More Than A Storm In A TeacuP

Elsewhere on these pages an article has been published questioning the viability of Sri Lanka’s over 100 year old tea industry, which is also the island’s third largest foreign exchange (forex) earner, ipso facto from income derived from the export of tea.
A question mark hangs over Its future based on rising costs, made worse by falling prices of tea in the world market, caused primarily by the crises involving two of Sri Lanka’s main buyers of tea, namely Iran and Syria, due to economic sanctions imposed on them by the West, led by the USA: Against Iran over its nuclear programme and against Syria for killing its own citizens who have risen against the tyrannical rule of the Bashar al-Assad regime.
“Those two countries however pay premium prices for Ceylon Low Grown teas,” Private Tea Factory Owners’ Association’s (PTFOA) members told reporters on Monday (see also page 41).
“But due to those sanctions, Low Growns which fetch the highest prices at the auctions, have seen their prices fall by as much as Rs. 40-50 on a kilo based on 2010 prices,” its President Kalana Dahanayake said.
They warned that if this continued without any solution to the problem, tea smallholders who provided the bulk of the supplies to the market, some over 70% of volumes, would be forced to fold up, sounding the death knell to this venerable industry which provides employment to tens of thousands of workers of this country.
A Rs. 5 increase in the price of a kg. of green  tea (green leaf) would be sufficient to stem the tide, they said, but who would provide that increase was the million dollar question? The Government or the PTFOA members, or for that matter the regional plantation companies which also buy the leaf for manufacturing after which it’s sold to exporters?
But PTFOA said that with rising electricity and firewood costs, two raw materials allegedly needed for the manufacture of tea, it was not possible for them to grant them that Rs. 5 increase needed for the survival of the tea smallholder.
PTFOA said that the smallholder provides over 70% of the island’s teas. Sri Lanka exports some 300 million kgs. of teas annually. Seventy per cent of that figure amounts to some 210 million kgs. of tea. It takes 4.64 kg. of green leaf to make one kg. of black tea, according to Tilak Alawattegama, Secretary General of the PTFOA . A Rs. 5 price increase  on a kg. of green leaf, on a mathematical exercise would translate into a sum of Rs. 4,872 million, no small amount by any long chalk.
As such PTFOA forwarded three other solutions to get over this morass.
They were that the authorities should provide the tea smallholder with free tea saplings similar to that which is being provided to, to cinnamon, pepper and coconut growers so that production may be uplifted; finding new markets, particularly in Asia, in this context penetrating Ceylon Tea to the two emerging giants in Asia, namely China and India; and the other, allowing tea imports for the purpose of blending and re-export.
When considering PTFOA’s first request, ie providing tea saplings to the smallholders so that they in turn could do the much needed replanting in his gardens, that may be the way to go.
As it’s, according to Dr. Sarath Samaraweera, a past president of the PTFOA, most of the bushes in smallholders’ tea gardens are those which were planted in the 1980s, when demand for Ceylon teas, in his own words, from the OPEC Club in the Middle East, was having its genesis.
Since then those bushes which are past their prime baring age have had not been replanted, resulting in a loss of production, he claimed.
That therefore being one of the chief reasons for low productivity in local tea gardens compared to its peers/competitors in overseas markets, according to Samaraweera.
PTFOA said that a smallholder’s tea garden may range from a few perches to an acre.
If the Government can provide cinnamon, coconut and pepper saplings to smallholders of such produce (ie the claim made by PTFOA at this briefing) to uplift their production, which, cumulative forex earnings may however yet be lower than that of tea, why cannot the Government extend that same benefit to tea, which, after all is Sri Lanka’s third largest forex earner?
Now that Plantations Minister Mahinda Samarasinghe’s work in Geneva is over (he together with his colleague External Affairs Minister Prof. G. L. Peiris tried hard but in vain to defeat the US and the West backed motion against Sri Lanka’s alleged human rights abuse in the closing stages of the LTTE war in Geneva recently), he should devote his full attention to work for the uplift of the island’s plantation industry in general and the tea industry in particular.
This reporter can remember, when, coinciding with the time tea was Sri Lanka’s number one forex earner,  at that time former President J.R.Jayewardene used to virtually unfailingly be present at the Ceylon Planters’ Association AGM, year in year out.
Leave aside tea,  has President Mahinda Rajapaksa  even once been present at the Apparel Association AGM, where garments till recently was the island’s number one forex earner, or for that matter at a foreign employment agencies’ AGM (ie if they have such a one), with remittances now being Sri Lanka’s number one forex earner?
Moral support by the highest in the land to those industries may also go a long way towards their uplift.
Of course the equation changes if Rajapaksa has not been invited to any of those AGMs!
However that may be, in the words of Pani Dias, the Immediate Past President of the PTFOA, the Government, has in its kitty, a cess of Rs. three billion collected from cesses levied on tea exporters, at the rate of Rs. 10 a kg., according to him.
Probably this Rs. three billion is worked out on the basis that Sri Lanka annually exports some 300 million kg. of tea. Therefore 300 million X Rs. 10 equals Rs. three billion.
Cannot part of that cess money be re-channelled to develop nurseries for the tea industry, so that tea saplings could be grown to cater to the much needed replanting needs of the industry?
