Tea small holders raise sustainability concerns
Tea small holders raise sustainability concerns Sri Lanka's tea small
holders, who account for 76% of the national tea output, say small
holder concerns need to be addressed for tea industry sustainability.
“Right now the tea small holders, who are the mainstay of Sri Lanka's
tea industry, are facing some serious problems that will directly
contribute towards reducing the national tea output in the future.
Unless mechanisms are developed to resolve these problems, Sri Lanka's
tea industry is at risk,” said Sri Lanka Federation of Tea Small Holder
Development Societies Chairman, Neville Ratnayake.
Tea small holders say the increasing cost of production, mainly
driven by higher labour costs, is making the sector unsustainable. This
is also preventing re-investment in land development and replanting,
which is expected to hurt industry productivity and quality of ?Ceylon?
tea, in the future.
Small holders say that in the case of high grown and mid grown tea,
the cost of production is actually higher than small holder incomes.
According to the Tea Research Institute calculations the production
cost of one kilo of green leaf, in the small holder sector, is Rs 43.19.
“However, the current price for high and mid grown green leaf, is Rs
40.00 per kilo, on average, which means small holders in the mid and
high grown areas are actually making losses,” said Ratnayake.
Low grown tea on the other hand, is generating a marginal profit for
small holders with prices in the range of Rs 50 per kilo. However, this
Rs 7.00 per kilo profit is seen as inadequate, given the cost of living
in Sri Lanka. Therefore, to avoid losses, small holders are compromising
agricultural standards. This is expected to reduce tea yields in the
future.
“Our production costs have increased after the latest plantation
sector wage increase in 2010. So to remain profitable farmers are
cutting down on good agricultural practices like investing in land
development. This means we can expect our yields to drop in the future,”
said Ratnayake. The quality of Sri Lankan tea is also affected because
of pressure on profit margins. Sometimes farmers delay plucking tea
leaves, to be able to pluck more in one round of plucking. But this
means some leaves are too mature and the tea that is produced is not of
the best quality,? said Ratnayake.
A significant share of Sri Lanka's upcountry and mid country tea
comes from small holdings. According to 2010 data released by the Sri
Lanka Tea Board, upcountry and mid country tea accounts for about 41% of
Sri Lanka's total tea production and tea small holders contribute about
25% of this production. This means the quality of tea produced by tea
small holders could impact the overall quality of Ceylon Tea. Low
quality tea could also result in Sri Lanka losing international market
share.
Small holders say Sri Lanka needs to urgently develop existing export
markets and find new export markets, while increasing tea outputs
domestically, for small holdings to remain profitable.
“Over the long term, we need to look at gradually doubling our yields
from the current 300 kgs per acre, per month.
This is possible with proper agricultural practices. However, we need
to also increase our exports. This means we must increase market share
in existing markets or, develop new markets for Ceylon Tea,” said
Ratnayake.
The government has already recognised the need for quality and
productivity increases in the tea sector and has mandated that 3% of
total tea extent should be replanted annually. The government has also
extended a Rs 300,000 subsidy, for replanting. However, the estimated
cost of replanting is around Rs 1 million per hectare of tea. Given the
economies of small holders, the legal provisions and financial
assistance are not seen as adequate to motivate the majority of tea
small holders to replant.
“On top of the high cost of replanting, replanting will also leave
small holders without an income for about three to five years, until the
new tea bushes can be harvested. This is the main reason small holders
are reluctant to replant,” explained Ratnayake.
A majority of Sri Lanka's tea small holdings (approximately 80%) are
below one acre. Many tea small holdings are half acre or quarter acre
plots and are a primary source of income for families. Sri Lanka has
about 400,000 tea small holders who support close to 2 million people.
“These small holders do not want to replant because replanting would
reduce their incomes. So we need to develop an alternative source of
income for these families. One alternative could be to introduce other
mono crops, such as pepper, that can be cultivated until the replanted
tea can be harvested,” said Ratnayake.
Given the extent of the small holder?s contribution to Sri Lanka's
tea industry, the Federation of Tea Small Holder Societies points out
that mechanism need to be developed urgently to safeguard the sector. |