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Tea Board moves into auction to save industry
View(s):The Government has decided to release funds up to Rs. 1 billion to bail out the tea industry which has run into a crisis because of low prices and other factors. Plantation Industries Minister Naveen Dissanayake told the Sunday Times that at a meeting presided over by Prime Minister Ranil Wickremesinghe on Tuesday, approval was granted to provide Rs. 1 billion to the Sri Lanka Tea Board to buy tea at the Colombo auctions.
Tea smallholders in hot water. Pic by Apsara Wijesinghe
He said the Tea Board would buy only premium quality tea and market it according to the demand. The minister said that this was the first time since 2008 the Tea Board was buying at the auctions in a bid to boost the sagging tea prices. He said he believed it would benefit tea smallholders and would be better than offering a tea subsidy.
A proposal to offer a subsidy and purchase the raw leaf at a guaranteed price was also considered, but eventually it was decided that it was difficult to maintain a guaranteed price for a prolonged period and buying at the auction would be a better option.
Plantation Industries Ministry Secretary Upali Marasinghe said the Tea Board hoped to buy 2.2 million kilograms with the hope tea prices would rise.
“Our aim is to increase price of tea to Rs 450 a kilo gram. The prices have been showing increases in the past two weeks”, he added. He said that the Government would not have a problem in finding storage as the stocks would be held in private sector warehouses of the until they were disposed of.
Along with moves to stabilise the tea prices, the Government is also to venture on an international marketing campaign to improve exports. International media outlets will be made use for the campaign. Latest figures of the Tea Board show that Sri Lanka suffered a drop of Rs. 18 billion from tea exports in the first 10 months of this year compared to the corresponding period last year. The quantity of exports too dropped during this period by about 15 million kilograms.
During the first 10 months of this year, the export decline was mainly in Turkey (by 7 million Kg), Russia (5.9 million Kg), Iraq (5.5 million Kgs), and the UAE (by 4.2 million Kg).