In this connection, M.D.H. Pilapitiya, another former PTFOA President made a serious allegation that the Rs. 600 million spent by the Government (ie taxpayers’ monies) on the Tea Smallholdings’ Development Authority (TSDA) is a waste.
If that is so, then TSDA is but one of several Government institutions which are a drain on the public purse either due to the fact that such institutions serve no purpose at all, or due to corruption, waste and inefficiency, maladies all too commonly associated with Sri Lanka’s public sector.
In an extreme scenario, what is important to the Government of Sri Lanka (GoSL), the tea industry or TSDA? President Rajapaksa, Minister Samarasinghe and GoSL should know what their priorities are. One cannot run with the hare and hunt with the hound in this complex game where the future of once Sri Lanka’s top forex earner providing employment to thousands is at stake?
However that may be, on the replanting issue, Samaraweera told this reporter, as it’s, the smallholder is fighting shy to replant his tea gardens because of the fear that he would lose even that little income he has had been getting, in the interim period, while awaiting for the new plants to grow into maturity and give him the desired leaves which could be plucked and sold in the market.
But this problem could be circumvented by engaging in replanting in degrees, without, carte blanche, replanting such tea gardens in their totality. Replanting should be done step by step, ensuring that while the replanting process is in progress, the smallholder would still have sufficient trees remaining, mature or even past their prime (!), to ensure that he and his family could still eke out a living by selling those leaves, while at the same time awaiting the new tea saplings to bud so that those leaves too could be plucked for manufacture at the right time.
The second point raised by Dias and his peers at that press conference was the need to find new markets for Ceylon Tea, particularly in the Asian region.
These comments emanated, particularly in the context of the crisis that has suddenly befallen the industry due to the turbulence in Iran and Syria, two of Sri Lanka’s top tea markets, both in terms of quantities exported and  prices commanded.
In the context of export diversification, the two markets PTFOA talked of were China and India, with the former making the shift from green tea to black tea in their consumption habits. Dias in particular talked of problems with Customs at that end which apparently hinders tea exports to those two markets. But with engagement at the highest level of government, those problems at the Customs end may be overcome.
After all India is Sri Lanka’s biggest import market and China too has a huge trade surplus over the island? Rajapaksa and GoSL should leverage on those advantages that these two Asian giants have over the island and try to push them to open up their markets for Ceylon Tea, if there be any man made barriers from those ends that hamper the export of teas to those  destinations.
As it’s, despite these alleged vicissitudes, there are those local companies such as Dilmah, Mlesna and Heladiv which export value added teas to those markets.  So penetration into those countries is possible, but what is required is patience. After all Rome wasn’t built in a day?
But with patience and with Governmental support, it may be possible for the industry to make further inroads into those two new and large markets.
The importance of penetrating those new markets and thereby gaining a foothold is that both China and India are growing economically at a rapid pace relative to the rest of the world. Further, these two are also the world’s two most populace nations, justifying the need and the requirement to penetrate into those markets and thereby also gain first mover advantage.
And the third request made by PTFOA was to allow for the import of foreign teas for the purpose of blending and reexport as Ceylon Teas were found to be too expensive as a result of which its market share was slowly but surely being eroded.
It was pointed out by Samaraweera, at this briefing, that the volumes of Ceylon Teas, exported to markets such as CIS (cumulatively Sri Lanka’s biggest tea market), Saudi Arabia and the UAE, have gradually been declining, not due to problems of quality, but on price, to the advantage of its competitors, as Ceylon Tea fetches a premium in the world market.
Commanding a premium price is well and good, but if one cannot sell one’s teas what is the point in having such prices? However, as said by the PTFOA, all of Ceylon Tea produced is procured by the international market thus far. Nothing of it goes unsold as yet. But they warned that Sri Lanka has also lost markets such as Egypt and Pakistan, at one time some of the biggest importers of Ceylon Tea, also on the issue of price, to its competitors such as Kenya, which tea is cheaper than Ceylon Tea.
There may be other issues such as Kenya producing CTC teas and Sri Lanka the more expensive orthodox teas, which  apparently the consumers in some of those lost markets prefer, ie CTCs over that of the orthodox.
However that may be, until recently, orthodox or CTC, Egypt and Pakistan were some of the biggest buyers of Ceylon Tea, that is the reality.
The fact that Ceylon Teas, despite high prices fetched, are yet being sold, with none of the quantities remaining unsold, is a silver lining. But the question that should be asked is cannot volumes be further increased and thereby revenue be enhanced by permitting cheaper foreign teas into the island for the purpose of blending and re-export?
There however is a vociferous tea lobby against such a move. They fear that an operation such as that would dilute the value of Ceylon Tea. But such emotions may need to be balanced by trying to work out arithmetically whether Sri Lanka has either lost or gained, both in terms of employment and revenue due to blenders moving over to countries/cities like Dubai and Russia, where no such restrictions are in place.
Another matter of concern is the once in two year mandatory wage hikes that plantation workers are benefited with, at the expense of the industry in these trying times which further inflate costs, with the next wage hike due next year.
Which comes first, short term political gain or the sustenance of the tea industry? The ball is now in Rajapaksa’s and his Government’s court.