Tea Trends

Several 2018 beverage trends bode well for the tea business as it is very well positioned for today’s health-focused consumers. The fastest growing segment in tea is ready-to-drink, while tea bags represent 44% and Loose Leaf accounts for less than 1%. While coffee is clearly trending among millennial and Generation Z consumers, tea is also seeking to reinvent itself among the younger generations.

China Buys Indian Black Tea

India increases tea exports to China with an order for US$ 1 million in black tea recently. Year-on-year growth in tea sales was 29% in 2017 with China paying US$ 25 million for approximately 9 million kilograms of Indian tea. China is now India’s 10th largest tea export destination. 

Top industry expert challenges planters to create strong brand, use technology

Planters’ Association of Ceylon (PA) Protem Chairman Dr. Rohan Fernando

 

                  Highlights brand ‘planter’ depends on how industry enhances its value 
                  Questions stakeholders if they have changed enough or should they change 
                  significantly moreBelieves plantation industry would be attentive, take steps to avoid being whitewashed
                  Describes planters as ‘managers of resources’
                  Raises concern over lack of female participation at higher plantation management.

 

In a thought-provoking speech Planters’ Association of Ceylon (PA) Protem Chairman Dr. Rohan Fernando challenged the planters to create a strong brand in the next 50 years, making use of the momentum of the fourth industrial revolution; while insisting the stakeholders what happened with railroads should not happen to the plantation industry.

Addressing at the 164th Annual General Meeting of PA, he highlighted that the brand ‘planter’ lies in how the industry enhances its value.

“The tea industry is 150 years old. If you compare the plantation industry, how have we moved with the changes or industrial revolutions that have taken place in the past 150 years? What value do we contribute to the society? Economy? When we are seeing such revolutionary changes not globally, but locally, I always wonder have we changed enough or should we change significantly more?” he left a room packed with planters from all parts of Sri Lanka unanswered.

He cited global hospitality, travel, e-commerce industries and local e-classroom initiative in rural school to empower children as great instances where technology has been adopted to a great extent to transform the landscape of doing business platforms and learning experiences. 

Pointing out that today life is all about brands and adopting to changes in the market place, Dr. Fernando was hopeful that plantation industry would be attentive and take necessary steps to avoid being whitewashed. 

“Kodak and Xerox didn’t adopt to the changes and was whitewashed from their industries. Hence, I hope you will think twice of what we should do in plantation industry. How much has our industry changed? Do we want radical changes in our industry? I think what happened with railroads should not happen to the plantation industry,” he emphasised.

“I am sure that all of you will agree that none of us are growing tea, rubber, coconut or palm oil — we are all managers of resources. We manage people, land, environment, water, so on and so forth. How we add value amidst the changes that we see all over the world, which is today hitting us in our face will be our future,” he cautioned. 

Dr. Fernando asked if the industry wants to tell the next generation planters also on the centuries outdates old school methods or to tell that we used the momentum of the industrial revolutions which they have been part and parcel of to make a difference in the plantation sector in Sri Lanka. 

He was also intrigued by the fact that Sri Lanka’s plantation industry has been dominated by male workers for centuries, while there is a significant mix of genders in other industries.

“We planters are thoroughly male dominated. There is no single lady or single doraisani or periyadoraisani amongst us. Is that because we have let ourselves dominate this profession or is it because we haven’t opened ourselves out to female professionals? Because almost every profession today there are very successful females, take doctors lawyers, architects, pilots, bus drivers, train drivers you name it, there is a very good mix of ladies, politicians for that matter. So, is there anything wrong with us? I was just thinking,” he stressed.

 

 

Daily Ft, 03rd October 2018.

Minister of Plantation Industries Navin visits Poland

The Minister of Plantation Industries Navin Dissanayake visited Poland from 11 to 13 September. The purpose of the visit was to explore new ways and means to promote the Ceylon Tea Market share in Poland and to strengthen economic relations between the two countries.

During the visit, Minister Dissanayake met with the Polish State Minister of Agriculture P. Gizynski with the aim to intensify cooperation in the agriculture sector between the two countries. They had detailed discussions on a range of issues, including intensifying up the level of trade with agri-food products, signing a MOU in the field of agriculture, improving scientific and technological cooperation in agriculture, assisting in water management technology in Sri Lanka, and supporting specialised potato farms in Sri Lanka. 

