Chairman stresses on replanting, modernization :

US $ 5 b tea export target

Ravi LADDUWAHETTY

Sri Lanka’s Tea Exporters have taken up the challenge of an export target of US$ 5 billion by the year 2020. “We have taken on the challenge posed to the tea sector to go for US $ 5 billion by 2020 in the overall national export target of US$ 20 billion and given the right environment and policies, achieving this target may not be a pipe dream”, new Tea Exporters Association (TEA) Chairman Niraj De Mel told the Association’s 12th Annual General Meeting.

De Mel also Van Rees Ceylon Ltd Managing Director said: “Tea has been a part of Sri Lanka for the past 145 years. Until 2006, tea was looked down upon for low foreign exchange earnings compared to apparel, tourism and foreign employment. However, in 2007, exports reached a billion dollars and since then, it has gone to $ 1.2 billion and last year to $ 1.4 billion,”

Tea is one of the oldest industries in Sri Lanka and it has been like an old oak tree, weathering many storms.

It has functioned undeterred amidst bombs, ensuing the steady inflow of foreign exchange coming into the national coffers which helped in no small measure to keep the national economy alive and well as well as to maintain the nearly 2 million workforce dependent on this great industry, he remarked.

Sri Lanka’s tea production has been around 310 to 330 million kilos throughout the last 10 years barring 2009 and accounting for around 11 percent of the global production and 19 percent share of Sri Lanka’s global exports.

“We have been commanding the highest tea prices among the tea producing countries which has been a trend for quite some time,” he said.

He said 68 percent of Sri Lanka’s export teas were in value added form which was also inclusive of the 5 kg and 10 kg packages according to the latest classifications of the Customs Department, but according to the universal classification was 42 percent in value addition.

He also cited the diversity of exports, branded value added exports, coupled with the large variety of tea grades offered by the producers as Sri Lanka’s teas being in an enviable position of being able to cater to a large segment of tea consumers across the world while fetching premium prices.

The new TEA Chairman, noted that some of the biggest challenges of the industry were sustainability, the need for exporters to have confidence on the supply sources and the health of the overall plantation sector.

He said while Sri Lankan teas fetched the highest tea prices in the world, it also had the highest production costs in the world!

The recent wage hike was a 27 percent increase from the previous one, he noted .

“Only a few regional plantation companies have carried out some replanting which is grossly inadequate in the backdrop of the laid down norm of 2 percent per annum and the dilemma facing the tea producer segment is one on hand, the high labour costs mainly stemming from the wages not being linked to productivity and the ageing tea bushes on the other, he said.

While conceding that a fair number of tea factories have been upgraded and modernized, he said there remained a large number of factories which remained far from being the ideally good factory.

He said branding had been pursued extensively by the TEA membership, uncompetitive tea prices leading to low profitability, inability to install high tech food processing and packaging technologies due to the high costs of financing along with the prohibitive promotion and advertising costs were also a huge drawback.

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