Thursday, August 28, 2014

Annual Highlights of the Spice Council of Sri Lanka.

07TH JULY 2012

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The Spice Council organized a workshop to educate Small holders, Proprietors, Dealers, Processers and other involved parties of Cinnamon Pepper and Citronella plantations to increasing productivity of Cinnamon Pepper and Citronella plantations.
The workshop was held on 07th July 2012 from 9.00 a.m. to 12.00 noon at the Citro Building, Urubokka Road, Katuwana.
Main sessions were conducted by Mr. Gamini Wijesinghe, Director Cinnamon Research Station of the Department of Export Agriculture, Dr. A. P. Heenkenda, Research Officer of the Department of Export Agriculture and Mr. D. N. Samaraweera, Research Officer of the Department of Export Agriculture.

Mr. K. R. Dayananda conducted a session on Oil extraction and value addition where as Ms. Inoka Nilmini Wanasinghe of Sri Lanka Export Development Board made a presentation about the SLEDB services. 


The Spice Council initiated a project to develop skills and competency and to establish a Cinnamon Training Academy (CTA) for Cinnamon Processors in Galle District to train Cinnamon peelers on food safety standards of GMP and HACCP. This project was initiated as there is a severe shortage of Cinnamon peelers and peeling under international food standards of GMP and HACCP, which restricts the industry’s production capacity.
Main objective of the project was to train adequate number of peelers in order to increase Cinnamon exports by 30-50% in 2 -3 years’ time and also to access high ended value added quality conscious European, US and Japanese markets.

The Spice Council signed a subsidy agreement with Promotion of Micro Small and Medium Enterprises (PMSME) – GTZ to set up the CTA. PMSME agreed to provide part of the funding for the project. TSC formed a Limited Liability Company known as Cinnamon Training Academy Ltd. and was registered under the companies act no. 17 of 1982 and given the total ownership and management of academy.
Fulfilling the conditions of the agreement The Spice Council collected Rs.3 million and a Cinnamon grower offered to donate a land in Ambalangoda to set up the CTA.  Sri Lanka Export Development Board also agreed to invest Rs. 3 million in the CTA. However, after all the above efforts, GTZ-PMSME withdrew from the subsidy agreement informing that the land selected by TSC and CTA is not sufficient.

In December 2010, TSC forwarded an application to Standard and Trade Development Facility (STDF), an institute operating under World Trade Organization (WTO), for a Project Proposal Preparation grant to formulate a project proposal on “Establishment of National Cinnamon Training Academy”. STDF appointed United Nations Industrial Development Organization (UNIDO) to formulate the project proposal. Several discussions took place between TSC, UNIDO and STDF during the phase of project proposal formulation. TSC and UNIDO along with UNIDO national consultant made several field visits to the places where the traditional Cinnamon processing is taken place and to upgraded GMP processing centers. The project proposal was submitted to STDF review and approval of the grant for the project.

After having reviewed the project proposal, STDF approved the project and reserved a grant of USD 630,000 for the project whereas UNIDO reserved USD 200,000 for the project.

TSC  sent the project proposal to the Department of national planning through the secretary Ministry of Industry and Commerce to obtain approval to launch the project.

| As a result of the undefeated efforts of the present Chairman of the Spice Council, Mr. Sarada De Silva, the project was approved for implementation through the Ministry of Industry and Commerce.


