The Chairman of The Planters’ Association of Ceylon G.D.V. Perera, speaking at a meeting of the Planters’ Association of Ceylon, expressed his grave concern that unless the relevant state authorities implement proposed actions to help the plantation industry to face the current crisis, the economy of the country will have disastrous consequences.

He also emphasized that the livelihood of around 250,000 plantation workers in estates managed by Regional Plantation Companies (RPCs), will be seriously jeopardized. The tea smallholders account for over 60% of the production of tea in Sri Lanka and face the same serious consequences of the global crisis. The tea industry is the country’s largest employer providing jobs directly and indirectly to over a million people.

The crisis that continues to escalate, affects not only the tea industry but also coconut and rubber plantations, the lifeblood of Sri Lanka’s economy. Agricultural products comprise one fifth of the country’s total exports; the lion share of that is tea.

“The plantation industry - particularly the estates that come under RPCs, bear the brunt of the current crisis where the global demand as well as prices for tea and rubber has reduced drastically while the cost of production continues to escalate. This is posing a severe drain on the fast depleting resources of plantation companies,” Mr. Perera said.

“Further, fuel, electricity and fertilizer costs still remain high despite reductions in other producer countries, and have a direct bearing on our high cost of production.”

The need of the hour is for the Government to realize the seriousness of the situation and take immediate steps to help the companies to face this crisis.

The Chairman of the Tea Board Mr. Lalith Hettiarachchi, who was present, explained to the membership that on 24th of October 2008, representations had been made to the President who was quick to understand the gravity of the situation and readily agreed to provide a relief package.

“The package currently under consideration includes one month’s working capital at a subsidized rate for the RPCs for which Rs. 225 million has been pledged to be released to RPCs who could negotiate the interest rate with their own banks, and the Government would then subsidize 6% of the agreed rate”. The President also agreed to set up a stabilization fund of Rs. 1.5 billion. Unfortunately, none of these measures have been implemented so far and no funds have been released.

Mr. Perera noted that the recent budget promised a 15% reduction in electricity rates but this benefit has not been extended to industries.

“In actual fact the Ceylon Electricity Board has increased the industrial tariff” he said.

“Furthermore, the recent budget proposals stipulate a 1% National Building Levy (NBL) that is waived for export industries but not for plantation companies although 94% of our production is for export. This is an added liability of around Rs. 350 to 400 million per annum which is an intolerable burden for the RPCs. Even the Zero rated status we enjoyed earlier on VAT is now withdrawn causing further burdens.”

“We have had several consultations and discussions with the relevant authorities and the President assured us that relief measures would be implemented. However, the government has not yet implemented the strategies that they accepted in principle” Mr. Perera stated.

“Unless the authorities take this matter seriously, and are committed, the problem will escalate to a national disaster that will impact not only on Government coffers, but our entire society” he emphasized.

Further he drew attention to the fact that Governments in other producer countries have come up with huge relief packages that will make their produce very competitive thereby making it more difficult for producers in Sri Lanka.