Stakeholders and the Ministry have to work in partnership

“Some of these global issues may be beyond our immediate control. It is however important, that all stakeholders collectively examine this situation and take the appropriate policy decisions, to ensure, that the Colombo auction regains its dominant position.”

“The Sri Lanka Tea Factory Owners Association initiated a request to the government, for a working capital facility, similar to that granted in 2009, during the Iraqi crisis, said Gaya Samarasekera former Chairman Sri Lanka Tea Factory Owners Association. He was speaking at their AGM at Waters Edge.

“The adverse market conditions in the last 22 months, have compelled our members to resort to excessive borrowings, to meet the working capital requirements,” he said.

A number of factories have been constructed over the years, without any restrictions, or consideration of the availability of the green leaf, or the criteria for the approval of a new factory. In this manner, many approvals have been granted to construct new factories due to various pressures. Additionally, some factories are being expanded without approval from the Tea Board, exceeding the capacity identified against such factories.

The result being, that many factories operate, well below capacity, therefore giving rise to fierce competition, for the available green leaf. When one factory rejects poor leaf, another factory accepts it. This is in most instances, to meet the debt servicing obligations.

Since the tea factory owners have invested large amount of private funds, for construction and operational activities, we seek the Hon. Minister’s intervention, to enforce a moratorium of three years, in granting approval for construction of new factories.

“We also urge, that tea sales in terms of approved factory capacities, as available with the Tea Commissioner’s office is monitored and brokers are informed, not to catalogue teas over and above what is permitted, as per the capacity approved. This would also put a stop, to recycling of teas, coming to the tea auctions, that distorts the national production/sales figures.

The industry stakeholders and the Ministry of Plantation Industry have to work in partnership to achieve the following objectives, that will ensure that Sri Lanka will maintain its position, as a world supplier of quality tea. We list below, the key factors for consideration by all industry stakeholders.”

Sri Lanka has the dubious distinction of having the lowest yield per Hectare and consequently the highest cost of production, to of all four major tea producing countries, namely India, China and Kenya. And if we don’t look sharp, lesser producing tea nations such as Vietnam, Indonesia and even Turkey, may overtake us,” he disclosed. “Poor replanting in the last few years, and the lack of extension and advisory services to the smallholder sector, has resulted, in declining yields, and income to tea smallholder families.”

Commenting on Tea Research Institute (TRI) he said due to cadre requirements TRI is today a “katcheri”.

We recommend, that the TRI be given an ‘autonomous’ status, to efficiently, conduct is research. The Government could be a “Golden Shareholder.”

Glyphosate, the only viable weedicide was totally banned, leaving the tea industry with no alternative. Although this was anticipated, and the association had discussions, with the TRI and the Registrar of Pesticides for the last two years, no substitute, has been made available, to the tea industry.

Kenyan tea auction prices moved above the Sri Lanka auction prices, indicating the competitive advantage it has over Sri Lanka, as a world supplier of tea. Sri Lanka tea prices have been sensitive to excess production and shortage in Kenyan tea production and this trend will continue in the future.

“What is more alarming is the fact, that the averages at the Mombasa auction, particularly for Kenyan teas, records significantly, higher values this year, compared to the corresponding figure in 2014, whilst the reserves has taken place with the Colombo auction averages.’ (Daily News)