EXPORT TAX EFFECT: Sri Lanka hiked export taxes on Cinnamon in the mid-19th century driving demand for Cassia. Though export tax was abolished, the market share from Casia was never recovered. In a globally traded commodity, any export tax is paid for by lost margins of the farmer to maintain market share, or lost market share.
ECONOMYNEXT – Cinnamon traders in Sri Lanka can now export the spice in bark form to Brazil using a phytosanitary certificate issued by the National Plant Quarantine Service office in Sri Lanka, the Ministry of Foreign Affairs said.
“As per Brazilian customs classification and the plant health requirements, Sri Lanka cinnamon in bark form is listed under wood and its products category due to the nature of the product. In order to facilitate entry of Sri Lankan cinnamon to the Brazilian market, the Embassy of Sri Lanka in Brazil has been actively engaging with the Ministry of Agriculture, Livestock and Food Supply in Brazil, known as MAPA and the Export Development Board and National Plant Quarantine Service office in Sri Lanka, over a year, to finalise the certification process for Sri Lankan cinnamon,” the ministry said in a press statement.
A phytosanitary certificate is issued to signify that regulated items such as plants or plant products meet specific import requirements.
“The National Plant Quarantine Service, upon testing a representative cinnamon samples drawn from the consignment, would issue a certificate verifying that the consignment is free from injurious insects, bacteria, nematodes and fungi and the consignment is subjected to fumigation using methyl bromide at 48g/m3 (above 210C),” the MFA said.
“Further, the information on phytosanitary treatment performed would be inserted in the appropriate field of the phytosanitary certificate, confirming that the dosage of bromide used is associated with room temperature at the time of application.”
Sri Lanka holds the monopoly in high quality cinnamon exports to the global markets for its taste, colour, and aroma. The largest market for Sri Lankan cinnamon is Mexico, the United States, Peru, Colombia, and Ecuador, being the fourth largest producer, followed by Indonesia, China, and Vietnam.
Other Latin countries too have shown interest in Sri Lankan Cinnamon which includes Bolivia, Chile, and Guatemala, according to news reports.
According to MFA, the Cinnamon imports to Brazil grew from 18 per cent during 2017-2018 but slightly decreased in 2019 as compared to 2018. The total Cinnamon imported by Brazil in 2019 from the world is over 2,300 tons at a cost of USD 7.74 million.
“In the total cinnamon import of Brazil, Sri Lanka represented a very small amount in 2015 and thereafter no recorded export of cinnamon has taken place directly to the country in recent years. Being the key exporter of cinnamon, Indonesia supplies nearly 75 per cent of total cinnamon to Brazil,” the MFA said.
“Cinnamon has a promising market opportunity in Brazil since the product is popular in Brazilian cuisine, beverages and confectioneries.”
“Sri Lankan cinnamon exporters can claim 5 per cent duty preference, under the Global System of Trade Preferences (GSTP Agreement) from Brazil and therefore the companies that are interested in exporting cinnamon, in bark form, can consult with the Department of Commerce to receive GSTP certificate. The prospective exporters also need to consult with the National Plant Quarantine Service office in Sri Lanka to obtain necessary certification documents,” the MFA added. (Colombo/Sep21/2020)