The Minister also had a productive meeting with Deputy Minister of Entrepreneurship and Technology Marcin Ociepa to explore the possibility of developing trade and technology services to benefit both Poland and Sri Lanka. The discussions focused on expanding cooperation in the sectors of rural development, agriculture, tourism, education, and water management, technical assistance for boat manufacturing, exchanging trade delegations, and opening of the Polish Trade Agency in Colombo.

In addition, Minister Dissanayake met with a leading Polish investor, Andrzei Zarajczyk, Chairman of URSUS, a manufacturer of tractors, agriculture machinery and buses in Poland who played a crucial role in the development of agriculture in Poland and other countries in the twentieth century. At the meeting, Chairman Zarajczyk stated that he is willing to start detailed discussions on the implementation of either an Agriculture Mechanization Project (tractors), or an environmentally friendly Public Transportation Project (electric buses) or possibly both projects in order to provide Sri Lanka with modern solutions in the agriculture and public transportation sectors. Both parties agreed to consider different and flexible methods and solutions to suit the Sri Lankan people. 

Since Poland is among the highest tea consumers in Europe, the Minister met with major players of the tea trade in Poland both individually and at a business meeting held at the Embassy of Sri Lanka to discuss details of the tea trade. The meeting included representatives from Dilmah, Basilur, and Impra tea companies. 

Ambassador of Sri Lanka to Poland Tissa Wijeratne, Plantation Ministry Addl. Secretary Wickramasinghe and Sri Lanka Tea Board Director Hasitha de Alwis accompanied the Minister during the visit. 

 

Daily Ft, 26th September 2018.

India’s June tea crop down 3.8%

MUMBAI (Reuters): India’s tea production in June dropped 3.8% from a year earlier to 142.70 million kg as plucking fell in the second-biggest tea-producing eastern state of West Bengal, the State-run Tea Board said yesterday.

West Bengal’s output in June slumped 14.5% to 40.86 million kg, the Board said. The country’s tea output in the first half of 2018 fell 4.6% from a year ago to 432.46 million kg, it said.

India, the world’s second-biggest tea producer, exports CTC (crush-tear-curl) grade mainly to Egypt, Pakistan and the United Kingdom, and the orthodox variety to Iraq, Iran and Russia. 

 

Daily FT, 16th August 2018.

Tea industry sans glyphosate?

By Gamini Weerasinghe

 

After the recent landmark order delivered by a court in San Francisco, US, where cancer patient Dewayne Johnson, who was ruled to have developed the disease through regular contact with  glyphosate, was awarded compensation of $ 289 million (Rs. 46,529 million), another 5,000 cases have been filed by victims against Monsanto, the producers of  glyphosate in the US.  

 

Portugal and the city of Vancouver in Canada have banned the weedicide. Even in the EU views on whether to use glyphosate or not are divided with France and Belgium opposing it and Germany and Poland being lukewarm about its dangers.  

Current glyphosate-resistant crops includesoy, maize (corn), canola, alfalfa, sugar beets, cotton and wheat. Produced in the US, they were genetically modified to be herbicide-tolerant. This glyphosate resistance enables farmers to wipe out most weeds from the fields without damaging their crops but cannot prevent the herbicide from being absorbed into edible crops and produce. 

It was also reported that Prof. Channa Jayasumana of Rajarata University, along with others, is looking to file legal action seeking compensation for victims in Sri Lanka. 

In all probability, litigation will snowball worldwide and the producing companies might put up their shutters. US sanctions against Iran and the crisis over Turkey’s currency the Lira has impacted Colombo tea auction prices. All point to the grey clouds that are looming for the tea industry. Let us reach out for the umbrellas and unfold them. 

In this scenario, it would be prudent to do research and plan to face any eventuality in case there is no glyphosate. The recent ad hoc decision to ban the weedicide in Sri Lanka resulted in great losses for the tea industry. It is incumbent upon the Tea Research Institute (TRI) and other research institutes to come up with solutions and alternatives in the event of such an eventuality. 

There are only very few planters of the pre-weedicide era of the 1960s who are still up and about. I am fortunate to be one of them and I even attended the launch ceremony of the product at Hotel Topaz in Kandy in 1976. 

Prior to the advent of weedicides, all weeding, which is a non-productive activity, was done manually. Usually it was given out on contract and paid for monthly. The normal rate was four workers per acre (10 workers per hectare). There were contractors who kept their contracts very clean. I wonder whether this practice would be economically viable and also whether workers could be induced to take on contracts. 

