Ceylon cinnamon potential must be fully realised

Sri Lankan or Ceylon cinnamon, while a celebrated crop in Sri Lanka, lacks a firm grounding. The previous administration planned to revitalise the cinnamon sector as part of President Gotabaya Rajapaksa’s 2019 election agenda. With duty-free imports of new extraction and packaging equipment, a tentative commitment was made to enhance the cultivation and export of the popular spice. 

It also offered a technical training course at the appropriate National Vocational Qualification level, the development of a cinnamon extraction and preparation facility for farms of less than five acres, and novel techniques for using cinnamon waste products.

However, in accordance with International Monetary Fund criteria, President Ranil Wickremesinghe’s administration has moved to stop all government deliveries of fertiliser, leaving these critical agricultural inputs solely in the hands of private enterprises. This has exacerbated the situation of small-scale farmers.

Cinnamon is farmed on around 35,000 hectares in Sri Lanka, primarily in the Galle and Matara regions, with over 60,000 farmers and 300,000 employees earning a livelihood from the labour-intensive and low-paying sector. The industry is made up of these small to medium-scale farmers and producers, who cultivate and harvest cinnamon in a traditional and sustainable manner. 

These farmers usually work in cooperatives or other organised organisations and sell their cinnamon to local dealers or export corporations. In Sri Lanka, the sector provides a substantial source of employment and revenue to rural areas.

In the Western market, there are two varieties of cinnamon. Ceylon cinnamon and cassia cinnamon. Ceylon cinnamon is endemic to Sri Lanka and thus was given a Geographic Indicator (GI) in February last year, which authenticates this product over the competition. 

Cassia is native to China, Indonesia, and Vietnam; its bark is tough with a rough texture, dark brown in colour, and has a stronger and spicier flavour. Cassia is regarded as of poorer quality compared to Ceylon cinnamon, which is frequently regarded as the “true cinnamon.” Several arduous and time-consuming stages are involved in the production of this cinnamon, explaining its premium price in the market. 

While cinnamon bark is a popular spice, cinnamon leaves are frequently utilised as a raw material in the manufacture of fragrances and pharmaceuticals. A kilogram of cinnamon bark costs Rs. 3,700 in Sri Lanka and $ 30 in the global market, with a 3x value addition. Competition from other nations is one of the most significant challenges facing the Sri Lankan cinnamon business today. 

In recent years, nations such as Indonesia and Vietnam have emerged as important cinnamon producers, and they can manufacture the spice at a lesser cost than Sri Lanka. 

As a result, worldwide competition has intensified, and Sri Lankan cinnamon producers are fighting to preserve their market share. While Mexico is the primary market for Sri Lankan cinnamon, the popular spice is also sold to the United States, Peru, Bolivia, Chile, Guatemala, and several European countries. Sri Lanka exported 18,813 metric tons of cinnamon in 2021, earning $ 230 million in export revenues. 

However, important value additions in the branding and final sale have not been captured as they should be, as in other more notable crop industries such as tea and coconut. 

Climate change is another issue for the sector. Because the trees require precise climatic conditions to grow, these changes are impacting cinnamon output. Furthermore, climate change is hastening the spread of pests and diseases that can harm cinnamon plants and lower harvests. 

Therefore, while this industry appears to be a lucrative space with the potential to export as a premium agricultural export, the lack of a national framework and corporate initiative has led the industry to not take root as it best can.