The country’s spice sector is facing many challenges and producers are finding it difficult to sustain their businesses on the long run. However, they are courageously engaged in the sector, facing strong competition from global players and the escalating cost of production, to generate foreign exchange and meet local demand, Chairman, Spice and Allied Product Producers and Traders Association (SAPPTA), Rumesh Jayasooriya said.
The major challenges faced by the industry are declining global commodity prices, international tariff and non tariff barriers, competition, increasing cost of production, lower productivity and lack of value addition and innovative products, he said.
“Our quality, service, marketing and branding need visionary thinking, unrestrained innovation and continuous improvements. Innovation is necessary at all levels of our industry, including growers, plantations, processors, brokers and exporters. The international market has been transformed into a borderless technology driven market place. Today, consumers are now much more knowledgeable and discerning. They want experiences and products that reflect their fast paced lifestyles and also convenience. There is an increasing demand for products that reflect value for money,” Jayasooriya said.
“The question is how can we ensure that customers get the products that reflect value for money? Over 70% of our exports are to Asian and Middle Eastern destinations. The rest goes to Europe and the North American continent. The way forward is through value addition at all levels.”
At grower level, the questions of how to increase production, minimise cost, obtain better or remunerative prices for produce, need to be answered. To ensure that the overseas buyer is being supplied from a reliable source, it is essential that growers having an internationally recognised quality certification, such as RFA, fair trade and organic certification, he said.
“At processor level, the factories should also have internationally recognised certification such as BRC, ISO and GMP. Product innovation is a must since customers are looking for new and improved products. Innovation is also necessary to minimise cost of production. This will enable us to be internationally competitive and offer products with a difference.”
Complying with the recommendations at grower and processor levels, marketeers will be able to find new buyers and capture new markets. “A point that is lacking in our system is marketing communications. Using all the modern tools, such as social media and digital marketing, the ultimate consumer and retail dealer should be kept informed of our superior quality.”
Emphasising the need for obtaining the support of stakeholders, he said that from public sector institutions, such as the Export Development Board (EDB), we expect support in the form of generic advertising and subsidising participation cost at international exhibitions. From the Department of Commerce, we expect support with regard to tariff and non tariff barriers imposed by certain countries and to monitor and ensure that illegal imports do not enter our country, by streamlining the current procedure to ensure that smugglers will not get country of origin certificates. We expect close cooperation between growers and the Department of Export Agriculture (DEA) advisory and extension officers, Jayasooriya said.
Outgoing Chairman, SAPPTA, Prins Gunasekera said, “We lobbied with the government and brought down the economic service charge from .5% to .25%. We are working closely with the authorities, to impose restrictions on pepper imports from Vietnam, which had led to the current low pepper prices. In this regard, we thank the Department of Commerce for taking immediate steps to stop the import of pepper, cinnamon and tamarind to the country.”
“We are also involved with the Spice Council to obtain the GI status for Ceylon Cinnamon and registration has been completed for GI status with the support of UNIDO and the Export Development Board. Last year was one of the most difficult years for the spice industry due to a continuous decline in prices in the world market,” he said.
Cinnamon produced in Madagascar is becoming popular in Europe with European Union assistance programs. “Even though our cinnamon is unique in taste and quality, we should be aware of the emerging threats to the industry. Fortunately, the EDB has intervened with the support of SAPPTA and the Spice Council to obtain GI status for Ceylon Cinnamon which will be a reality in the near future.
“Brand promotion for cinnamon and pepper is also in the pipeline and much work has been done by the EDB with trade representatives to achieve this milestone. Although pepper production in the country has declined, our prices did not increase as it should have happened under normal circumstances. In fact, prices have actually come down to Rs. 400-450 this year,” Gunasekera said.
This is a result of the unrealistic floor price of Indian Rs. 500 per kg for pepper, imposed by India on its imports, which is roughly equivalent to Rs. 1,240. At this unrealistic price, no pepper can be exported from Sri Lanka to India. Due to this, Sri Lankan pepper exports to India has virtually stopped. “We hope that this problem will be resolved soon, as we have made representations to the Indian authorities.
“Although the spice industry was identified as a priority sector recently, we are yet to see any tangible initiatives to access high yielding and quality planting materials, improve post-harvest and processing technologies, reduce the use of pesticides and improve the abilities of local laboratories. Shortage of manpower is also considered as a major problem that has to be addressed.”
“We have also requested the Government to extend the subsidy schemes to the plantations sector too to bring more plantation companies to the spice industry. A large number of plantation companies have joined us and as much as nearly 2,000 acres is under spice cultivation.
“Spice cultivation which was a cottage industry in the past is now becoming a commercial industry with the involvement of Regional Plantation Companies in large scale production. “We need to pursue value addition and branding of our spices. “We as a country should consciously work towards moving away from the vagaries of commodity marketing and produce value added branded products with our spices,” he said.
“The export sector is currently burdened with many restrictions and controls and to a certain extent, it has got politicalised resulting in many bottlenecks. We must make every endeavour to keep the trade clean and healthy,” Gunasekera said.