Some tea estate companies to divest; RPCs brew new model
In the wake of a slump in profits on the regional plantation companies (RPCs) some companies are contemplating moving out of the business, while a joint effort is underway to establish a new model for others remaining in the business. Plantations Minister Navin Dissanayake addressing the media on Wednesday at the ministry said authorities were looking at a new economic management model in the RPCs. In this regard, they were in discussions with the estate owners and the trade unions following which public announcements would be made. The discussions are centered on a revenue share model and a productivity led model that would ideally replace the existing attendance based model.
He pointed out that although they had no intention of taking over complete control of the estates back to the state they were keenly eyeing a few estates as it was not possible to allow these to wither away.
Minister Dissanayake noted that authorities would monitor the profit and loss of these RPC estates as this was not properly carried out since 1991. Industry sources point out that some companies were contemplating moving out of the business although nothing was official to date. Companies were said to be free to divest their share in the stock market, sources said. Speaking of other issues the minister said that the Tea Shakthi Fund would be allocated with more money for improvement under a cabinet paper which was submitted by the previous Plantations Minister Lakshman Kiriella. The minister observed that in this regard they would be handing over five factories to the private sector as the fund was in a “very poor state.”
The plantations would be given a boost through a Treasury allocation of Rs.2 billion that is likely to increase to Rs.2.5 billion to provide fertilizer subsidy within two weeks, the minister said. The manner in which these allocations made in this regard would be disbursed is yet to be arrived at between the Plantation Ministry and the Treasury, the minister said. While the ministry has requested to provide for less than a hectare, Rs.14, 000 for tea and Rs.8, 000 for coconut the Treasury has recommended only Rs.12, 000 for tea and Rs.10, 000 for coconut. Allocation for the rubber sector is agreed upon at Rs.5000 for less than a hectare, it was stated. Minister Dissanayake highlighted that in the wake of the drought prevailing in tea growing areas production has dropped that has adversely affected the crop.
Sri Lanka Tea Board (SLTB) Chairman Rohan Pethiyagoda said it was mostly the smallholders that were particularly suffering from this drought as they were unable to pluck leaf as often as they do. In this regard, production has dropped between 10-50 per cent but currently prices were holding well. Auction prices had come down to Rs.403.87 per kg in February from January prices of Rs.410 and prices last year during the same period were at Rs.418.29. Colombo continues to fetch high prices at the world tea auctions quoting prices at US$3.56 per kilo of tea compared to other markets in 2015.