Spice industry growth talks on hold due to COVID-19 outbreak

• Spice Council says industry will take at least 6 months to recover  
• Sector was already struggling before COVID-19
• Industry focused on increasing production and value addition for now

Discussions on expanding the spice industry of Sri Lanka between the Government and stakeholders have been put on hold due to the COVID-19 outbreak and a continued drop in demand is expected in the coming days.

“We can expect a drop in demand during these days,” The Spice Council Chairman D.A. Perera told Daily FT, adding that this could however be followed by a high demand for natural products and spices.

The key reason for the negative growth was increased global production, Perera said, which had resulted in price reductions of a number of spices. Currently, several countries in Europe, including Germany, have cancelled orders for spices, resulting in a drop of sales.

According to the export performance data for January and February published by the Export Development Board (EDB) on Sunday, cinnamon exports during the period amounted to $ 25 million, pepper amounted to $ 3 million, and cloves amounted to $ 3 million. However, EDB stated that these products had recorded a negative growth compared to a similar period of 2019.

“There was an almost 50% price reduction in pepper and we can’t expect this to change because global production is high,” he said, explaining that when global production was 450,000 tons, pepper rates were at $ 10 but that with global production now at 600,000 tons, the rate was below $ 3.

Currency depreciation in Mexico also affected cinnamon exports and the industry is currently affected by low cinnamon prices. The price of cloves has also reduced significantly due to both increased production and competition between manufacturers within the country.

While the industry is not optimistic about an increase in demand or prices in the near future, especially due to the COVID-19 outbreak, they are hoping to hold discussions on measures to strengthen the industry.

“If we can increase production within the country and develop products with universities, the Industrial Technology Institute (ITI), research centres, and other organisations, it would greatly benefit the industry,” Perera said.