Ceylon Chamber hails $ 1b tea exports fete but warns of misgivings

The Ceylon Chamber of Commerce [CCC], which has been associated, since its inception in 1839, with the Plantation Industry, and with the Tea Industry from its beginnings over 140 years ago, applauds the Tea Industry on surpassing the value of US.$. One Billion in export earnings in the year 2007.

This achievement should be viewed in the context of the benefits to the country in real terms. Over 95 percent of the resources utilised by the Tea Industry are indigenous. Consequently, its net foreign exchange earnings are extraordinarily high, with a minimal outflow. Cognizance should also be given to the fact that, until the relatively recent emergence of other major foreign exchange contributors, the Tea Industry sustained the economy of this country for many decades. Furthermore, our country is recognised throughout the world on account of CEYLON TEA and, more recently, since the 1996 World Cup victory, its cricketing exploits. Ceylon Tea is the country’s easiest identifiable brand, which has been developed progressively, over the years, by the Trade.

This landmark achievement may create a misleading perception in the minds of many that the Industry stakeholders are reaping unduly abundant rewards. A little known fact is that a significant element of these earnings are absorbed by plantation labour wages and other facilities provided to this sector, such as housing, health benefits, educational facilities, etc. In the past twelve month period, two wage increases have been awarded to the plantation labour, through the direct intervention of the Government. This has resulted in labour expenses amounting to as much as 65 percent of the average Cost of Production. The Tea Industry supports a population of over one million, who are both directly and indirectly associated with it, in earning their livelihood.

This feat becomes all the more commendable, when one considers the very low yields recorded in the plantation sector compared to other producing countries. Sri Lanka’s average yield per hectare is in the region of 1,650 kgs. Our main competitors in the global market, Kenya and India, achieve yields much higher than this. This has significantly eroded the returns on investment. If only wage increases previously granted had been linked to productivity, there would have been benefits for all stakeholders, as well as the country. This is a thought for serious consideration for the future, as it will be the only way to stem the decline in crop of the past two successive years, since Sri Lanka achieved its record crop of 317 million kgs. in 2005. Should wages be linked to productivity, the realisation of the clear potential for not only increasing the annual production, but also swelling the annual foreign exchange earnings is likely to follow.

In this context, it would not be inappropriate to reflect upon the impact that privatisation had on the Industry. In 1992, following 17 years of State management, the plantations had become such an enormous burden on the Treasury that the Government was compelled to consider privatising the management of the plantations. By 1995, the transformation was so great that the ownership of the plantations was also privatised. Not only had private sector management turned around the Plantation Industry from being a financial drain on the Treasury to a substantial contributor, but also production, which had been virtually stagnant during the nationalisation era, began to show progressive increases. Within a period of 15 years of private sector management, production recorded a 50 percent gain. This had a direct effect on the condition of the plantation labour, which had been deprived of any improvement during the State managed period, by way of a surge of benefits that uplifted its life style and earning capacity

However, all this should not devalue the contribution to this accomplishment made by the Branding initiative. The successful development of Sri Lankan owned Brands, particularly in Russia and the CIS countries, in Australia and New Zealand and in the Middle Eastern countries, is a credit to the Export Trade. This has considerably added value to the exports of tea. The resolute generic promotional campaign conducted by the Sri Lanka Tea Board, in partnership with the Colombo Tea Traders’ Association, has also played a significant role in this success.

The investment made by the industry, in every sector, to upgrade the product and enhance its value, has made Ceylon Tea the most highly-valued tea in the world.

The Producers, by their unrelenting endeavours to obtain HACCP and ISO certification and abiding by prescribed parameters in the application of approved weedicides, fungicides, insecticides, etc., thereby achieving the high food hygiene standards demanded by consumer countries; and also by manufacturing a wider range of grades than any other producing country, to cater to the diverse needs of consumer countries.

The Brokers and Independent Warehousemen, by the construction of state-of-the-art warehouses, equipped with computerised procedures and modern machinery, and complying with strict industry guidelines on standard storage measures and facilities, to achieve greater efficiency and more hygienic conditions warranted by tea, as a food product.

The Buyers by installing expensive and sophisticated equipment and procedures, to ensure acceptance of our product by the most fastidious consumer markets, and by diversification and value addition to their range of products to provide consumers, in the niche sector, with an amasingly wide range of choices.

The importance of preserving the purity of the Colombo Tea Auction, which has been nurtured, protected and developed by the combined efforts of the Ceylon Chamber of Commerce and the Colombo Tea Traders’ Association for over one hundred years, to be acclaimed as a model by the global tea industry, cannot be over-emphasized. The professionalism and efficiency with which the auction has been conducted has ensured maximum transparency and competitiveness.

If the Tea Industry continues to operate with the same zeal and dedication as it has done in past years, the future can only be viewed with a sense of realistic optimism.