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Tuesday, May 3, 2022

The Economics of Cinnamon

 My wife is teaching about the Age of Discovery and the Spice Race is a big part of that process.  We were watching this video about cinnamon.  There is a lot of labor involved in the process.  At one point we see the cinnamon farmer trying to negotiate a better price for a bundle of cinnamon sticks.  The buyer goes away without making the deal.  I just bought a pound of Sri Lankan cinnamon for $15.89.  How much of that gets to these women processing the cinnamon, and the farmer?

Wholesale price for the sticks is about $2/pound on the Sri Lankan wholesale market. https://www.ceicdata.com/en/sri-lanka/wholesale-price-by-commodity-annual/wholesale-price-miscellaneous-cinnamon-quills

The powder is made from the parts not good enough to become sticks.  It would appear that if something is making cinnamon expensive, it is after it leaves Sri Lanka; Sri Lankans are not charging a lot for it.  I expect importers to make a profit.  Is there no competition in the international cinnamon trade?  Or is there a cinnamon cartel in Sri Lanka?


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