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Launch event of the United Nations Industrial Development Organization (UNIDO) backed, Spice Council promoted $1.53 Million national project “Enhancing the Compliance and Productive Capacities and Competitiveness of the Cinnamon Value Chains in Sri Lanka” was held on 23rd October 2012 at the Galle Face Hotel, Colombo.
 The session was attended by Economic Development Minister Hon. Basil Rajapakse, Minister of Industry and Commerce Hon. Rishard Bathiudeen, Deputy Minister of the Ministry of Industry and Commerce Hon. Jayaratne Herath, Economic Affairs Officer of STDF/ WTO Dr. Kenza Le Mentac and Representative and Regional Director of UNIDO, Ms Ayumi Fujino.
The three years long project agreement of $ 1.53 Million was signed between Mr. Anura Siriwardene ,Secretary, Ministry of Industry and Commerce, Ms Ayumi Fujino, Representative and Regional Director of UNIDO) and  Sarada de Silva , Chairman of the Spice Council.
Cinnamon is the prime spice of Sri Lanka. The first records of cinnamon from Sri Lanka extends back into 1500 B.C. Cinnamon wood is mentioned in the hieroglyphic record of Queen Hatshepsut who lived in Egypt. It is alsoknown that Genghis Khan and other Mongol dynasties traded cinnamon through the silk route. In the more recent history the Arabs, followed by the Europeans, namely Portuguese, Dutch, and English were attracted to the irresistible and distinctive aroma and flavor of the Ceylon Cinnamon. They established a network of international trade, which is still present.
Sri Lanka holds a monopoly of Ceylon Cinnamon (Cinnamomum zeylanicum Blume) in the export market and this is the only monopoly the country holds. Statistically it is over 90%. Ceylon Cinnamon is exported to over 40 countries, bringing annually over US$ 80 Million turnover to the country.

The cultivation of cinnamon is carried out mainly by small holders. Cinnamon as an industry provides livelihood to over 350,000 families in Galle, Matara, Hambantota,
Ratnapura and Kalutara districts. However, currently, the industry is finding its monopoly in the export trade has been challenged.
The competitiveness of Ceylon Cinnamon in its captive markets - Mexico and USA, is being taken over by a cheaper substitute, the so-called cassia (Cinnamomum cassia). Globally it has lost nearly 50% of the market share during the past 10 years.
The high cost of production, low volumes, and poor quality and food safety standards have lead the industry to lose the competitiveness in major export markets. Due to the acute labor shortage, the Cinnamon is harvested and processed only up to 65% of its full capacity. A lack of knowledge and skills in processing Cinnamon safely and hygienically has restricted the industry to supply Cinnamon according to the international food safety standards. The long standing social stigma for Cinnamon peelers has resulted in workers leaving to other occupations and discouraged the young generation to take up the vocation. Currently, the industry is lacking over 35,000 skilled workers to carry out the harvesting and producing cinnamon according to the export market demand.
Ministry of industry and Commerce is the implementing authority of the project. The ministry will lead the steering of the project by providing political level coordination and facilitation. The Secretary to the Ministry will be the Chairperson of the Project Steering Committee.
The Spice Council Sri Lanka (TSC), along with the relevant state partners, leads the way forward in the cinnamon industry.

TSC was strengthened by the support received from the United States Agency for international Development (USAID) and the German Development Cooperation (GIZ) in the past to implement interventions to address the core issues of the industry. TSC is very closely working with the other stakeholders of the project: Department of Export Agriculture (DEA), under the Ministry of Minor Export Crop Promotion and Sri Lanka Export Development Board (EDB), under the Ministry of industry and Commerce to strengthen the Cinnamon industry in the country.TSC has been working along with the Department of Export Agriculture (DEA) to develop production and production based research. TSC and Department of Commerce of the Ministry of industry and Commerce jointly lobbied for bifurcation of Cinnamon and cassia.
the project ‘Enhancing the compliance, productive capacities and competitiveness of the cinnamon value chain in Sri Lanka’ was designed with the financial support of STDF and technical support of UNIDO in 2011.The project was planned after an extensive consultation with the industry stake holders and reverent authorities.
The higher impact or the overall objective of this project is to support the Cinnamon industry stake holders to enhance the competitiveness of their value and reinforce them to face the stiff competition at the global trade and restrain the market deprivation which is at the moment a major concern. Furthermore the project will attempt to support their weak value added segment increasing the share of the value added Cinnamon from Sri Lanka to the world Market.

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The Spice Council (TSC) joined hands with international Pepper Community, the Department of Export Agriculture of Sri Lanka and Spices and Allied Products producers and Traders Association (SAPPTA) to organize The 40th Session and Meetings of International Pepper Community which was officially inaugurated by the Chief Guest, Honorable Basil Rajapaksha, Minister of Economic Development, Government of Sri Lanka.
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The 40th Session of IPC is being hosted by the Ministry of Minor Export Crop Promotion and is jointly organized by the Department of Export Agriculture, Spice Council and IPC Jakarta. More than 380 delegates including around 200 foreign delegates from 24 countries are participating at this year Session being held in Mount Lavinia Hotel, Colombo, Sri Lanka from 30th October till 2 Nov. 2012.

