CB to pull cinnamon out of crisis

The Government last week extended Central Bank's (CB) New Comprehensive Rural Credit Scheme (NCRCS) to help the cinnamon industry to come out of the present crisis. Accordingly the banking sector will release over Rs. 400 million for the small and medium scale cinnamon collectors at 14% annual interest rate for 270 grace period.

The Chairman of the Export Development Board (EDB) Anil Koswatta said that this low interest credit scheme will help the industry to face the present crisis. The industry has been stagnant as a result of declining demand in the main international markets. The exporters have not received money for the exported consignments and as a result the purchasing of cinnamon from the growers has been at a standstill. Cinnamon prices have reduced sharply causing difficulties for the growers.

The objective of the loan scheme is to stimulate the market. Since the Bank interest rates are high as 25-30% the small and medium scale cinnamon collectors are reluctant to purchase cinnamon, Koswatta said. The loans are given by 14 commercial banks from their own funds and the CB will provide the interest subsidy for the commercial banks. The Chairman of the Spice Council, D. A. Perera said that the Council and the EDB have planned to launch an extensive marketing plan in the US and Mexico to increase the market share of the local cinnamon.

The demand for cinnamon in Mexico, our main market, has fallen after Mexico devalued the Peso. We export 55% of our cinnamon to Mexico, Perera said. (GW)