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| Sunday, 10 August 2003 |
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Spice exporters fall short of world demand by Elmo Leonard Export orders for Sri Lanka's spices are going abegging due to short supply. Even the island's cinnamon exports, which make up 90 per cent of global output, are not expanding, Spices and Allied Products Producers' and Traders' Association (SAPTA) Chairman, Gulam Chatoor said. Sri Lanka exports 8,000 tonnes of pepper, a mere four per cent of world production. Sri Lanka exported spices and allied products worth Rs 9.5 billion ($103.26 million) in 2002; Rs 6.3 million in 2001; and Rs 6.1 billion in 2000. The Export Development Board has urged plantation companies which have land capacity, to take up the cultivation of spices. However, these companies have been shying away, due to high investment and a gestation period of up to six years before spices come into production, Chatoor told SAPTA's 19th Annual General Meeting. He pointed out that most local spices are produced in home gardens and that the quantities are small, adequate post-harvest processing is not possible and sophisticated markets are not reached. Chatoor said the Government had withdrawn subsidies for replanting and new plantations. The Treasury will not release the Rs 100 million due to 2,500 farmers, he said. Addressing these issues, Minister of Finance, K.N. Choksy, said the Government does not intend to participate directly in agricultural activities due to the failure of land reforms, which resulted in great costs to the country. "Expanding cultivation and increasing output are roles the private sector has to play," he said. Minister Choksy said business is now institutionalised through trade chambers, making it easier for private sector entrepreneurs to access knowledge, expertise and assistance to minimise the risk of capital investment losses. The government is only a facilitator. The corporate sector has received substantial tax concessions, he said. Two months ago, Parliament sanctioned an additional package of benefits to the agriculture and agricultural produce exporting industries, to facilitate expansion and increased productivity. The package has provided concessions for the enlargement of existing undertakings in the export trade. Incremental profits and income are also exempt from taxation for specified periods. Research and development in the export trade also attract special concessions, Choksy further said. The Finance Minister conceded that lending rates in Sri Lanka are high. Agro-based industrialists find it difficult to survive due to high interest rates. The Minister urged commercial banks to reduce lending rates, in keeping with the reduction of Central Bank interest rates. Banks have already made concessions and trade chambers should negotiate with them for more concessions in their areas of interest. He urged SAPTA to form collaboration arrangements with plantation companies and enable these companies to take up spice cultivation. Under the Indo - Lanka Free Trade Agreement, India has abolished import tariffs on spices from Sri Lanka, providing an opportunity which local spice exporters can exploit to the fullest, he said. Minister Choksy said the Government had not overlooked the financial needs of home growers; Rural Development Banks have agreed to lower interest rates for small-scale agriculturalists. Also, the Government does not demand a high degree of security from small-scale farmers, as urban banks do. The Government had, through the last budget, established an Agro-Enterprise Development Fund, another source of financial assistance to small and medium-scale operators in the sector, Choksy said. Countering the charge that the Government had discontinued the payment of subsidies, Choksy said they continue to pay subsidies on planting material such as seeds and plantation support material such as fertiliser. The Government's policy is to move away from granting subsidies. The continuation of such grants and the continued expectations of those at the receiving end had hitherto hindered, more than helped the country's progress in the agricultural and industrial sectors, he continued. The Minister expects agriculture and industry to be self-sufficient. The Government has also enacted a new Welfare Benefit Law, under which handouts and doles will be discontinued, except to sectors such as disabled persons. Chatoor drew attention to India's withdrawal of tariffs on spices from Sri Lanka from February this year, while continuing to levy 70 per cent tariffs on such products coming into India from other countries. With it, cloves from Sri Lanka fetch $3300 per tonne in India, as against cloves from other origins, which get $1900 per tonne. Local producers and exporters will benefit from these non-tariff rates, he said. |
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