.
CTA was formed to find long term solutions to arrest the prevailing conditions such as severe shortage of cinnamon peelers, that restricts the cinnamon industry’s production capacity and train adequate number of cinnamon peelers issue nationally accredited certificates. Proposal to allocate funds to enhance the skills required for the cinnamon industry and expand the objectives and services of the Cinnamon Training Academy will no doubt assist in social, economic development and poverty alleviation of the country.
‘Value Addition’ has been identified as most fitting strategic action to be implemented to capture higher market share in international spice trade. Time has come for Sri Lanka to diversify the cinnamon products. Bulk form of exportation limits the development of overall cinnamon industry such as, few employment opportunities, poor technology transformation and low return to the investments.
There are many other countries that produce cinnamon and cassia in bulk form; therefore it is difficult to compete with them in world market. Those countries have higher production capacity, higher productivity and are selling their products at low prices in the world market. The importing countries reprocess and add value to our cinnamon and re-export as final product and earn higher income. Very often they mix cheaper substitute Cassia with Ceylon cinnamon. The most suitable way to overcome this problem is to add value to our cinnamon and export them to special niche markets in Europe, Japan and USA. However there is a good demand for Sri Lankan cinnamon products due to its intrinsic quality and flavor. Therefore we should set our goals accordingly to gain more profit. When we consider the value addition there are few areas that are identified by the industry.
Allocating funds to National Science Foundation to research undertaken on cinnamon and cinnamon related activities is a timely measure. Promoting industry-related research in developing cultural industries will help to foster wealth creation and development of the country. Industry is central to the economy of modern society. It is essential to a developing country like ours to widen the development base and meet the growing needs. We fervently hope that these funds allocated would be used for the betterment of the cinnamon industry and manufacturing value added (MVA) products and services. Agricultural research and technological improvements are prerequisites for increasing agricultural productivity and generating income for farmers and help to the alleviation of poverty.
The Ceylon Cinnamon Association, The Spice Council and the Cinnamon Industry stakeholders are consulted in doing this research. We all in the Cinnamon industry must appreciate and thank Mr. Sarada De Silva for all his efforts over the last 40 years.