SRI LANKA THE SPICE ISLAND May 26, 2018

Sri Lanka (formerly Ceylon), “Pearl of the Indian Ocean”, is an island at the southern tip of India with a population of 21 million. It has a diverse environment, magnificent cultures and scenery, and a history stretching back thousands of years. The island’s central mountainous area flattens down to the sea, and has diverse climatic zones facilitating production of many aromatic plants, some of which are further processed into essential oils and oleoresins. The principal spices are cinnamon and citronella in the southern coastal belt; pepper, cloves, nutmeg and cardamom in the central hills, especially around Kandy and Matale. Small amounts of ginger, patchouli, vanilla and sandalwood are grown, but processing sandalwood is currently illegal.

Spices and essential oils is an important sector in Sri Lanka. After tea, the sector generates the largest agricultural foreign exchange earnings and in excess of 90,000 hectares (ha) of the wet zone is under spices.

Cinnamon :

Cinnamon, along with pepper, is the dominant spice crop and the only spice grown in Sri Lanka as a mono-crop in the southwest region. Growers range from smallholders with 1 ha or less to plantations up to 200 ha. Smallholders own most of the cinnamon cultivated land, with an estimated 80% grown on land below 1 ha. An estimated 250,000 cinnamon cultivators and 400,000 cinnamon sector employees and 60,000 family units are directly dependent on the cinnamon industry as their main income source (C. Perera IFEAT Conference 2015). In terms of farmers’ agricultural returns, cinnamon ranks second in importance to tea. The area under cinnamon has been increasing, totalling an estimated 32,682 ha in 2016 (see Table). In recent years there has been a growth in organic cinnamon production by both plantations and smallholders covering approximately 1,200 ha of certified organic land.

A range of commercial products is obtained from cinnamon including quills, chips, featherings, leaf oil, bark oil and root oil. The bark yields oil with high cinnamic aldehyde content, while the leaf consists of eugenol and the root has a high percentage of camphor. There are two kinds of cinnamon: Ceylon (or Sri Lankan) cinnamon (Cinnamomum zeylanicum and Cinnamomum verum) and cassia cinnamon (Cinnamomum cassia Blume (Lauraceae) primarily from China and Indonesia. The Ceylon variety is referred to as the “true” or “real” one; but in reality both are from the same family. Nevertheless, compared with cassia, Ceylon cinnamon contains far lower amounts of naturally occurring coumarin, which can pose toxicity risks. Also, as a medicinal herb, Ceylon cinnamon is better researched, especially in its extract form, than cassia. For example, researchers know more about the anti-bacterial properties of Ceylon cinnamon.

Harvesting begins around 3 years old and the economic lifespan is 30-40 years. The bark is harvested twice a year, immediately after the two rainy seasons, when the rain-soaked bark is more easily stripped from the trees. Yields vary considerably but with ideal climatic and soil conditions, it is possible to obtain 450 – 500 kg of cinnamon and 10,000 kg of cinnamon leaves per hectare. The fresh stems are peeled – using a labour intensive process – to obtain the inner bark. This peeled inner bark, known as quills, is an important export item and the main market outlet is Central and South America, particularly Mexico. Broken pieces obtained from this operation are known as quillings. Cinnamon production and spice exports have been on a rising trend in recent years with exports in 2017 totalling an estimated 16,617 MT, approximately 4,000 MT below overall annual production (see Table). The cinnamon industry faces a number of challenges including a shortage of trained peelers, rising labour costs, growing competition
for land use and alternative economic and employment opportunities.

Cinnamon Bark Oil (Cinnamomum zeylanicum):

Bark oil is usually distilled from quillings, because of their lower cost. About 10-12 distillers, both small distillation operations located in the growing areas, and large companies using modern equipment, carry out distillation. Traditionally the oil was extracted using hydro distillation and copper stills were used but these have now been replaced by stainless steel stills using steam distillation and supercritical fluid extraction.

Competition exists for raw materials between bark oil distillers and cinnamon exporters. Higher cinnamon prices have encouraged harvesting more than once a year and this has affected both quality and yields. Yields are now rarely above 0.7% compared with over 1% previously with cinnamic aldehyde content of over 65%. Bark oil prices largely depend on the raw material used in distillation; fresh cinnamon quills produce better quality oil. While cinnamon bark oil contains 90 major components and 50 unidentified components, quality is measured by the oil’s cinnamic aldehyde content (i.e. graded 40%, 50%, 60% and 70%).  The higher the content, the better the quality and the higher the price. Age, soil, climatic conditions and location can affect quality.

The oil has a characteristic powerful spicy, tenacious cinnamon odour, and a yellowish or brownish colour that darkens when exposed to air. Its main uses are in food flavouring, beverages, perfumes, cosmetics, and pharmaceutical preparations.

Exports of bark oil from 2014 to 2017 show an upward trend reaching 47 MT in 2017. Most cinnamon bark oil is exported directly by 3 or 4 of the large distillers or by commodity exporters, who purchase from small-scale distillers. The off-season for cinnamon is from January to April, and this, combined with the dry weather during the first quarter of 2018, has reduced raw material availability, putting upward pressure on prices. The limited availability of oil until at least late May will ensure that prices remain firm.

Cinnamon Leaf Oil (Cinnamomum zeylanicum Nees C.) :

Cinnamon leaf oil is a by-product from processing cinnamon bark into quills. After harvesting the bark, the leaves, twigs and tender stems are trimmed and left in the field. After wilting for 3-4 days, the leaves are collected in 40 kg bundles and transported to the field stills for steam distillation. One hectare yields approximately 7 MT of raw material and each distillation uses approximately 350 kg of material. Distillation takes 6-7 hours and the yield is approximately 1% and is carried out solely by small operations within the growing area. There are about 200 small distillers who use field stills ranging from comparatively primitive to conventional types and sell their oil either to larger distillers or commodity exporters. The best oil yields are usually obtained during July and September. Oil is graded according to eugenol content and Sri Lankan leaf oil specifies a maximum of 75-80% eugenol with a maximum of 5% cinnamic aldehyde. Distillation methods, soil and climatic conditions mean that eugenol content can vary between locations. ISO standards exist for leaf oil but not for bark oil. Cinnamon leaf oil production and exports are considerably greater than bark oil production and exports.

Moreover, leaf oil production and exports are showing an upward trend despite annual fluctuations. In the early 2000s, exports fluctuated between 120-180 MT while during the last four years annual exports have averaged 262 MT with a peak of 309 MT in 2017 (see Table). As with bark oil, the limited availability of raw materials is affecting leaf oil prices and availability. In early 2018 leaf oil was trading locally at lower prices, but recently has risen quite sharply. Anticipating higher prices, distillers are reported to be holding onto stocks in anticipation of continued upward price pressure.