News
Russia suspends tea imports from Lanka; three ministers to fly to Moscow for urgent talks
Russia’s sudden suspension of Sri Lankan tea purchases has triggered a desperate diplomatic offensive with three ministers flying to that country next week to urge the authorities to lift the temporary blockade. As tea brokers and exporters recovered on Saturday after the shocking, temporary ban which is effective from tomorrow (December 18) and enforced after insects were discovered in a consignment of tea from Colombo, reports of Colombo being sucked into a political drama amidst a trade and investment dispute and trade-offs involving Russia, India and China, emerged.
According to trade sources and political analysts, the temporary ban is seen as a stinging response to Sri Lanka’s ban from 2024 of chrysotile-contained asbestos roofing material, as it is hazardous to human health. However from January 2017 imports of this material, in which Russia is the main source, will be restricted. Sri Lanka’s roofing industry and Russian authorities have vigourously defended this popular asbestos roofing material and cited documentary data and scientific evidence saying that it is not harmful.
Three ministers – Plantations Minister Navin Dissanayake and Industry and Commerce Minister Rishad Bathiudeen — to discuss lifting the ban — and Science, Technology and Research Minister Susil Premajayantha, separately — to discuss the asbestos issue — were due to visit Russia next week. Russia is Sri Lanka’s largest importer of tea and also has the biggest stake, among other imported teas, in the Russian market. The temporary ban, on all agriculture products from Sri Lanka, was announced by the authorities citing the discovery of the Khapra beetle (normally found in grains and seeds) in the packaging of one consignment of tea from Sri Lanka. Tea is the main agriculture export to Russia.Russia is currently the highest importer of Ceylon Tea, in the first 10 months of this year, buying 29.5 million kg of tea valued at US$ 23 million. This is about 12 percent of the direct earnings made by the country from this market alone and also amounts to 12 per cent of total shipments of tea made so far. Sri Lanka shipped to Russia 48 million kg of Ceylon Tea in 2011 and since then volumes fell to 36 million kg in 2015.
While ministerial sources, who declined to be named, confirmed that the suspension was a tit-for-tat for the ban on chrysotile, trade sources didn’t rule out other areas in which there has some dispute with Russia or a ‘Russian friendly-nation’ in the latest spat between Colombo and Moscow. The reference was to the recent delay in Sri Lanka buying a Russian patrol vessel for the Navy, a decision that was eventually approved by the Cabinet in late November. Also discussed in political circles, though there is no clear evidence or proof, is India’s possible ‘meddling’ through Russia in putting pressure on trade deals due to the South Asian superpower’s annoyance of an increased China presence, particularly in Hambantota, while India securing the Trincomalee port and its environs is trapped in political manoeuvering here.
An interesting tit-for-tat example was explained by Wilfred Jayasuriya, an award-winning writer and former Chairman of state-owned State Trading Company Consolidated Exports Ltd (Consolexpo) in 1977-79, when Libya, then a big buyer, reported a consignment of tea being “unfit for human consumption” as insects called “Psochids” or book-lice were found.
Libyan leader Muammar Gaddafi had signed an agreement with then Prime Minister Sirimavo Bandaranaike (before or after the 1976 Non Aligned Summit in Colombo) to purchase tea through Consolexpo at high prices. The first shipments were made when the United National Party won national elections in July 1977 and J.R. Jayewardene became the Prime Minister. “I believe Gaddafi was not happy with the political changes considering JR to be closer to the US and this could have prompted the tea issue,” Mr. Jayasuriya, who wrote a novel on the crisis titled “The Libyan Episode” which won the award for the best novel at the State Literary Awards in 1996, told the Sunday Times yesterday.
After visits to Tripoli, Rome and London by Sri Lankan experts to examine the consignment and undertake tests, British experts had then declared that the insects were harmless, odourless and colourless. Tripoli authorities agreed to a solution where insects are killed using a smoked substance in the packed material. While tea shipments were not suspended during the process, with Libya buying one million kg of tea per month, the dispute resulted in delayed payments of US$ 6 million for six months to a year. Eventually the contract was moved out of Consulexpo and went to the private trade but with much lower quantities.
The example drew a parallel with the influence on prices that Russia tea buying has at the Colombo auction. Libyan tea purchases at high prices were similarly an influencing factor at the tea auctions in Colombo.
West Asia has been Sri Lanka’s biggest tea buyer until conflict in the region and US sanctions created issues. Since then Russia has been the biggest tea buyer, not without issues either with banking crises at various times affecting tea buying and cash transactions.