Policy mix to overcome challenges faced by tea sector

Ramani KANGARAARACHCHI

COLOMBO: A policy mix has been formulated to overcome the foregoing challenges and problems in the tea sector in Sri Lanka, said Plantation Development Project Director Raja Premadasa.

“The tea sector will be made the leader in the global tea market through products and market integration in keeping with the National Plantation Policy (NPIP),” said:

The tea sector’s mission is to become the leader in the global tea market through product and market integration.

It is aimed to achieve this mission in line with the vision of the plantation sector, over the next ten years by implementing the strategies outlined in the NPIP.

“This will be done through building public-private and private-private partnerships as the key policy variables. According to NPIP a strategic policy Mix has been formulated to overcome the foregoing challenges and problems faced by the tea sub sector in Sri Lanka.

The NPIP has recognised fifteen major issues affecting the growth of the sector, namely weak strategic R and D and extension programmes, increased ageing workforce and the high rate of out migration of labour in the plantation sector, high incidence of negative externalities in the non adoption of proper land use practices in the high and midland regions, insufficient financial capital for the RPCs, declining land productivity in the up and mid country regions, low investment in factory modernisation, low level of quality certification in tea factories, dearth of product integration and diversification programmes, lack of crop diversification drives, increasing unauthorised expansion of tea cultivation, declining share of tea in the world beverage market,global over supply of tea shifting “orthodox tea” to “CTC” tea, blending low quality tea with “pure Sri Lankan tea” and lack of policy analysis and marketing intelligence relevant to the tea market.

The Policy Mix of the tea sub sector will address this issues by implementing following policies as per the NPIP. R and D Extension, Human resource development, Development oriented investment, Policy on production, manufacturing and marketing involvement, crop diversification, registration of lands under tea and Policy of marketing and promotion.

However, a golden opportunity has been opened for the corporate sector with the allocation of Rs. 3.7 billion as financial capital through the Plantation Development Project (PDP) for opening up investment opportunities for factory modernisation, crop diversification, non crop diversification and product integration to transform the sector into fully fledged agri business entities by catering to the global market needs.

The Project Director said that once the transformation is completed, it is expected to be strengthened through the formation of human and social capital, to transform the sector into a sustainable industry in the long run.

There is an opportunity for the smallholder sector to receive concessionary loan facilities through a revolving fund Rs. 1.2 billion for crop development and factory modernisation, established under the completed Tea Development Project.

The total tea production in the tea sector at present is Kg320 million for 222,000 hectares and its contribution to the GDP in 2005 was 1.2 per cent when average Colombo Auction Price stood at Rs. 185.84 per kilo. Tea makes 70 per cent of agricultural exports.