TSC and SAPPTA hosted the dinner for the International delegates of the 40th Session and Meetings of International Pepper Community on 31st October 2012.


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The Spice Council held its 9th Annual General Meeting on 19th December 2012 at the Cristal Ballroom of Taj Samudra Hotel. Ms. Rita O’Sullivan, Country Director of The Asian Development Bank (ADB) graced the occasion as the Chief Guest.
ADB Country Director Rita O’Sullivan acknowledged that the complex industry was riddled with issues in the region and that a united stakeholder force was the foremost solution for the problems.

Addressing the Annual General Meeting of The Spice Council held for the ninth consecutive year,
Ms. O’Sullivan at her speech identified that in the local context, issues facing the industry range from skill development and financing to the lack of latest technology. She also said that the bank is now working with the Government to come up with a different method of skills development, which aims at giving a good standing to those working in the spice industry and to eradicate the social stigma attached to spice workers.
Speaking at the Annual General Meeting of The Spice Council, Council Chairman Sarada De Silva said that even though the industry faced tough times in the first half of the year, with production and exports declining as a result of the drought, the industry has been able to bring up the numbers on par with last year’s value by September.
Mr. De Silva, highlighting the Productivity concerns said, despite industry issues, producers have received high process obtained by exporters for their spices in the last three years.
He said, “However this is not favorable to long term competitiveness of our spices in the world trade,” “Our main problem is production and productivity. Many export inquiries cannot be fulfilled due to insufficient volume and quality issues.”

He also said that the industry believes that with good agronomic practices, production can be increased by 50% within the sectors. The council works in close coordination with the Department of Export Agriculture (DEA) on issues relating to production, extension and production based research to establish and implement such practices. However the DEA needs to be upgraded in order to strengthen service delivery capacity to deliver better services to asses growers with improved technology and agronomic practices.
Speaking about the theft on spice plantations he said that it is now an escalating issue with the organized robbery not only robbing crops but destroying vines and trees during the process.
It is a major drawback to growers attempting to increase extent of production said Mr. De Silva.
He also expressed the need to revisit the archaic laws and penalties to find a solution to the issue.

Mr. De Silva speaking about the lack of employees said that the industry, like many others, is also affected by the shortage of skilled personnel. He posed the option of retaining women who leave the island as housemaids and teaching them to work in the spice industry. He reflected that those seeking employment as housemaids overseas are paid less than US$ 150 a month, which could easily be earned by working in the spice sector.
“We propose that the Government does not allow anyone to go overseas for employment for less than US$ 250 or more. We are able to pay these salaries in the industry.” Said Mr.  De Silva.
He also said that the council is also looking at mechanization to address the shortage issue and that a project is currently being discussed with Moratuwa University Faculty of Engineering, Toyohashi University of Technology in Nagoya, Japan and Industry and Commerce Ministry for mechanization of harvesting, peeling and product development in cinnamon.

