More private investments will boost export agriculture
 

by Gamini Warushamana

Sri Lankan's export agriculture needs more private investments to obtain the optimum potential and face the new challenges in quality barriers enforced by our main export markets said, Assistant Director, Department of Export Agriculture Dr. Jayananda Weerasinghe. Investment opportunities are available in value added industries, processing, quality improvement and control, he said.

Still we export primary products in many of our Export Agriculture Crops (EACs) (which includes spices, beverage and industrial crops) and there is potential for investment in industries to add value.

For instance Sri Lanka is the world's largest cinnamon exporter, providing 70% of world exports but still our exports are in the form of bale or quilt form which are similar to what we exported prior to the Portuguese invasion in 1505. We started to export cut pieces, simple value added form of cinnamon very recently and their export volume is very low, he said.

Our main market for cinnamon is Mexico as Canella or white cinnamon. It is mainly used as a beverage. Canella is an expensive variety and the low cost substitute is called cassia or Chinese cinnamon.

Our entrepreneurs have not recognised and exploited the supreme position Sri Lanka has as the main cinnamon producer. We should provide value added products and penetrate upmarkets such as US, EU and Japan, where we can get a higher price, Dr. Weerasinghe said.

On the government side much has been done to increase production and improve the quality of the products.

Under the first program which ended in 2001 the Department carried out a cultivation extension program in 14 districts.

New high yield and high quality varieties were distributed among the farmers. Cash subsidies were given to the farmers and extension services were provided through the field officers of the department. The second program was started last year and the approach is different.

It is a six-year plan to be implemented from 2005-2010. Under the new program farmers are organised in Community Based Organisations (CBOs) to cultivate and process the EAC considering the present concentration of cultivation. Assistance will be provided for new planting, improve existing plantations and processing.

Dr. Weerasinghe said that the quality issue is very critical today and the business process has not developed or stakeholders have not recognised the challenges. Still products are dried on road sides, keeps stocks over a long period of time till the prices go up and collectors mix high and low quality products together. This process has to be changed or else we would face serious problems, he said. By 2000 the estimated loss of exportable volume of the EAC was 5,500 Mt per year and the value was US 2.2 million.

This is 3% of the total earnings of the EAC and this would increase with new quality standards in EU, USA and WTO negotiations. According to studies, 19% of our cinnamon, 12% pepper, 16% coffee, 38% cloves, 15% cocoa and 38% of cardamom are not reaching export markets due to high moisture levels.