Financial Times

Tea racket: expose the offenders
Big names are said to be involved in the racket to export 'refuse' tea classified as fertiliser, which was uncovered recently following a timely tip-off and action by the Tea Commissioner. For some time now the industry has been complaining that such refuse tea was finding its way back into the market. The Tea Association of Sri Lanka, the apex body that groups all sectors of the industry, has called on the authorities to catch and expose those behind the racket to export refuse tea which it said could tarnish the image of Ceylon tea.

The racket was uncovered when the Customs detected four containers of refuse tea declared as fertiliser and consigned to Kenya last month. Exports of such refuse tea are banned as they fall below the standard set by ISO 3720, which governs tea exports, and have to be destroyed. However, over 100 containers of such refuse tea had already been shipped by the time the racket was detected. Six such containers are believed to have been exported to India where there is said to be a ready market for such tea, especially for instant tea manufacture.

The TASL has strongly advocated that stringent punishment be meted out for such blatant violation of the laws of the land and for bringing disrepute to the image of Ceylon Tea. The Association wants the punishment to be severe enough to act as a deterrent to any further acts of this nature.

Ceylon tea is perhaps our most strategic industry, in much the same way aerospace or shipbuilding industries are of strategic importance to industrialised countries. We simply cannot afford to tarnish the image of Ceylon tea, especially at a time when competition from other producers is increasing and the world market is getting saturated.

One of the key decisions to emerge from the recent 15th Session of the Inter-Governmental Group on Tea of the Food and Agriculture Organisation was the need for producer countries to withdraw poor quality teas from the world market. The danger of countries like Vietnam and China increasing production and flooding the market with cheap teas was highlighted. It is feared that Vietnam could do to tea what it did to coffee, where producer prices are at historic lows while brands such as Starbucks are doing very well. Retail shelf prices of branded products remain the same or increase while real value prices of tea exported as a commodity have fallen in recent years.

Tea producers are not only in competition with each other but with other beverages like coffee, carbonated drinks, juices, alcohol, beer, mineral water, and milk for 'share of the throat'.

It is ironic that a racket that threatens to cause serious damage to Ceylon tea should be uncovered at a time when the industry has unveiled a five-year plan to boost tea earnings to a billion dollars a year by encouraging the export of tea as a value-added product rather than a raw commodity. Aid agencies have chipped in with a large dollop of funds to help tea companies diversify and secure niche markets.

Radical changes are envisaged such as extending the leases of the regional plantations companies and joint marketing of value-added branded products. We cannot hope to compete against low-cost producers in the mass market. In Ceylon tea we have a premium product with a history of over 150 years. The industry should focus on its strengths - the superior quality and the amazing diversity of tea available in the island. We cannot afford to allow unscrupulous racketeers, however big they may be, to tarnish the image of such a vital industry.

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