Board re-established to tackle export price drop
The Government is planning to tackle the long-running issue of the price depreciation of Sri Lanka’s pepper in the global market through the re-establishment of the Spice and Allied Products Marketing Board.
The proposal to re-establish the Board, 12 years since its closure, was presented by the State Ministry of Development of Minor Crops including Sugarcane, Maize, Cashew, Pepper, Cinnamon, Cloves, Betel-Related Industries, and Export Promotion and was approved by the Cabinet of Ministers last week.
Sri Lanka’s pepper prices in the global market, particularly in India, its biggest export market, have dropped due to India slashing a Minimum Import Price (MIP) of Rs. 500 per kilogramme on Sri Lanka’s pepper exports in December 2017 after India detected a Vietnamese pepper racket that had taken place through Sri Lanka.
Indian importers paid around $ 6,000 per metric tonne (MT) of Sri Lankan pepper under the Indo-Lanka Free Trade Agreement, mainly due its unique pungency levels, while they paid almost half this price for their Vietnam pepper imports.
Exploiting the preferential treatment given to Sri Lanka’s pepper exports under the agreement, several local exporters partnered with Vietnamese pepper exporters and exported Vietnam pepper to India utilising Sri Lankan packaging. The detection of the racket and subsequent MIP led to a MIP of $ 7,700 per MT, as the cheaper imports were pressuring its local manufacturers. It was learnt that the Sri Lankan authorities had discussions with the Indian authorities; nevertheless, a decision on the MIP is yet to be arrived at.
However, through the establishment of the Board, export markets are expected to be diversified. According to the State Ministry, the value addition of pepper and other spices would be the utmost focus of the Board, with a view to increase the prices of Sri Lankan spices in the export market while also expanding markets for Sri Lanka’s spices. Spices exported from Sri Lanka are mostly raw as value addition accounts for about 8-10% of the export products. Value-added products get substantially higher market prices compared to raw products.
Spice exports accounted for about $ 361 million of the total exports in 2018 while in 2019, it dropped to $ 240 million. Through the re-establishment of the Board, authorities expect to double the export earnings from the spice industry of Sri Lanka.
The Spices and Allied Products Marketing Board was established under Section 2 of the State Agricultural Co-operation Act (No. 11 of 1972). On 16 July 2008, the Cabinet of Ministers decided to hand over activities of the Board to the Department of Agriculture and to close down the Board from 27 July 2008 onwards. The Board is currently under the preview of the State Ministry of Development of Minor Crops.
Sri Lanka’s pepper prices in the global market, particularly in India, its biggest export market, have dropped due to India slashing a Minimum Import Price (MIP) of Rs. 500 per kilogramme on Sri Lanka’s pepper exports in December 2017 after India detected a Vietnamese pepper racket that had taken place through Sri Lanka.
Indian importers paid around $ 6,000 per metric tonne (MT) of Sri Lankan pepper under the Indo-Lanka Free Trade Agreement, mainly due its unique pungency levels, while they paid almost half this price for their Vietnam pepper imports.
Exploiting the preferential treatment given to Sri Lanka’s pepper exports under the agreement, several local exporters partnered with Vietnamese pepper exporters and exported Vietnam pepper to India utilising Sri Lankan packaging. The detection of the racket and subsequent MIP led to a MIP of $ 7,700 per MT, as the cheaper imports were pressuring its local manufacturers. It was learnt that the Sri Lankan authorities had discussions with the Indian authorities; nevertheless, a decision on the MIP is yet to be arrived at.
However, through the establishment of the Board, export markets are expected to be diversified. According to the State Ministry, the value addition of pepper and other spices would be the utmost focus of the Board, with a view to increase the prices of Sri Lankan spices in the export market while also expanding markets for Sri Lanka’s spices. Spices exported from Sri Lanka are mostly raw as value addition accounts for about 8-10% of the export products. Value-added products get substantially higher market prices compared to raw products.
Spice exports accounted for about $ 361 million of the total exports in 2018 while in 2019, it dropped to $ 240 million. Through the re-establishment of the Board, authorities expect to double the export earnings from the spice industry of Sri Lanka.
The Spices and Allied Products Marketing Board was established under Section 2 of the State Agricultural Co-operation Act (No. 11 of 1972). On 16 July 2008, the Cabinet of Ministers decided to hand over activities of the Board to the Department of Agriculture and to close down the Board from 27 July 2008 onwards. The Board is currently under the preview of the State Ministry of Development of Minor Crops.