State push for tea price hike
The government has plans to artificially boost tea prices aimed at assisting the industry in the wake of crisis faced by the exporters.
Plantation Minister Navin Dissanayaka addressing the media at the ministry office in Battaramulla said that since tea prices were falling, the Sri Lanka Tea Board (SLTB) would be called to purchase tea stocks at the auctions in a bid to raise prices.Tea auction prices in 2014 which started out in January at Rs.509.78 per km came down to Rs.443.04 in December and continued to fall to Rs.396.55 in May but then picked up marginally to Rs.400 and then dropped again to Rs.385.51 in August this year. Mr. Dissanayaka noted that this method was practiced in the past as well and that this could amount to increasing prices artificially.
The minister pointed out that tea smallholders have been given a guaranteed price until the end of September. To date the government had spent about Rs.1.5 billion for the payment of subsidies from the Rs.4.5 billion which would later be used for the purchase of tea at the auctions, the minister explained.
Mr. Dissanayaka said he believed the government could make a profit out of this by selling these stocks in the market once the price improves.
The minister expects the international market to bring about a price correction within three months as he opined this crisis had arisen due to the sanctions imposed on Iran and the falling rate of the Russian ruble.
Mr. Dissanayaka also said that the tea sector employees would have to change their work model in a bid to increase productivity among workers.
He believed that worker demands were unreasonable and that they need to change the current structure and added that they would be granted a seven perch plot of land that would allow them to grow and pluck the tea.
These lands, the minister said would be granted as a pledge by Prime Minister Ranil Wickremesinghe to do away with the current line-room concept.
Moreover, it was asserted that the tea houses concept would be increased but not on an extravagant scale as the present one at the Racecourse shopping mall, which was said to be running at a loss.
The minister noted that he would want to increase the tea drinking habit among locals as a result of which a number of tea boutiques run by the SLTB, owning about 50 per cent equity and rest by private companies, would be established in the districts that would serve high quality tea.
The promotional campaign for tea is expected to kick off by the end of the month, the minister said, adding that while Phoenix Ogilvy was selected to carry out traditional advertising, an Indian firm was selected for the digital advertising.
However, he pointed out that he was not satisfied with the way the Indian firm was selected as there were others that have pitched better prices and who were not entertained. As a result they would be going in for another selection process.
New markets would also be explored that would purchase tea in future like Turkey which currently places 150 per cent tax on imports due to which the government would hold talks to either remove or reduce duty to boost Sri Lankan exports, the minister explained.Commenting on blending Ceylon Tea, the minister said that while it would not be permitted in Sri Lanka they could not stop such processes from taking place in the overseas market.
On the other sectors, Minister Dissanayaka said the rubber industry was provided a subsidy amounting to Rs.1.6 billion and noted that the sector needed to go for value addition as Sri Lanka was found to generate the rubber raw product for 30 per cent of lobal tyres manufactured.
The Janatha Estate Development Board and the State Plantations Corporation that are now running at losses have been transferred to Public Enterprise Development Ministry portfolio since the Premier was looking at reforms to be carried out in these establishments, the minister said.