Cinnamon industry must be turned into a billion dollar industry: Dr. Amunugama

 Minister for Special Assignments Dr. Sarath Amunugama addressing the gathering

Minister Dr. Sarath Amunugama, participating as Chief Guest at the inauguration of the Cinnamon Training Academy at Kosgoda, said that Sri Lanka’s cinnamon industry must be turned into a billion dollar industry and that tourism must be turned into a 10 billion dollar industry. The Minister participated at this function on behalf of the President. Following are excerpts from his speech:

We should all strive to upgrade the cinnamon industry of our country. In ancient times the Portuguese and the Dutch came to this country because of the cinnamon industry. When we read the history of that period it becomes very clear that they came to this country because of cinnamon. At that time cinnamon and spices were essential to preserve food and to add flavour to it. Therefore at that time there was a big demand for our cinnamon. 

It was cinnamon that was considered the prime product of this country before the present commercial crops tea, rubber and coconut came occupy that position. Therefore it has become essential for our Government to improve the cinnamon industry. The reason is that cinnamon alone among our export crops is the principal crop that has the capacity to go forward. Tea, rubber and coconut are in the doldrums. 

The reason is that because of our high costs of production we find it difficult to meet competition in the world market. In all our competitor countries, Thailand, Myanmar. The Philippines, Africa, etc. The cost of production is lower than ours. Therefore those exports continue to face difficulties all the time. Long term and short term problems have arisen. 

There is a big crisis in the Middle East and former Russia, which is the biggest market for our tea, rubber and coconut. The demand for our tea and rubber has gone down. When the price of oil goes down the price of rubber also goes down. Today synthetic rubber is being produced. Those days when the price of oil was going up, it was cheaper to buy our rubber than to make synthetic rubber. But when the price of oil goes down synthetic rubber becomes cheaper than natural rubber. Today synthetic rubber is in competition with our natural rubber.

Tea

The tea industry is facing huge problems today. Production costs go up day by day. Therefore it is very difficult for us to compete in the world market. That is the reality. When we examine and analyse the exports and sources of the country’s income, and formulate plans, we must necessarily give priority to products that we can compete in. If we continue with our industries the way we do now, if the cost of production of rubber goes up, if the cost of production of coconut goes up, we will definitely find it difficult to compete.

When our costs of production are excessive we cannot go to the world market and compete. In the olden days when you say ‘Ceylon Tea’ everyone buys, but today that situation no longer exists. Our own planters went to Uganda, Africa and Kenya and planted tea there. There is a big tea industry in Uganda and Kenya developed by our own people. Today, Kenya has overtaken Sri Lanka in tea production. Kenya stands ahead of us in the world market. Therefore we must adapt new strategies. 

It is not possible to develop this country without exports. The only way we can develop this country is by going into the world market. If we do not adopt ourselves to the world market, if we only compete to divide this tiny domestic market among ourselves we will never be able to go forward. We cannot change the laws of economics to suit the whims and fancies of each and every one. 

The market in Sri Lanka is extremely limited. In countries like China and India even if there was no demand from other countries they can still sell their products to their own people. A large middle class has emerged in China. It is the same in India. They can sell their products to those people. In contrast we do not have an adequate domestic market. We must promote products that have the capability of competing in the world market by virtue of their competitive costs of production and price. 

Cinnamon comes number one among such products. I thank you on behalf of the President for producing something which is competitive. Today tea, rubber and coconuts cannot compete. We have therefore adopted new strategies. The biggest tyre factory in the world has been established at Koggala. There, our rubber is used not to produce tyres for small cars but for big tractors. They are sold to America. 

Cinnamon

Cinnamon is the only one among our primary products which can offer good competition. You are producing a very high quality product. Many people who are engaged in the cinnamon industry go to countries like Mexico, Chile, Argentina and America spending out of their own pockets. They go to those countries at their own expense and establish their markets. I think that when you go to Mexico, Argentina or Europe for trade negotiations the government must bear the expenses. Cinnamon is a successful export crop. We must now think of ways and means of promoting it further. You must be given more facilities and more assistance and this must be made a big number one export of Sri Lanka. 

The income from cinnamon at present is 135 million dollars. Our ladies who go abroad and work there send back seven billion dollars. Therefore you must accept the challenge and joining hands with the government make this a one billion industry. That is how we can go forward. 

Tea brings in 1½ billion dollars. Therefore in time to come cinnamon must be made a one billion dollar business. That can be done. The reason is that today the entire world is moving towards a Middle Class society. It is the middle class which needs what you produce. In some countries although there is a large population they don’t have cash in hand. Therefore they don’t have purchasing power. If the people in the countries with which we trade do not have cash in hand they cannot buy our cinnamon. They will not buy our products. A large middle class is developing in China. A large middle class is developing in India. In Europe and America that middle class is already there. Therefore if we plan correctly we can definitely target that middle class and develop our cinnamon industry. 

Tourism

The second matter is that in these areas the tourist industry can surpass the cinnamon industry. The income from our tourist industry is at the most 1½ billion dollars. Today Thailand earns 30 billion dollars from tourism. Singapore earns 28 billion dollars. Kampuchea which was below us is today earning 19 billion dollars from tourism. Myanmar also earns more than us from tourism. We should make tourism in this country a 10 billion dollar industry. 

If we want to go forward, we cannot develop it by imposing unnecessary rules and regulations. Tourism cannot be developed if laws that will handicap it are imposed. We must get ready to make tourism a 10 billion dollar industry. If the cinnamon industry is made a one billion dollar industry and tourism a 10 billion dollar industry there will be tremendous development in the country. We must get rid of these old rules and regulations, the rules and regulations coming down from colonial times as well as bureaucratic attitudes and move forward.