The old planters in that decade were very particular about the adage ‘one month’s seed is six months’ weeds’. A weed seed can stay alive for 30 years until the proper conditions conducive to its growth are made available, usually when the soil is disturbed. My superintendent at the Mattakelle Estate, Talawakelle, Derrick Brown, insisted that the soil should not be disturbed to expose the hidden devils.  He introduce a small-three pronged implement just to remove the weed. The high profits of Mattakelle were due to the foresight of securing and nurturing the top soil. The estates that have used mammotees or ‘shorandies’ have lost their top soil with disastrous consequences.  

The areas that are exposed to sunlight, and thus produce most of the seed, are the ravines and roadsides. I planted pasture grass in all these areas and it should be noted that my estate recoded the lowest cost in weeding across the whole regional board while the second lowest was three times my cost. Somebody cut the pasture grass which had covered the ravines and produced much-needed milk.

It is also necessary to cover the ground so as to starve the weed of sunlight. Here a great amount of concentration and discipline is needed in plucking so as to establish the cover by tending to the side branches. 

Again, to restrict the sunlight, proper shade should be established and maintained.  I have planted Dadaps and Gliricidia at 5’X 5’ and lopped one row every three months. This provides the same amount of sunlight to the tea bush and covers the ground with its branches and thatch.  Gliricidia gives 2-3% nitrogen from its lopping. Glyphosate was first introduced to tea cultivation in the 1980s for the control of problem weeds such as Couch (Panicum Ripen) Illuk grasses. Higher dosages of glyphosate (36%) at 11 and 5.5 litres in 600 of water per hectare were recommended to control Couch and Illuk grasses, respectively.   

It was never envisaged at that time to be used for the control of all weeds. Around that time I found that Bracharia Brizantha has an allopathy to cootch grass and that this pasture grass kills the troublesome Couch. The findings were acknowledged by the TRI and there was also a mention in international magazine Farming of Netherland. 

The best way to improve the soil is to have livestock as demonstrated by Mark Bostock on Aislaby. In fact, one person, Shelton Perera, proprietor of Blinkbonny Estates, even used sheep to graze on the weeds in the tea fields and on another estate they used pigs.

Demonstrations in France


Diversification

At this time there is something to think about for ‘C’ category fields which eat into the profits of an estate. Land is a great asset that cannot be produced. Let us make the best use of it. Use the land and concentrate on the good tea and the balance can be diversified for more profitable ventures. It will also solve the problem of a shortage of labour on most estates for the coat has to be cut according to the cloth available. 

Livestock

The most common areas that propagate weed seeds on an estate are the ‘C’ category fields with their lack of ground cover due to the poor stand and debilitated bushes. The top soil has been washed way.

 

It is seen from the records given that about 20-25% of the income derived from tea is spent on the importation of milk and milk foods that can easily be produced in this country.   

It was also stated that we need only 400,000 cows at the present level lits/cow/day of 3.2 to be self-sufficient in milk. It can also be seen from the chart produced that during the last decade we have lost 800,000 heifers (female calves), which would have made Sri Lanka self-sufficient in milk and save 20-25% of the foreign exchange earned through tea. 

The daily manure production of a cow is about 15-20 kg of dung at 4-5% Nitrogen and around 7-10 litres of urine which will improve the soil. 

The Government has given every encouragement to the dairy farmers to improve the industry by giving soft loans from the Central Bank and the Ministry of Social Welfare and Primary Industries. The TRI has advised me that if fodder/pasture is to be planted it is not necessary to uproot the tea. The Department of Animal Health and Production is on record saying that the next profitable crop after potatoes is grass which costs about Rs. 1.80 per kg and I know that Hatton dairy farmers are purchasing fresh grass at Rs. 4 with the transport on the buyer’s account. The grass they get is of low quality. It would cost about Rs. 500,000 to plant a hectare of grass and a harvest of 40,000-60,000 kg/ha/year can be obtained from Hybrid Napier grass of CO3 or Bana. 

There is a question as to whether the tea industry can survive with competition worldwide as can be seen from the chart below.  Sri Lanka also does not produce adequate CTC teas where there is global demand. The COP is also the highest among all producing countries. It can be noted that only 17% of the total exports of tea in the world now come from Sri Lanka while other countries, especially African countries, are forging ahead. Some of them do not use any weedicides at all as plenty of cheap labour is available for manual weeding.  

Cinnamon, spices and fruits

Sri Lankan Cinnamon, which is a coumarin-free product, is in great demand. It is the only cinnamon that is allowed to be imported to the European market.  

There are many others spices like ginger, turmeric, vanilla and fruits like avocado, jak, marmalade oranges, grapefruit, soursop and the like that could be planted on these lands with economic advantage.  