Speaking about the land issues, Mr. De Silva said that the industry is also grappling with issues relating to non-availability of land for commercial agriculture. While large tracts of land are given to foreign investors, local entrepreneurs do not get lands as they require.
“We do not object to foreign investors investing, but we request that the local investors be treated in the same manner. We also seek long-term loans at internationally competitive rates to invest in the spice industry.” Said Mr. De Silva.
Highlighting the importance of Public-Private Partnerships (PPPs) Mr. De Silva said that the council is to set up a Cinnamon Training Academy with assistance from the World Trade Organization – Standards & Trade Development Fund, United Nations Industrial Development Organization, and Food and Agriculture Organization totaling US$ 83,000.
He said that the Government is funding Rs. 45 million from the EDB through the Ministry of Industry and Commerce and the industry is funding Rs. 31 million for the process.
“Under the CTA we will train stakeholders in the cinnamon industry from nurseries to harvest and produce ISO and health standard certifiable products and are also looking at training the required cinnamon technicians to produce hygienic products.” Said Mr. De Silva.
Speaking about branding and value addition of Spices, Mr. De Silva said that the industry to move forward, the concept of branding and value addition must be adapted into the system. There is a threat of foreign companies coming into dominate the value addition sector and Ceylon spices losing both value and identity. He also said, “Unless we add value and brand, we will be caught in the vagaries of the bulk market at the lower end of the value chain and will not be able to assure sustainable reasonable prices to producers. The possibility of value addition is enormous. While many companies have realized this and are working towards it, we urge others to follow suit.”
03RD TO 07TH JUNE 2013
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The Spice Council participated at The International workshop on “Branding of Local specific Agriculture Products through the use of Geographical Indications” organized by the Asian Productivity Organization (APO) of Japan with the Ministry of Agriculture from 3rd -7th June 2013 in Sri Lanka.
The main objectives of this workshop were productive branding of special local food productions using Geographical Indicators to review reachable avenues for the establishment of marketing methodology, exchange of knowledge and experiences in the relevant field and studying challenges and problems in the use of GI methodology.

10TH TO 21ST JUNE 2013
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The Spice Council (TSC) in collaboration with Sri Lanka Food Processors Association (SLFPA) got down Prof. Barbara Rasco, BSE, Phd-Professor, School of Food Science, College of Agriculture, Human and Natural Resource Sciences, Washington State University, an expert on the Food Safety Modernization Act of USA to conduct programs and improve awareness among local industrialists about the required processing standards when exporting food related products to USA with financial assistance of USAID VEGA project.

21ST MAY 2013


Workshop and focus group discussion was held at Unawatuna Beach Resort , Galle on 21st May, 2013, with cinnamon growers and processors. Cinnamon bark processing industry has remained traditional over the years, thus introducing a GMP system in the manufacturing process remains a challenge to be met by the cultivators, processors and those involved in the value addition chain.
There is no documentary evidence of a GMP system for the Cinnamon processing industry that would have facilitated the cultivators and processors to gain knowledge and adhere to food safety procedures expected by them.
The workshop was jointly organized by the TSC – UNIDO – WTO Cinnamon project and Ind-Expo Certification Limited.


31ST MAY – 02ND AUGUST 2013
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The UNIDO-WTO-Spice Council cinnamon project which was launched in October last year by Hon. Basil Rajapaksa, Minister of Economic Development has successfully reached a mile stone of the project by drafting the National Competency Standards for cinnamon according to the National Vocational Qualification (NVQ) of Sri Lanka, by a team of industry experts together with a think tank of private and public sector institutions and professionals.
The historic event of inaugurating the National Workshop for validating the competency standards for cinnamon industry of Sri Lanka was held on 31st May 2013. Hon. Dullas Allahapperuma, Minister of Youth Affairs and Skills Development, Hon. Rishad Bathiudeen, Minister of Industry and Commerce and Hon. Reginald Cooray, Minister of Minor Export Crop Promotion graced this occasion as the Chief Guests.

30TH JUNE – 07TH JULY 2013

As a group of value chain actors of the Cinnamon value chain, The Spice Council is very much keen in obtaining Geographical Indication for Ceylon Cinnamon and to expand our market especially to European Union.
The UNIDO-WTO-Spice Council cinnamon project led a delegation to European Union (EU) to Meet EU officers in Brussels, Belgium to discuss about obtaining Geographical Indication for Ceylon Cinnamon. The delegation consisted of officers from United Nations Industrial Development Organization (UNIDO) and Sri Lanka Export Development Board (SLEDB).

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Chairman of the Spice Council Mr. Sarada de Silva was among the array of international dignitaries invited to address the side-event organized by the Standards and Trade Development Facility (STDF) during the Fourth Global Review of Aid for Trade at the World Trade Organization (WTO) in Geneva from 8th to 10th July 2013.
Mr. De Silva’s speech was focused on the role of Public – Private Partnership to build SPS capacities and related to the formation of the Spice Council. Mr. Sarada De Silva is the founder Chairman of the Spice Council of Sri Lanka, which has been accepted by the Government of Sri Lanka international agencies as an extremely successful public – private partnership.


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