By Dilani Hirimuthugodage
Geographical Indications (GIs) have the potential to significantly boost export revenue by emphasizing the unique value associated with the origins of tea, spices, and other agricultural products. GIs can enhance global visibility, command higher prices, and facilitate entry into specialized markets through effective branding and value enhancement. Implementing targeted reforms in the GI sector is crucial for developing a more resilient, value-oriented export economy.
As Sri Lanka faces a steady decline in export competitiveness across key markets, largely due to global economic uncertainties, there is an urgent need to explore innovative strategies for sustaining growth in exports. Elevating export competitiveness is vital for achieving robust economic growth. One important yet frequently overlooked asset in this endeavor is the nation’s intellectual property rights (IPR) framework.
Sri Lanka finds itself at a pivotal moment as the global community prepares to celebrate World Intellectual Property (IP) Day this April. In a highly competitive international market, countries cannot rely solely on volume; they must focus on creating value by capitalizing on consumers’ readiness to pay more for products that possess distinctive qualities. This is where IPRs become essential. Geographical Indications serve as a means to protect the intellectual property of unique export goods, providing assurance to consumers and traders that these products originate from specific locations and possess unique characteristics or reputations tied to those origins. By offering certification, GIs allow for premium pricing of origin-specific products such as tea, spices, and other agricultural items, while safeguarding these products from imitation.
Sri Lanka’s Renowned Agricultural Exports
Sri Lanka is globally recognized for its exceptional agricultural products, including tea, cinnamon, various spices, coffee, king coconut, cashew, and regional fruits like Malwana Rambutan and Karthakolomban Mango. However, many of these goods are still exported as unbranded raw commodities, making them susceptible to price volatility and increased competition from similar items.
Over the past five years, agricultural exports have contributed approximately 20-24% to the nation’s total export earnings. Notably, tea accounted for 51% of agricultural exports and 10.9% of total exports in recent years, placing Sri Lanka as the third-largest tea exporter globally in 2024. The majority of the country’s tea exports are directed to Middle Eastern countries (43%), particularly Iraq, the UAE, Turkey, and Iran, while 22% is sent to the Commonwealth of Independent States (CIS), 4% to China, and 3% to the USA. Additionally, Sri Lanka ranked 15th among spice exporters in 2023, maintaining its dominance in the true cinnamon market, supplying 90% of global demand, and achieving high rankings for pepper, cloves, nutmeg, and coffee.
Success of GIs and Sri Lanka’s Competitive Advantage
International case studies indicate that obtaining GI certification can substantially enhance export volumes and widen market reach. For instance, the Cambodian Kampot pepper, which gained GI recognition in 2010, saw production nearly double by 2017, with exports surging over 250%. Similarly, Indonesian Muntok White Pepper experienced a tripling of its exports by 2014 after securing GI status in 2010, illustrating how GI recognition can facilitate greater penetration into global markets.
Sri Lanka possesses a notable competitive edge in its principal agricultural exports, as demonstrated by Revealed Comparative Advantage (RCA) values consistently exceeding one. Ceylon Cinnamon, Ceylon Tea, and other significant spice exports exhibit remarkable specialization, marked by high RCA values.
Market penetration, a measure of how widely a country exports a particular product, has varied for Ceylon tea and spices across significant markets, indicating changes in demand and increasing global competition. While countries like Mexico and Peru show consistently high penetration for spices, performance in Europe remains moderate, and there are indications of decline in markets like the USA and UAE. Conversely, emerging markets such as China are capturing a growing share, presenting new avenues for growth.
In the future, Sri Lanka can target emerging middle-class markets that are willing to pay premium prices for quality products that are certified by their origin, utilizing GIs to bolster branding, authenticity, traceability, and export competitiveness.
Challenges in Utilizing Sri Lanka’s GI Potential
Despite its strong comparative advantages and globally recognized products, Sri Lanka’s GI system remains underexploited due to various obstacles, particularly a lack of awareness among stakeholders in the agricultural value chain and inconsistent practices among smallholders, collectors, processors, and exporters. To strengthen this system, improved coordination across the value chain is essential, with a focus on effective traceability, monitoring, and control from production to consumer.
Moreover, the GI framework in Sri Lanka faces significant hurdles, including weak enforcement of intellectual property against the misuse of geographical names, fragmented institutional structures, poor inter-agency cooperation, and a lack of a dedicated GI framework that aligns with international standards. Currently, there is no specialized GI division within the National Intellectual Property Office (NIPO), resulting in unclear guidelines and product classifications. Additionally, the absence of a nationally recognized GI logo hinders product differentiation and consumer trust, while a lack of a publicly accessible online GI registry diminishes transparency.
Consequently, Sri Lanka has yet to fully capitalize on the value derived from the unique origins and reputations of its agricultural products.
Realizing the Economic Value of GIs: From Legal Reforms to Market-Driven Growth
At this juncture, global demand increasingly favors traceable and authentic products, giving GIs a competitive advantage. To reinforce Sri Lanka’s GIs, practical steps include initiating targeted awareness and marketing campaigns aimed at educating both producers and consumers about their significance, alongside supporting collaborative government and industry marketing efforts. Strengthening the GI framework in Sri Lanka can be achieved by aligning with international best practices through the establishment of a dedicated GI unit within NIPO, alongside clear guidelines for product classification, and the creation of a national GI logo to enhance branding, product differentiation, and consumer trust. Furthermore, it is crucial to enforce stricter penalties and enhance market surveillance to prevent the misuse of geographical names.
This is an opportune moment to consider the strategic role of IPRs in boosting Sri Lanka’s export competitiveness. By effectively harnessing its origin-based strengths through a functional IPR system, Sri Lanka can transition toward a high-value, resilient export economy, ensuring that its unique agricultural heritage translates into sustainable growth and international recognition.
Dilani Hirimuthugodage,
Research Economist,
Institute of Policy Studies of Sri Lanka (IPS)
Financial Chronicle Biz English | Sri Lanka Business News.