The tea industry and the planters have weathered many a storm during the last 150 years and it is hoped that it will rise to the occasion once again. 

(The writer is a former planter with 38 years’ experience. He was the Deputy Director General of SLSPC, Director of JEDB and consultant to NLDB. He can be contacted on 0718387895 or through This email address is being protected from spambots. You need JavaScript enabled to view it. ).

 

Daily FT, 21st August 2018.

Pothotuwa Tea Factory excels once again

Pothotuwa Tea Factory achieved yet another all-time record price of Rs. 1,400/- for a Low Grown BOPF grade for the third successive week, and surpassed its achievement of last week’s record price of Rs. 1,300 at the Tea Auctions held on 14 August. 

This line of tea too was marketed by M/s Forbes & Walker Tea Brokers Ltd. 

 

Daily FT, 16th August 2018.

Evolution of plantation sector into diversified, vertically-integrated, globally aligned agri-biz

While coffee might seem to be the ‘go-to’ drink for those seeking a hot beverage, the world actually runs on tea – Pic by Shehan Gunasekara


From its inception up to the present day, the history of Sri Lanka’s plantation industry has been unique; undergoing drastic changes from the colonial era, to the period of private management by Agency Houses, into an extended period of nationalisation and finally and most drastically through the sustained transformations that the plantation sector has undergone subsequent to the 1992 privatisation. 

In order to truly appreciate the present circumstances and performance of this industry and the role of the Regional Plantation Companies (RPCs) in particular, it is vital to consider the development of our industry as a whole. 

Today’s international markets are changing at an increasing pace, while the threat of climate change continues to cause varying disruptions to agricultural productivity across the globe. At this crucial juncture, we assert that our entire industry must be viewed in its totality in order to ascertain the true reasons as to why Sri Lankan RPCs have achieved such success across so many key areas today – from improvements in the socio-economic conditions of its employees on the estates to substantial improvements in quality control, management techniques and infrastructure – in order to accurately ascertain what more is required of each and every stakeholder group and to ensure commercial, environmental and social sustainability for the Sri Lankan plantation industry moving forward. 

 

While coffee might seem to be the ‘go-to’ drink for those seeking a hot beverage, the world actually runs on tea. Aside from water, tea is the most popular beverage in the world and in the United States alone; tea imports have risen over 400% since 1990. It would be futile if we don’t capitalise on the trend and re-instate our position of being the number one exporter in USD terms.

 


Colonial roots 

Established in the era of British colonisation, Sri Lanka’s plantations experienced a period of progress with the agrarian elite investing in bank institutions, infrastructure, railways, credit expansion and industrialisation. The money earned from tea and later rubber exports was the essential capital that would bring about important changes in the country’s society, economy and culture. 

However, living and working conditions of the bonded estate labour was not a consideration and the feudal hierarchy lorded over them ensuring productivity, quality, and profit above all. Basic necessities like healthcare, housing and education were limited to the basic requirements. Plantations were run tightly, in order to maintain the lowest cost of production and highest rates of productivity and soon Ceylon tea began to be recognised and consumed the world over. 

When Sri Lanka gained its independence, the management of the country’s plantation industry was still retained in private companies known as Rupee and Sterling companies. While the British no longer retained sovereignty over the island, there was a substantial continuity in terms of how the island’s plantations were operated and managed. 

During the pre-nationalisation period, Agency Houses on behalf of them managed approximately 134,000 hectares of tea alone with rubber occupying 64,000 ha and coconut, 22,000 ha, all of which covered 8% of the Country’s land with their continuing performance instrumental in the preliminary establishment of Ceylon tea’s reputation for the highest quality. 

The nationalisation debacle 

During the 1972–1973 periods, the Government of Sri Lanka nationalised privately-owned estates, taking over some 502 privately-held tea, rubber and coconut estates, due to socialist ideologies that led to major land reforms, limiting the extents that could be privately held. In 1975 the Rupee and Sterling companies were nationalised – with Agency Houses continuing as trustees. Thereafter in 1976, these were turned over to the two largest State-owned plantation agencies, namely: Janatha Estates Development Board (JEDB) and State Plantations Corporation (SPC). 

Several smaller entities such as Usawasama, Janawasa, were also created and stacked with political appointees who mismanaged the estates to an extreme point where they had to be shut down and land distributed for village expansion. Pulling political strings was rampant, with totally incapable, inexperienced managers hired.  

