Relief essential to cinnamon industry

by Lalin FERNANDOPULLE

The Export Development Board (EDB) has proposed a low interest loan repayment scheme to support the cinnamon industry which is facing a major crisis due to the global financial melt down.

The EDB proposed a 12 per cent interest scheme for small- holders who comprise over 80 per cent of the country’s cinnamon industry which is the fourth largest foreign income earner.

Sri Lanka produces the finest cinnamon in the world a brand that cannot be matched.

Chairman, EDB, Anil Koswatte said that the EDB will initially bear 90 per cent of the cost of the machinery used for value addition for cinnamon and thereafter will bear 60 per cent of the cost.

Around 5 per cent of the annual export income from the cinnamon industry will be allocated as an incentive for those who have been exporting cinnamon since last year.

The annual export income from cinnamon is around Rs. 8.5 billion. “The EDB proposed Rs. 700 per kilogram for fine grades and Rs. 450 a kilogram for low grades. Cabinet approval has been sought to brand Ceylon Cinnamon which help attract more buyers in the world market”, Koswatte said. The EDB proposed relief measures to help cinnamon producers who are facing a tough time due to the adverse consequences of the global financial crisis which has resulted in a drastic drop in price and the demand for cinnamon.

Cinnamon producers said that they are unable to sell their produce due to the sharp reduction in prices which were around Rs. 800-900 per kilogram for fine grades. Prices have slided to around Rs. 350-400.

Smallholders are finding it difficult to meet their daily expenses and pay the peelers and other workers. Buyers have cancelled or delayed orders until the world crisis eases off.

Experts said that over 400,000 people depending on the cinnamon industry would lose their livelihood if speedy measures are not taken to support the industry. The United Union of the Cinnamon Producers said at a recent meeting that if the government fails to address the issue the families depending on the cinnamon industry will have no alternative but to take to the streets.

The cinnamon industry has called upon the Government to commence a minimum price support scheme for producers, a low interest repayment scheme, grant a subsidy for fertilizer and incentives for exporters.

Sri Lanka has been exporting cinnamon since the colonial era and the Ceylon cinnamon brand is known as the best product worldover.