Peace essential to do business, flourish in exports

The Spice Council, comprising all key industry private and public sector stakeholders, was created through the need for an apex body to coordinate and implement strategies for the development of the spice sector.

At the Annual General Meeting of the Spice Council earlier this week, its Chairman Sarada De Silva said the industry sees no need for government intervention.

"We know the difficulties faced by the government in respect of finances," De Silva said. "Macro economic polices and inflation affect us very much and as an export oriented industry we cannot pass on the increased cost to our buyers." Instead, the industry is urging the government to create an environment suited to deliver results. "Peace and business are inseparable.

While we support the government in its fight against terrorism, we strongly urge the government to move in the peace negotiations and endorse an acceptable package from the deliberations of the all party conference."

De Silva said that last year has been a successful one for the spice industry. Pepper farmers have benefited from increased farm gate prices. Pepper which was around Rs.150, 18 months ago has almost trebled during the year and has now settled around Rs.350. "This has extremely benefited the producers in the districts of Matale, Kandy, Kegalle, Badulla and Ratnapura," he said, adding that it is imperative that the increased earning of the producers be channeled to upgrading their production facilities and increasing productivity of the plantations. With sound agronomic practices and investment, it is easily possible to double or even treble the current yield per hectare of 500 kilos. In competing countries like Malaysia and Vietnam, yields of over 2500 kilos per hectare have been achieved.

Cloves have not performed as expected due to lower levels of farm gate prices and have declined in volume and value from the previous year. Cinnamon is the largest spice exported accounting for 50 percent of volume and 60 percent of value. Producers in the districts o Galle, Matara, Ratnapura, Kalutara and Hambantota have benefited from the 30 percent increase in the farm gate price during the past 18 months. The national average yield per hectare is around 500 kilos but some plantations achieve 1000 kilos per hectare.The demand from overseas markets has increased but the industry is unable to meet this demand due to the acute shortage of cinnamon peelers. Production can be increased by 30% in the short term and export earning can increase by another US$ 20 million if adequate peelers are available.

Though farmers have been benefiting from increased prices for their products, the ever escalating costs have been a problem, particularly the increased cost of fertilizer. De Silva said a permanent solution must be sought as well as finding alternative soil enrichments other than chemical based fertilizers.

"We have encouraged the Department of Export Agriculture to improve and extend the reach, of their extension service to the producers to improve production and productivity," he Silva said. Results are likely to be seen in 2008. The Department has also started a reward scheme for farmers who undertake better agronomic practices.

A Model Spice Processing & Training Unit was established in Gallekoluwa, a remote village in Matale. The Competitiveness Program (TCP) of the USAID financed the cost of construction, spice drier and training on a cost share basis. The total investment by TCP of USAID was Rs.1.8 million. Internet facilities have been provided and farmers are able to obtain international pepper community prices online.

"We have been working with GTZ Value Chain Promotion Component to document the detailed value chains of cinnamon and pepper with the assistance of all stakeholders," De Silva said. "In the last year we have addressed some of the constrains that have been identified. We were also assisted by them in developing the standards for good agricultural practices for cinnamon and pepper."

The Council also worked with GTZ Promotion of Micro Small and Medium Enterprise Development on a proposal of The Spice Council to establish a Cinnamon Training Academy. All private sector funding is in place and the Council is awaiting the release of Rs.3 million from Export Development Board.