Tea sector and its economic importance to Sri Lanka
Malin Goonetileke Secretary General, The Planters’
Association of Ceylon
For the first time since the inception of the tea industry 141 years
ago, Sri Lanka’s tea export earnings exceeded US $ 1 billion in 2007.
This achievement amidst the many setbacks and ad hoc changes in
fiscal policies detrimental particularly to the producers clearly
underlines the potential of the tea industry which still continues to
grow on a stressful environment and the significant influence it exerts
on the country’s economy through export earnings and employment
generation is scarcely appreciated.
Production however steadily dropped to 302 million kilograms compared
with the all time high of 317 million kilograms achieved in 2003 which
can partly be attributed to the go slows and strikes in late 2006
followed by the drought in early 2007.
Despite the record foreign exchange earnings which are commendable,
the amount which accrues to the Producers is almost 30 per cent lower
than the total export value.
Tea, once Sri Lanka’s largest export commodity has experienced and
surmounted intermittent crises over the past several decades and
continues to be perhaps the highest Nett Foreign Exchange earning
Industry and merits the support from the powers that be, to ensure its
sustainability and growth.
Fortunately, Ceylon Tea is still synonymous with high quality and its
particular strength lies in its diversity and hence the continuing
demand from consuming countries.
Therefore, some key strategic decisions need to be made and support
meted out at every level in order to attain at least 2-2.5 per cent of
the country’s GDP held 3 decades ago from the current 1.5 per cent as
quoted by the Central Bank, contributing 13 per cent of Sri Lanka’s
total exports.
Local employment generation
The estates managed by the Regional Plantation Companies employ in
excess of 300,000 workers while the Industry provides direct and
indirect employment to over one million people which is some 13 per cent
of the country’s total labour force.
Little known and appreciated is the fact that many townships and
villages within the plantation areas have steadily developed with their
economic situation totally dependant on the well-being of the Industry.
In this context, the plantation sector takes precedence over all
others in terms of the Economic, Social and Environmental benefits that
accrue to the country.
Further, the State is relieved of having to provide facilities such
as housing, water and sanitation and other infrastructure provided by
the Estates not only to the workers but to the entire resident
population along with other administrative support such as facilitation
of ID cards, Birth and Death Certificates and not least the maintenance
of Law and Order in these areas.
The eighteen plantation companies listed on the Colombo Stock
Exchange account for 1.64 per cent of total market capitalisation which
is significantly higher than apparel, tourism and other foreign exchange
earning avenues.
Contribution to the Capital Market and related industries
Despite the declining harvest, export levels and earnings therefrom
have shown positive gains with good demand from Sri Lanka’s traditional
markets such as the CIS countries, Iran, UAE and other Middle Eastern
destinations.
The volume of value added teas in the form of packets and tea bags is
steadily increasing and the expansion of the product range to instant
tea, green tea, organic tea, a variety of flavoured teas albeit in
limited quantities, apart from creating opportunities and growth through
exports, have indirectly benefited industries such as printing and
packaging, logistics and freight forwarding as well as the local
handicrafts sector.
Challenges faced
Sri Lanka cannot be complacent any longer with the changing global
scenario where competing countries are aggressively promoting and
supporting production and exploring new markets.
The Indian Government is said to be embarking on a series of measures
commencing with enhancing productivity. Union Minister of State for
Commerce, Jairam Ramesh is quoted having said that the Indian Government
was considering sharing 50 per cent of the social security expenditure
on Estates due to the high social welfare costs which the Indian Tea
Companies were finding difficult to bear.
Among the host of issues plaguing the plantation industry, critical
and significant are problems that directly relate to land and labour.
Frequent government intervention and politicised trade unions add to
the severity of the problem. A burning issue is the looming labour
shortage due to out migration, voluntary unemployment and the ageing
workforce.
Inasmuch as the onus is on the companies and employees, trade unions
too have a key role to play in encouraging their members to greater
productivity thereby realising the true potential of the Industry.
Unwarranted work stoppages and other similar setbacks, while
incurring losses to the Companies, adversely affect the plantation
workers and the National Economy in the long-run.
All stakeholders in the industry as responsible citizens as well as
the Government must analyse what needs to be done to ensure the long
term sustainability of the Industry.
Ceylon Tea is no longer a commodity but a food item contending with
rival products in a fiercely competitive global market with the dubious
distinction of having the highest cost of production amongst the major
tea growing countries and any further decline in productivity due to
ageing tea bushes, worker agitation, political and Government
interference, ill conceived fiscal measures etc would be the stepping
stones for our competitors.
This calls for urgent attention at the highest levels. |