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by Maxwell Fernando

Tea prices at the Colombo sales centre have remained rather buoyant in the recent past and all indications are that the tea industry is heading for good times at least in the short-term. The country enjoyed a good Uva season after many disappointing years earlier. Buying was well spread out and those teas with the true Uva character obtained extensive enquiry from a wider selection of quality buyers. Airmail bids were freely forthcoming with a few outstanding teas obtaining record prices.

Tea prices in Colombo had remained somewhat inconsistent so far this year in relation to the two previous years. Whilst following the general pattern with prices for all categories dipping during mid-year, weekly prices have been subjected to fairly wide fluctuations. This has been most noticeable for low grown varieties.

These teas have been selling well above those realised for other two categories but went through a bad patch during June. They however recovered fast and started to rise but could not reach the levels recorded during mid January.

Weekly offerings for the past few weeks have been maintained at around 5.5 million kilos and a surge in crop cannot be expected in the near future. It seems to be the ideal quantity Colombo can handle allowing sufficient time for buyers to inspect the teas carefully. Further quality levels of current offerings from all sectors are considered reasonable, as there is no pressure on the processing units to extend manufacturing hours beyond rational limits.

The question of quantity and quality had surfaced on many occasions earlier but most unfortunately, Sri Lanka is caught in a web where manufacturing costs are considered about the highest in the world. Under these conditions the obvious solution available to producers is to increase production. This question however should be tackled in a more cautious manner.

Increasing production through the application of proper agricultural practices is indeed the way to get about it, but the crop can also be increased just fathering an extra leaf. It must not be forgotten that by doing so the quality of the final product is downgraded. Compromising quality for quantity all the time may not appear the correct solution to the problem.

The country experienced similar conditions during mid June when there was a surge in crop. Off grade percentage rose to over 30% and it took a long-time to market those substandard teas. Even in the present situation, off grades constitute over 20% of total offerings, and the poorest are quoted well below a dollar a piece.

Colombo could safely handle about 5.5 million kilos of tea a week, which means handling about 275 million kilos a year. It may appear that it is best to maintain a production level of around 300 million kilos of quality teas rather than a greater quantity of substandard teas where Sri Lanka will be competing for markets looking for cheap tea. It must be remembered that there are many other producers who can produce tea at half our costs. Sri Lanka is identified as a producer of quality tea. We have so far found ready markets to absorb our entire production. Let us maintain our position and aim at feeding markets that are looking for premium teas.

With the privatisation of the plantations, a new realisation dawned and the stagnant levels of production seen during the early 1990s have now been put right. It was only during the past decade that the tea industry witnessed a complete turn around on the production front. History has it all recorded that as long as the plantations were independent, production was steadily increasing, but after nationalisation there was a noticeable decrease.

Although the managers of the nationalised plantations had all the professionalism to run the plantations, investments slowed down, cultural practices vanished, brown patches on the estates increased and with it production decreased. Profitability eroded, and agricultural estate became a "white elephant" for the government to manage.

Sri Lanka has always served the top end of the quality market and this feature is followed very closely by other tea producers in this region with a great amount of resentment. The quality levels of South Indian teas have dropped in recent times with the result they are now facing stiff competition from Indonesia, Bangladesh, Vietnam and others who are capable of producing teas at half their costs. Further, their forecast regarding a dramatic increase in domestic consumption did not mineralise, with the result they face a situation of oversupply.

On the orthodox front, Sri Lanka has made tremendous progress and is in the forefront on the export arena. Switching to the manufacture of CTC varieties has not been in the best interest of the country, and production is currently stagnating at around 7% of total production. Clonal material is found to be the best for the production of leafy varieties, and about 70% of planting material found in low grown areas is of this variety.

South India is fast to imitate Sri Lanka and a concentrated attempt is currently being made to increase and wherever possible revert to the production of orthodox tea in the hope of conquering some of their lost tea markets. Vietnam is seeking local expertise to promote the production of orthodox teas. This no doubt is a threat to Sri Lanka, but there is some exceptional character in Sri Lanka teas that cannot be reproduced in other tea producing countries.

It is this excellence that Sri Lanka has to project and it should be the top end of the quality market that we should target. There are many newcomers to tea production, who can produce this beverage more cheaply, and it would be to our disadvantage to compete at bottom levels. Sri Lanka produces a premium product, and there are buyers to pay excellent prices.

Our teas have never failed to find suitable homes for disposal. Intention should always be to upgrade our teas and not downgrade them.

In addition, Sri Lanka teas at present are enjoying unique features that have established them at the top end of the beverage market. At the meeting of the International Standards Organisation (ISO) Technical Committee on tea held in February 1997, a pronouncement was made from the chair that on the ongoing analysis of made tea from all major tea producing countries, Sri Lanka tea was found to be the "cleanest in the world" as far as chemical residues were concerned.

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