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Ceylon tea embroiled in mixed bag of worries
View(s):Sri Lanka’s tea industry faces numerous challenges in its export markets as the auction this week has been postponed and a drought has severely impeded production.
As the plantations face cash problems, exporters are embroiled in further issues as the coronavirus pandemic has led to a shutdown of the country and most offices are running on low staff including the tea exporters. But plans are being worked towards conducting the auction next week. Without an auction tea stocks cannot be sold in the global market.
“We have not still made a firm decision to hold the auction because the plantations have a problem as they have to pay a lease to the growers so it’s a cash issue,” Ceylon Tea Traders Association (CTTA) Chairman Jayantha Karunaratne told the Sunday Times on Wednesday.
He noted, “we are requesting for the auction to be held”, but among the exporters there had been a mixed reaction.
“Producers want it but in the export sector some are in favour and some are vehemently opposing it,” he said.
Exporters have been unable to turn up at work to capacity since last Friday since the curfew was imposed.
“They could not even purchase samples of tea so exporters did not work this week,” Mr. Karunaratne explained.
Without a 100 per cent participation at the auction, prices are likely to get affected, he explained.
Quantities of stocks have dropped during January to March 15 with about a 12 per cent drop overall compared to the same period last year. However prices have been higher.
Markets face issues
Prior to the start of the issues of the coronavirus pandemic tea exports had been slightly higher than last year but by the end of this month with border closures globally amidst a range of other problems March is likely to send tea exports lower than last year, Mr. Karunaratne noted.
He pointed out that Russia, Sri Lanka’s biggest market, is facing issues of a drop in demand for oil and the oil prices have come down. This has affected the Russian Ruble and caused a drop in demand for teas from Sri Lanka. The impact would mean Sri Lanka will not be able to obtain larger orders or payments could get further delayed.
Iran is facing US sanctions and Sri Lanka is finding it difficult to send their teas to the next biggest market.
In addition, routes to Iraq and Turkey have closed causing shipments to be laid up in ports en route.
“The prices didn’t decline that much due to lower quantity – but going forward we will have difficult times for cash flows for exporters,” the CTTA Chairman opined.
“I don’t think a serious drop is expected. There will be a lot of challenges in getting our products moved into the markets because of border closures, less ships going via Colombo to the West and collection of cash from the buyers,” he explained.
Rising temperatures
The drought that has been prevalent in the country has caused some tea bushes to be completely wiped out especially among smallholder estates in the south in Galle and Matara.
Ceciliyan Associates Managing Director Pani Dias, a smallholder who is also the CTTA Vice Chairman, explained that since the drought weather conditions started around mid-February there will be a 25 per cent drop in production for the next three to four months.
“The drought has been severe and tea bushes have died due to high temperatures and global warming,” Mr. Dias explained.
Though areas with dense tree cover like Kalawana and Deniyaya were not impacted, estates in Matara and Galle have been impacted as most palm oil plantations have been established providing little cover, he explained.
Temperatures have been running high at around 36 degrees celcius, considered very high.
“About 85 per cent of smallholdings are about half an acre or below one acre plots so if half an acre plot is lost then these owners will have to look for work elsewhere to earn a living,” Mr. Dias explained.
At least 20 per cent of estates have been wiped out and if there is rain then the bushes will recover about 10 per cent of the crop.
There are currently 450, 000 smallholder families with about one million dependents.
Asia Siyaka Brokers Anil Cooke told the Sunday Times that the routine of closing catalogues early for auctions is broken due to a major shortfall of crop and free movement of workers being disrupted by choice or due to the curfew.
The previous week’s sale was held under difficult circumstances and buyers responded very positively, he explained adding that the trade really rallied and kept the prices up but on the other hand limited quantities were available in the auction due to low inventory in the value chain.
| Deniyaya tea workers: no work, no water, no hope By Amila Prabodha Gamage Plantation workers in Deniyaya suffering in the drought say the worse is yet to come for the tea trade from the coronavirus. The tea bushes have dried out, workers are idling, and people are walking miles for drinking water. Worker P. Krishnasami, 54, said many are suffering without a full income because work had not been available for several weeks. His income had dropped to Rs 7,000 in February, but was left only with Rs 225 after deductions for EPF and loans. “We don’t have work in the estate now. There is nothing from the government and now we do not have drinking water,’’ he said. He said they have been promised dry rations, but they were yet to come. He claimed that the estate management had demanded Rs 50 each for face masks. Another worker, Muththu Ramalingam, 57, said he has been employed for 40 years in the plantations and during the last four to five months he has not had proper employment. He said that this month he could not expect anything more than Rs 1,000 because there is no work although he usually could earn around Rs 7,000 per month. “Nobody has taken care of us. We are helpless,’’ he said. Kumuduni Balapriya 24, a mother of two daughters, said she and her husband work in the estate. “We didn’t even go to buy food after the curfew. How we can buy things without money?” she questioned. “Once, the monk came from the temple, and gave us some buns, we didn’t get anything from government yet,’’ she added. P. Abeygunawardena, who is promoting organic tea for export in the area said he was confident that the virus will not deal a finishing blow to the business. “The pathetic situation of the Sri Lanka tea sector today is due to our own mismanagement and unfair private gains at a huge public cost,’’ he said. He said new opportunities that will open up due to the virus epidemic highlight the need for nature friendly, health conscious, new scientific approaches to tea production, processing and consumption. “Why not organic, clean and nature-friendly production? Why not electronic auctions and marketing? Why not declare Sri Lankan tea as poisons-free, healthy drink to the world? he suggested. Gunasoma Wanigasekara, 60, a small tea factory owner in Akuressa said that the drought has affected them badly. “We have experienced a severe drought from January. Akuressa is one of the areas that got effected badly. Our intake of tea dropped by more than 50% in February and 80% in March,” he said. He said the factory has an outlet for foreigners, and until the curfew was imposed, tourists visited, but now the situation would change. “The situation is changing very quickly. We are not able to pay our workers, especially daily wage workers. Production has stopped. So, now they are in very bad situation,’’ he said. “We can only give the basic salary for workers being paid on a monthly basis. “Our all income has stopped. We still don’t have a clear idea of how the government will implement its decision to delay loan recovery,” he added. Nihal Gunasekara, 52, a small tea cultivator with one acre of land, said that they have been affected from January onwards. “My land has almost dried up from the drought. All tea plants are nearly dead. I earned 30,000 rupees a month from this land. But I get nothing now,” he said. With the adverse impact of the curfew yet to be fully felt, plantation workers and owners of small tea plots believe that they are facing a double blow. | |
