A message to the Minister of Plantations from Ceylon Planters’ Society

Russell Tennekoon
Secretary General - Ceylon Planters’ Society

Much has been said and read about the disastrous state of the Tea Industry, Chrysantha Perera, Chairman of Ceylon Tea Brokers has in his Annual Report suggested a five point strategy to get out of this mess. At present we are losing on average of Rs. 70/- on every Kg of Tea we make!

How much longer can the producer survive? In order to keep the estates going the lands and fixed assets have been mortgaged. It has reached a crisis point where the Banks are not lending the Companies anymore due to their inability to pay back. Alarming indeed.

It is well and good for those outside the production sphere to state that the wage structure (highest in the world amongst the Tea producing countries) be tied up with productivity. The Industry has been attempting to persuade the Unions on this issue for the past decade with no success. The Governments at the time provided no support whatsoever for reasons of political expediency. Various management and operational models of outsourcing are being tried out but the core issue is that Sri Lanka Tea is unable to withstand the price lows being a commodity product, and is subject to external volatility like all other commodities.

In the recent past our marketing focus has been on the Middle East, Russia and the C I S Countries which are now in turmoil for one reason or the other. Although they are our main buyers we have neglected European markets who have been more or less stable throughout.

The Government grabs Rs. 10/- from every KG of Tea exported which amounts to an approximate figure of Rs. 10/- x 300 million Kgs = Rs. 3,000/- million. This Cess of Rs. 10/- was imposed for the sole purpose of Tea promotion but as the Government was broke they grabbed it for the Treasury. When I was a young planter in the sixties the Cess was Rs. 2/- which was ploughed back into the Industry and offered as a subsidy for replanting old Tea. Almost every estate at the time used the opportunity and replanted their old Tea.

With no solution in sight, where do we go from here? Wages have to and will increase through necessity although the Industry cannot afford it now. Besides there are several other internal problems such as the High Cost of funds, Management fees by a few Companies, and poor management itself all of which are controllable issues.

What is beyond control is on acceptable price for our Tea. Now that the new Government has got a mandate we must seek the assistance of International lending agencies such as the ADB which helped considerably to upgrade estates decades ago. With the correct men for the job we can use our Embassies and Trade Counsellors as well as co-opt the private sector to sell the virtues of our Tea.

Our Tea Brokers are very competent marketeers who can sell oil to the Arabs. Their services are essential in such an exercise. What sells as Tea even in the developed European Countries is shocking. No country in the world is blessed with such diversity in appearance and liquors from each agro-region, within such a small geographical extent. France has used these factors for their wine. We haven't. The South Americans are using the same strategies and also romanticizing their coffee. We haven't, although each of our estates has its history and own stories to tell.

Let's face it; the Tea Board should stick to what it does best. Framing and implementation of policy and other essential regulatory controls. Marketing should be by marketeers. Get the best. There is a crisis. As long as it lasts our Tea Industry will continue to spiral downwards. We cannot sit back and wait for things to happen. The ripple effect of this downturn is now filtering down to the masses. It is not business as usual in all the Tea producing Districts. The Tea Board being the apex body must act now, organize a forum of all Stakeholders, the relevant Ministries, Producers, Brokers, Bankers, Buyers and Shippers as done during the first oil crisis in the sixties.

How can we optimize our Free Trade Agreements? Should we focus on NICHE marketing due to our high costs? Should we pursue the establishment of a second Tea hub? Dubai was first off the starting blocks despite not having a single Tea bush. Establish Trade pacts for our lesser known grades? Views, and opinions could be sought and strategies to mitigate the crisis be acted on before it is said that Ceylon was once a Tea Producer.

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