Separate department for cinnamon development:  A step backwards

The Government’s decision to create a separate department for the development and promotion of cinnamon amidst an already oversized Government apparatus has puzzled many. The move comes at a time when there is general consensus that Sri Lanka has a bloated public sector at tremendous costs to its economy. 

Strangely enough, this controversial step is taken at a time when the Government has pledged to privatise State-owned enterprises while intending to downsize other non-essential public services as far as possible as part of the deal struck with the IMF to rescue the economy.

Sri Lanka’s cinnamon industry has shown a steady progress over the last decade thanks to the dedication and perseverance of exporters, manufacturers, and cultivators associated with this treasured spice. Cinnamon exports, which were $ 130 million in 2015, increased commendably to $ 230 million in 2022. The Department of Export Agriculture (DEA) and the Sri Lanka Export Development Board (EDB) over the years have undertaken numerous worthwhile initiatives to advance the status of the cinnamon industry. Such hard work by the stakeholders bore into fruition when Ceylon Cinnamon became the first commodity in Sri Lanka to achieve Geographical Indication (GI) status last year. 

The DEA is involved in promoting cinnamon cultivation, while the EDB is implementing branding and promotional activities to enhance the export potential of Ceylon Cinnamon. Once this department for cinnamon is established, what would be the mandate of the DEA and EDB in terms of cinnamon?

Paradoxically, a new government department is proposed when the Government is led by the leader of the centre-right political party of Sri Lanka – the UNP. The UNP, on the initiative of President Wickremesinghe, became a member of the International Democrat Union, a global movement of centre-right political parties, many years ago and is supposed to stand for less Government intervention like its ideological cousins – Tories in the UK. Admirably, the President has a demonstrated track record of pursuing measures to reduce the size of the Government. Regaining Sri Lanka – the economic development plan of Wickremesinghe Government from 2002 to 04 – envisaged to trim the public sector significantly.

Meanwhile, Sri Lanka’s ratio of Government workers to citizens is one of the highest in the world, and public sector salaries consume a lion share of taxes collected from people. Why is the Government keen on enlarging an already excessive bureaucracy which would result in more taxes on citizens and businesses that would make them worse off? Unfortunately, no opposition legislator has taken the Government into task over this proposal. In developed democracies, a questionable action of this nature would have attracted a lot of public attention, as voters in such societies remain vigilant on how their elected representatives spend their tax money.

Sri Lanka has been renowned for the best cinnamon in the world from ancient times. Mexico is the largest buyer of Ceylon Cinnamon. However, most of the cinnamon that is exported to Mexico from Sri Lanka is sent as bulk exports in the raw form. On the other hand, Mexico re-exports cinnamon sourced from the South Asian Island to its prosperous neighbour – the USA – after carrying out significant value additions. Sri Lanka must transform itself from a supplier of bulk cinnamon to a producer of value-added cinnamon to realise greater economic benefits to the country. Such evolution within the industry must be created by the novelty and creativity of forward-thinking business leaders while the Government’s duty is to maintain a conducive, business-friendly environment which stimulates the entrepreneurial spirit instead of imposing unnecessary bureaucratic red tape that impedes the progression of an industry which has achieved considerable success in the recent past. Sri Lanka’s ICT industry has become one of the dynamic contributors to the economy, as it was given a free hand to function sans cumbersome State intervention. That is the playbook to follow.