With Sri Lanka recently securing the Geographical Indication (GI) certification for Ceylon Cinnamon, there is a growing call among the industrialists and policy strategists to make use of the recognition and unlock the full export potential of the product. 

However, the sector faces serious setbacks, particularly in terms of investments required to add value and profitability for the product for it to compete successfully in international markets. This structural limitation is primarily driven by Sri Lanka’s “extractive outlook” on agriculture, which focuses on raw material production, rather than the value-added exports, according to the Export Development Board (EDB). This same factor has hindered the full realisation of Ceylon Cinnamon’s export potential, noted EDB Director Policy and Strategic Planning Kumudinie Mudalige, who highlighted that Sri Lanka is in need of a “turning point” (of investments) to promote the product internationally.

“To increase exports in Sri Lanka,we need turning points like the apparel sector, which became a major export earner, following the shift toward an open economy. We now earn close to half a billion rupees from this sector, which was relatively new to the country,” Mudalige explained at a recent event hosted by the Institute of Policy Studies. “So, we need more turning points like this, with a lot of investments for Ceylon Cinnamon, to help it climb up the value chain and gain a higher margin as a finished product,” she added. Mudalige went on to highlight the broader challenges in agricultural exports, including lack of commercial agriculture practices, low production volumes and high input costs, which make Sri Lanka less competitive compared to the countries with similar agricultural exports. Despite Sri Lanka being the world’s leading producer of pure cinnamon, she pointed out that Mexico serves as the primary buyer, only to add value and then re-export it to the US, at much higher prices.

“Although we have the GI certification, the production volume in Sri Lanka is relatively small and value addition does not happen. For that to change, we need investments, both foreign and local as well as free trade agreements (FTAs), which will open new avenues for many other industrial products,” Mudalige stated. She stressed that by exploring new markets and FTAs, the country should also focus on enhancing the public perception of the product, in order to fully capitalise its high-end export potential. “For now, we only have apparel as a significant player. But with sectors like cinnamon and coconut, particularly in industrial applications, we can make a big impact on the economy. When we make our policies, we have to look at this area extensively,” she asserted. (NR)