From left: SAPPTA 1st Vice Chairman Yaan La Brooy, People’s Bank Corporate Banking Head Aruni Goonetilleke, SAPPTA Chairman Vernon Abeyratne, Primary Industries Minister Daya Gamage, SAPPTA 2nd Vice Chairman Prins Gunasekera, SAPPTA AGM Subcommittee Chairman S. A. Cader and Ceylon Chamber of Commerce Commodity Associations Assistant Secretary General Gillian Nugara
Pic by Waruna Wanniarachchi

By Chandeepa Wettasinghe
The Primary Industries Ministry will be implementing a computer model to optimize the supply and the distribution of the growth of spices and allied products and increase productivity to reach a US$1.5 billion export target, according to the subject minister Daya Gamage.

 “We will be setting up computer software, which will allow us to break down regions into clusters, and set up factories and infrastructure in ideal places around which spices should be grown,” he said.
He said that land use is already inefficient, which entrepreneurship and value-addition could address.
“The owners are in Colombo, visiting their lands once a month and, treating the sale of commodities as a secondary income. If more effort is put in, the land productivity could be increased fourfold, which will reduce the input costs for processing and make our products more competitive,” he said.

Gamage further added that the computer model could project what amount of supply would be required from Sri Lanka given the demand for the country’s spice products. “We should increase export revenue from spices to US$ 1.5 billion. Revenue from cinnamon should increase to US$ 1 billion,” he said.

Sri Lanka’s spice exports for the first half of 2017 increased 28.2 percent to US$ 160.7 million compared to the first half of 2016. The country’s total exports expanded by 5.2 percent in the same period.

Gamage also noted that compared to other high foreign exchange earners such as apparel which have foreign leakages, the earnings from spices would be retained in the country.

Subsidy for pepper farmers

Sri Lanka’s pepper farmers are likely to receive a subsidy of Rs. 200 per kilogramme of pepper, until global pepper prices recover, under a cabinet proposal submitted by the Primary Industries Ministry. “The minister (Daya Gamage) just told me that a Rs. 200 pepper subsidy has been proposed,” Spice & Allied Products Producers’ & Traders’ Association (SAPPTA) Chairman Vernon Abeyratne said at the association’s Annual General Meeting held last Friday. Speaking to Mirror Business, Primary Industries Ministry Secretary Bandula Wickramarachchi said that the proposal has been submitted to the cabinet for the subsidy to be in effect until global pepper prices reach Rs.900 per kilogramme.
He said that the subsidy is not coming under the 2018 budget. However he also noted that the total amount which will be allocated by the government to spend on the subsidy has not yet been decided.
According to Abeyratne, global pepper prices have fallen down to around Rs.750-800 per kilogramme, from around Rs.1, 000-1,300 this January.

“This is in light of increased production of pepper in other countries of origin like Vietnam and Cambodia,” he said.

He added that pepper prices face further downward pressure in the future due to new Vietnamese crops which will enter the market in coming December and January.

“We have to concentrate on niche market to obtain better prices highlighting our high quality standards,” Abeyratne said.

Former Justice Minister Wijeyadasa Rajapakshe had alleged that Board of Investment registered export companies were importing cheap Vietnamese pepper for value addition and dumping them in the local market against BOI regulations.