Sri Lankan tea doomed if country decides to shift to low price producer
The Sri Lankan tea industry, to sustain its position in the world market as the producer of ‘Pure Ceylon Tea’, must make a (conclusive) decision to be the source of single origin high quality teas, at a premium price.
This is the consensus of the tea factory owners in this country as reflected by Kalana Dahanayake, Chairman, Sri Lanka Tea Factory Owners Association (SLTFOA), when he addressed the 22nd AGM of the association held at Water’s Edge, Battaramulla, last week.
Mr. Dahanayake raised a number of major issues confronted by the country’s tea industry, drawing the attention of the authorities for fast solutions, but Mahinda Samarasinghe, Minister of Plantation Industries who made the keynote address, failed to respond to these issues, constructively.
Pix by Susantha Liyanawatte shows Minister Mahinda Samarasinghe and other officials at the head table.
The SLTFOA chief said that a policy decision has to be made whether Sri Lanka should be a ‘mass producer” of low priced tea to the world by also permitting the import of low quality liquoring teas in the disguise of “specialty teas” for blending or be the preferred source of single origin high quality teas, at a premium price.
He said that they could never be a low price tea producer and compete against Asian and African countries which have far greater yields. If Sri Lanka opts for low prices, that could eliminate tea smallholders. “The only option available is to maintain our position as a reliable supplier of good quality, high priced teas. I believe the key word is reliability,” he said.
He listed the key issues as – highest cost of production in the world; declining tea yields; slow progress in tea replanting and new planting; excess factory capacities – the continued approval of new factories including expansion of existing factory capacities; high cost of working and investment capital; inadequate investment in research and development in the tea industry; excessive unhealthy competition for green leaf from the RPC estates and export marketing of Sri Lanka tea.
He said that mechanisation of tea cultivation would eliminate labour shortages and high wages while increased productivity would reduce production costs and improve farmer income. He appreciated the initiative taken by the Minister to mechanise tea harvesting with the farmer response being positive, he said. The project should be extended to pruning, holing, draining, drip irrigation, etc, he suggested.
Progress in replanting is extremely poor, Mr Dahanayake said, pointing out that the current replanting subsidy is low which is a a core issue faced by the smallholders. In the absence of an adequate replanting subsidy many villagers engaged in tea cultivation are becoming poorer leading to serious social and political consequences, he said.
Quoting the book “Monograph on Tea Manufacture” by E.L. Keegal which says ‘tea is made in the field and not in the factory’, Mr. Dahanayake said that a good standard of leaf is a prerequisite to manufacture a high quality tea. But today, he lamented, that good leaf count has dropped to 20 – 30 per cent resulting in refuse tea percentages averaging 12 – 15 per cent.
Pinpointing another major constraint, he said the only cost effective source of energy for drying tea is firewood supplied by cutting jungle trees. He said that they have suggested to the authorities to obtain uncultivated land to plant trees to supply firewood, and requested the Minister to intervene. He said that on average 300 or more trees have to be cut to supply firewood per district, per day.
He said most of the factories are performing below 50 per cent of their capacity resulting in the decline in quality. Members find it extremely difficult to service debt obligations to the brokers and banks.
Minister Samarasinghe in his address gave statistical details of tea production, price benefits and the increase in revenue with high prices of tea and the resultant increase in the foreign exchange and said that a formula developed by the Tea Research Institute would increase the yield per hectare from 4,500 to 6,000 kg.
While he conceded that there are lot of challenges faced by the tea industry,he also went on to stress what seemed to be the bad side of the tea industry in this country. He said that he had the occasion to visit the factory in Chile of a major buyer (around 80 million kg of tea) from Sri Lanka. The buyer spoke of the good side of the tea he obtained, but showed Mr. Samarasinghe three plastic bags – containing nails and metal particles; rubber bands and insects collected when the tea is processed.
He said that 81 pre-auction inspections resulted in identifying 80,000 kg tea unsuitable for consumption in 2013 which is approximately 2 per cent of total production. 41 factories were found with unsuitable tea. These detections, he said, would help to ensure quality.