Demand for turmeric rises following import ban

Turmeric

Sri Lanka

Published Feb 17, 2021

In March 2020, the Sri Lankan government placed a ban on the import of many products, including turmeric, to limit foreign currency leaving the country, aiding the repayment of the country’s USD 4.5 billion international debt. Implementation of the ban has led to a shortage of the spice in the country and a spike in demand as 7,500 tonnes of the country’s turmeric is consumed by Sri Lankans every year, with only 20% being produced locally.

Impact of the ban

The cultivation of turmeric has suffered heavily in the country due to the Sri Lankan civil war that lasted from 1983 to 2009, leading to the country becoming heavily reliant on imports. Therefore, the government seeks to boost local turmeric production by banning imports. The effects of COVID-19 have further crippled the country, leading to hundreds of thousands of workers losing their jobs and contracting the economy by 3.9% in 2020. Turmeric growers from the eastern Ampara district in Sri Lanka have benefited greatly from the ban during the COVID-19 pandemic, by receiving much higher prices for their turmeric than usual. The local market price for a kilogram of the raw turmeric root used to sell for LKR 80 (USD 0.42), however, with the import ban in place, demand rose such that after the spring harvest, the local market price had reached LKR 300 (USD 1.67) per kg, and dried turmeric was fetching LKR 4,000 (USD 22.28) per kg.

(Sri Lankan turmeric farmers.) Source: SAPP

Other banned imports include cars, floor tiles, and machinery parts but the prohibition on turmeric imports has been deeply felt by locals, as the spice is considered a vital ingredient within the local cuisine and is also used as a health supplement. Turmeric is also utilized as a color ingredient in Sodhi, a famous Sri Lankan coconut soup eaten alongside the country’s carbohydrate-rich foods. 7,500 tonnes of turmeric are consumed by Sri Lankans yearly, with only 20% of that amount being produced locally. Therefore, the import ban on turmeric has led to a shortage within the country as local production is not yet able to meet the local demand. Following the surge of COVID-19, the immunity-boosting properties of the spice were rediscovered, fuelling a rise in turmeric demand in the country, causing prompt depletion and resulting in a price surge. Prices went up to LKR 9 000 (USD48) per kg in 2020, an amount so high that it is equivalent to a week’s wage for an average Sri Lankan.

The increased turmeric demand in Sri Lanka also gave rise to the illegal smuggling of the spice into the country from India. Smugglers have been buying turmeric illegally from traders in Erode, India, since 2020. Consignments are brought in from Erode and stocked near the coast, with Palk Bay used as the smuggling route. Landing and take-off points include Vedaranayam to Kodikkarai in Nagapattinam district, Dhanushodi and Vedhalai in Ramanathapuram and stretches on the Tuticorin coast. According to the police, the perpetrators conduct all their communication and trade on WhatsApp and conduct their movement at night so as not to be detected by authorities. Several tonnes of turmeric were seized by Indian patrols from Indian fishermen trying to smuggle the spice into the country in July 2020, and customs agents identified a further 25 tonnes that were smuggled into the country from India, in containers that were deceptively marked as “onions”.

(Customs officials examine turmeric imported illegally into Sri Lanka at a warehouse in Colombo on December 14, 2020.) Source: AFP

Ban set to continue in 2021

The ban was initially set to last 3 months but it has now been extended until at least the end of 2021 as it has positively affected the country’s economy by stabilizing the Sri Lankan rupee, which had contracted against the dollar in 2020. However, trade partners have begun to threaten retaliation as the effects of the ban have affected the trade for major export countries to Sri Lanka. The European Union, Colombo’s second-largest export market after the United States, has threatened to report the country to the World Trade Organisation.