Demand and pricing for Sri Lanka’s spice exports, namely for pepper, cinnamon and karunka have been impacted by the re-export of refuse produce from countries such as Indonesia and Vietnam, Agriculture and Livestock Deputy Minister Namal Karunaratne told parliament yesterday (6).
“There’s been a lot of challenges faced in this segment, especially in the re-export segment. It was found that exporters imported pepper from Indonesia and Vietnam, mix them with Sri Lankan produce and label it as ‘Made in Sri Lanka’,” Karunaratne said, stressing that the industry is facing consequences for the lack of oversight.
“If you take karunka (dried areca betel nut) pepper and cinnamon, due to these practices the prices have fallen. There have been times when farmers have been unable to sell their produce. The main reason is because they import refuse from other countries and re-export them from Sri Lanka.”
Citing India as a destination market for spices, Karunaratne continued: “This impacted our standing in global exports and our brand as a nation. A country like India that has a quota with Sri Lanka; with this flooding of refuse, there was a drop in demand for Sri Lankan goods, and prices were driven down. We are studying this and looking to bring the country’s export goods to a good position, one that brings in more dollars.”
Sri Lanka and India’s Indo-Sri Lanka Free Trade Agreement (ISFTA) is mainly utilised for exporting merchandise, providing rather limited access for Sri Lanka.
Of the limited access, only 64% of Sri Lankan goods that entered India in 2021 went through the ISFTA preferences, Department of Commerce data shows.
“Our spice exports have a good demand across the world, and there is a convenient export industry for that. However, certain parties have misused this advantage. We are working towards curbing such practices. This year’s budget allocation for promoting and developing this segment from within the department has been three times higher than previous allocations,” Karunaratne said.
In 2024, Sri Lanka’s exports to India were valued at $ 883.74 million, accounting for 6.8% of total merchandise exports. Further, export earnings from spices and concentrates increased on year-on-year terms by 16.11% to reach $ 461.85 million in the year 2024.
The increase was attributed to the strong performance in exports of pepper (90.14%) and cinnamon (3.87%). Pepper exports to India increased 91.35% in the year 2024 compared to the corresponding period of previous year, Export Development Board (EDB) data shows.