Seven Reasons For Liberalising Tea

Seven reasons were touted for the liberalization of the tea industry by Tea Exporters’ Association (TEA) representatives when they met the press on Tuesday.
Those were “Ceylon Tea” losing its position in international markets to global brands; blenders moving out from Colombo to new tea hubs such as Dubai due to exorbitant duties charged on teas imported for the purpose of blending and reexport here; only a third of Ceylon Teas qualifying for the Sri Lanka Tea Board’s (SLTB’s) standard of being classified as “Pure Ceylon Tea” and thereby being fit to carry the Lion logo, where such teas fetch premium prices in the world market; plantation companies fighting shy of replanting due to high costs involved; the shrinking of Ceylon Teas in the world market due to the emergence of other origins of teas from  countries such as Vietnam; high cost of production which makes plantation companies lose out though Ceylon Tea prices are still the highest in the world in the auctions and Ceylon Tea production stagnating at the 300 million kilo levels on the back of new producer markets emerging which has seen a shrinkage in Ceylon Tea’s share in the global market.
TEA and former SLTB Chairman Niraj de Mel said that Sri Lanka backed by professionals in the industry, coupled with the world’s most expensive tea auction centre, ie which fetches the world’s highest tea prices, has the ideal setting to start international tea blending operations here.
De Mel further said that his members in both volume and value terms contribute to over 80% of the island’s tea output, where annual exports amount to between $ 1.5-1.6 million in this over 100 year local industry.
However a lobby group which reportedly has the support of Finance Ministry Secretary Dr. P. B. Jayasundera is opposing the liberalization of the tea industry. Jayasundera is also alleged to have had said that tea imports for the purpose of reexport would be banned in another three years time.
This prompted Rohan Fernando, Chairman, HVA Group, a tea exporter, to say that if that is implemented that they would then move overseas. It is the “finer” imported teas such as the Darjeelings and green teas, coupled with CTCs from Kenya that are generally bought here for the purpose of blending and reexport.  However the demand is for more orthodox tea imports for the purpose of blending and reexport, which operation is however stultified due to the higher duties charged.
De Mel said that tea bags which command a premium and which comprise blended teas are the industry’s future due to the growing demand for such in the world market.
He further said that a tea hub would have a spillover effect on the rest of the economy, enhancing banking, shipping and brokering, thereby opening up newer avenues of employment to the people of this country.
De Mel further said that Plantation Industries Minister Mahinda Samarasinghe has appointed a committee to examine the viability of importing tea for the purpose of blending and reexport, a concept first mooted by former Trade Minister the late Lalith Athulathmudali in the 1980s.  He further said that the current slack prices for tea were in order, and were operating according to the principles of demand and supply and not due to any extraneous situation.