The global financial crisis is hitting Sri Lanka’s cinnamon industry too with producers saying prices for top cinnamon grades down to Rs.500-525 per kg from around Rs.850-900 per kg earlier. Some of them are turning to ‘God’ in desperation.
The ‘course’ cinnamon, which was selling around Rs.600-650 per kg has come down to Rs.350 per kg, according to a statement by The Spice Council (TSC).
“These are extremely uneconomical levels for the producers. Even at Rs.500 and 350 respectively the producers are finding difficulty in being able to sell the produce. The dealers and exporters are facing severe cash flow problems due to their inability to sell their stocks that they are having in hand even at a loss. Exporters say that for the last 4-5 weeks no export orders have been received,” the statement said.
Buyers have still not paid for most of the exports already made and they have delayed or cancelled the earlier orders placed that were to be shipped. Since the major buyers are from Central and South America they too are facing the global financial crisis and are unable to meet their current commitments or place new orders, the council said.
The cinnamon industry consists of 80% smallholders who are in serious difficulties and they are unable to meet their day-to-day needs. They are also unable to pay the cinnamon peelers and workers and this would lead to a lot of social unrest amongst the cinnamon peelers, workers and small holders. Cinnamon smallholders and peelers decided to have a protest march and also seek the blessing of the ‘Seenigama Devale (temple)’ on December 27 (yesterday) to resurrect the industry.
The Council said it was drawing the urgent attention of the government, officials and the agencies concerned over the plight of the industry. If these trends continue in the next 2-3 months the cinnamon industry will have a natural death. “The Spice Council wishes to suggest to the relevant authorities to immediately fund a minimum price support scheme for the cinnamon producers, 30% price support on fertilizer used and give the exporters and dealers who are carrying large stocks a relief on interest paid to the banks.”
It is urging that fresh-interest free capital is given from January 1, 2009 for exporters and dealers to purchase the cinnamon produced by the small holders.