Beijing gets Tea Board office
View(s):Amidst challenging times for the tea sector, the Sri Lanka Tea Board (SLTB) Beijing office opened this month giving a fillip to its black tea exports. In the meantime a new circular is expected this week granting a subsidy on interest for up to Rs.12 billion in capital loans.
Planters Association Chairman Roshan Rajadurai told the Business Times on Thursday that there was a significant increase in black tea consumption as a result of which the Beijing office established by the Tea Board would be a timely venture.
He noted, “The office is definitely a step in the right direction,” adding that Ceylon tea with its quality and the minimum use of chemicals in growing its plants and being the finest teas would be able to cater to the growing demand found in this market.
In the meantime, prices continue to drop at the auctions and the estates are currently facing a crisis with crop overgrown and disease leaf and in this context, Mr. Rajadurai explained the product would “not be anywhere near normal”.
A workers’ strike had also added to the problems faced by the sector and though the Iranian sanctions were lifted it would only impact on about 1-2 per cent of the tea industry exports and in particular the tippy teas, he stated. Though state officials believed the prices were expected to escalate in the wake of the removal of sanctions, however, the industry thought otherwise.
Mr. Rajadurai explained that it would take time for buyers and the banking system to get back to normal and though Iran was a good market it would not bring in a significant impact on the majority exports.
The Beijing office is attached to the Sri Lanka Embassy in China and this was established having watched the situation over the last two to three years where volumes have increased in the consumption of black teas, the SLTB Chairman Gamini Wijayaratne told the Business Times.
SLTB statistics indicate that Sri Lanka has exported 3.6 million kgs of black tea to China during the first half of this year, a considerable increase compared to 2.4 million kg exported during the same period in 2014. Total black tea exports to China for 2014 was 4.76 million kg.
SLTB already has offices in Dubai and Moscow which continue to remain open as these are two crucial markets for the tea industry in Sri Lanka. Moreover, a circular on the granting of working capital infusion of loans of a total of up to Rs.12 billion with a two per cent interest subsidy borne by the Treasury was likely to be made this week, Mr. Wijayaratne said.
He noted that almost all factories would be eligible for this loan scheme which has obtained cabinet approval. Through this scheme working capital would be given by banks from their own funds and the government has agreed to bear up two per cent of the interest as subsidy payment, Mr. Wijayaratne explained.
At present the Central Bank is involved in ironing out some of the working arrangements and the circular on this loan scheme would be made public this week.