Tea and finance

The tea industry has been ravaged by a strike that was called off on Thursday but not before millions of rupees were lost due to the disruptions.

Industry sources said the damage to the sector is enormous notwithstanding the fact that November-December is traditionally the best season for teas with good quality western grades being produced.

This quarter also leads to the end of the April-March 2007 financial year of many companies who would like to see an improved bottom line … unlikely to happen however in the current situation.

The crisis began as a go-slow on November 19 and broke into a full-blown strike thereafter. It hurts plantation companies badly, the auctions and the continuing quest to provide the best teas internationally in a competitive market.

Reports, just as we went to press on Friday, indicate that the unions and the plantation companies have agreed to a wage level of Rs 250.

Industry sources say this is the worst strike in recent times as it occurred during the best period in the year for good teas on top of an acute financial crisis faced by companies.

Plantations have been struggling in recent months with high fertilizer costs and escalating power rates in addition to other increases in the cost of production.

Apart from that many were in the process of upgrading their factories to meet higher standards required by buyers like the HACCP certification and other quality assurance practices applied in most of Europe.

Industry sources lamented that the authorities didn’t consider the tea crisis as a national issue given the importance that this sector plays in the national economy.

Tea has been having many off-the-field problems this year until the strike hit the sector this month.

For example, there was the drama over the ‘dumping’ and subsequent reinstatement of the Tea Research Institute director followed by the crisis at the Tea Board which is still going on with the former controversial chairman taking the minister and others to court over his removal. There are reports that there were disputes between some of the trade unions over the wage demand.

Some were prepared to accept the offer made by the Employers Federation on behalf of the companies while others wanted something more. The ongoing strike will see its repercussions in coming weeks because the country’s best brand has been compromised and the auctions undermined.

Rumblings over PBJ
Is the tea party over for Dr P.B. Jayasundera, the high-flying Treasury Secretary who is second only to retired civil servant S. Paskaralingam as an all-powerful public servant? State media first reported that Jayasundera had resigned and was taking up a position in the President’s office. The Treasury Secretary was quick to deny that through our sister paper, the Daily Mirror, saying he had expressed a desire to President Mahinda Rajapaksa to move out at a latter date, not now.

Some UNP parliamentarians were very interested over the reports. Without waiting to check whether the reports were correct, they rushed to ascertain who the replacement would be and what requirements the new man should bring to the job!

Dr Jayasundera has drawn both bouquets and brickbats during his tenure of service. During the Finance Ministry votes in the recent budget debate UNP MP Bandula Gunawardene used the occasion to attack the Treasury Secretary. Many government MPs including Public Administration Minister Sarath Amunugama and Deputy Finance Minister Ranjith Siyambalapitiya were quick to step in and defend the Treasury Secretary.

What triggered the resignation reports this week? There is no doubt that Dr Jayasundera is an efficient and able administrator cum economist whose knowledge of public finance is second to none in the country. The World Bank or the IMF will also vouch for his efficiency on matters of public finance or the economy

However this has in recent times being clouded by bringing politics into the job, as many of his former colleagues would say. Initially a close aide to President Chandrika Kumaratunga, he switched alliances when Mahinda Rajapaksa was contesting the presidency and continued as the CEO of the Finance Ministry under Rajapaksa’s charge.

But there have been problems with some senior ministry officials and high-ups at the President’s Office which may have precipitated some initiatives by Dr Jayasundera to move out of the Treasury at some point.

The country’s finances are in a precarious state with defence spending ballooning and expectations of an escalation in the conflict. The Treasury Secretary role is crucial at this time and it’s important for the government to clear the air on Dr Jayasundera and his future.