Sri Lankas tea industry – at one time biggest foreign exchange earner – is in crisis with controversies between government officials and exporters over cess funds, replanting and promotional activities.
In a connected development, the Plantation Ministry has decided to close down its Warsaw-based promotional branch for European Union (EU) countries because the branch is not profitable – but exporters are raising major questions about how the whole issue is being handled.
Plantation Ministry Secretary I. Sugathadasa said the cost of maintaining this branch was too high when compared to the value of sales in the EU area and thus a decision was taken to close it down by the end of this year.
However, tea industry experts said yesterday that if the EU branch was closed the Tea Board should open new promotional units in emerging markets such as the United States, the former Soviet Republics and Pakistan. “When the promotional office in Japan was closed down, the plan was to open a new office in the US. But this has not happened. We will be losing out in the long run due to this,” said Rohan Fernando, vice chairman of the Tea Exporters Association and a director of the Tea Board.
According to industry sources, the tea industry is facing difficulties because the cess funds needed for factory modernization, replanting and promotions have not been released.
They say the government has not released more than 15 million of the cess funds whereas the budget for promotional and development activities is around Rs. 270 million.
The Sunday Times also learns that the Tea Board had not paid any advance or booked slots in trade fairs since October last year due to lack of funds. However, the Plantation Ministry Secretary has a different view. She said the funds had been released even though not as cess funds. “The cess fund is also revenue of the government; so funds will be released as and when the government considers it necessary. We have released a large sum of money for the fertilizer subsidy. In fact we have released all the money collected from the cess fund even though we have not referred to it as cess funds,” she said.
According to Mr. Fernando the ecess fund was established as a development fund for the tea industry and should be utilised for that purpose. “If the government considers this as part of its revenue why was it called a cess fund? It should have been called a tax. We have hardly done any promotional activities in recnt times due to lack of funds. This should not be so. If Tea is one of the primary industries in the country then the government should also act effectively to develop the industry and promote it,” he said.
Industry sources also warned that if the replanting and promotional activities did not happen as planned, the industry would suffer long-term damage. |
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