Although socialist ideologies were being rammed into the system’s administration, the plight of estate workers was yet to be factored in. Rather, the debates surrounding nationalisation were almost purely motivated by a desire to take control of significant profit generating resources, ply it with political sycophants and distribute land in a sweeping, authoritarian manner. Estates began to degenerate rapidly under State management, while the numbers employed in these estates ballooned in size with the country’s political class increasingly viewing the sector as a job bank to purchase support each election cycle.

This reality was plainly understood even at the time, as evidenced by academic publications from the era. An excerpt from an American publication in 1992 noted: “The privatisation initiative in the tea sector as part of structural adjustment programmes advocated by the World Bank and the International Monetary Fund (IMF) is intended to balance the national budget by removing Government subsidies and privatising State enterprises such as JEDB and SLSPC. Theoretically this policy initiative may generate more efficiency and equity in the Sri Lankan tea economy”. 

“Public funds which were previously used in subsidising inefficient bureaucratic agencies can now be reallocated for the purpose of much needed infrastructure and human development programmes. Moreover, the management of privatised entities may have the choice to operate free of political interference and financial regulations of the Government.” (Economic Rationale for the Privatisation of Tea Plantations in Sri Lanka by Dr. Patrick Mendis, 1992)

 

All official records and high powered government committees have confirmed that by the time the estates were handed over to the RPCs, post privatisation in 1995 that “the State-run plantations continued to make heavy losses and performed poorly throughout most of its existence”. 

Overstaffed, underperforming and riddled with debt that was ultimately costing the Sri Lankan tax payer approximately Rs. 400 million per month, there was only one lesson that ultimately came out of the 20 years of nationalised management of Sri Lanka’s plantation sector, namely that politicisation breeds inefficiency, especially when mixed with complex businesses. From this era the positive contributions that did come about were the result of World Bank funding which was directed towards much needed replanting, factory development and transport vehicles.

By the time privatisation was completed in 1992, conditions on the estates had reached their lowest point. Considering the continuous losses and increasing debts of JEDB and SLSPC up to the time of RPC’s and private management from 1992 onwards, it is very likely that they would have continued to make losses and incur Government financial support. If privatisation had not taken place, the Rs. 1.5 billion per year financial support provided by the Government to the JEDB/SLSPC in 1992, would in today’s Rupee amount to almost 12 billion per year. 

The political upheavals during the 1970s and 1980s were sharply felt by estate communities and the plantation industry as a whole. Our industry has endured through the severe weathering effects caused by the ensuing conflicts including the 1970s and ’80s JVP insurgency when many young college students were forced to take refuge in hill country estates. 

This in turn resulted in the estates becoming easy targets for violent police raids with estate management being hounded by the insurgents in turn. The situation became grave when planting executives on duty were brutally murdered in the remote plantations. Talented estate managers migrated overseas with many of their competent peers leaving in disgust at the senseless violence. 

The conflict with the LTTE also took its toll on the industry and estate communities with several thousand estate workers seeking refuge in South India with racial discrimination levelled against them. The scars of decades of ethnic conflicts are still clearly felt today, contributing to the mass exodus of the more productive estate staff and workers, leading to a depleted work-force, faced today.

 

Adapting on-the-go: The era of privatised management 

Once the inability of the State to manage the plantations had finally manifested, privatisation emerged as the only possible alternative to the collapse of the industry and offer-for-sale documents were prepared to serve as the legal foundation for privatisation. These documents, executed by the State, provided each RPC complete freedom to use the leased land for diversification into any other crop, extraction of minerals, forestry and timber harvesting and setting up of any venture permitted by law. 

The overarching provisions and terms of these documents hinged on the promise of complete autonomy for the private sector to manage their plantations in the most efficient and productive ways possible and this was the very reason for estates to attract strong interest, both locally and internationally. Unfortunately for our industry, neither the offer document nor the spirit of these initial agreements was respected by any subsequent Governments. Such a resounding failure on the part of successive Governments has been the source of continuous and severe disruption to many development plans for RPCs. 

The plantation companies were bequeathed a total land extent of 239,398 ha – comprising of 94,244 ha of tea land and 57,930 ha of rubber land at the time of privatisation in 1992. In the 23 years since, politically motivated acquisitions and illegal encroachment resulted in a 28.2% reduction in the most productive land extents – including a 16.3% reduction in tea land and a 25.8% reduction in rubber lands – shrinking total RPC land extent down to 180,291 ha by 2016. 

The main aim of privatisation was to improve the overall managerial performance and in just over a quarter century later, the plantation sector has showed drastic improvements across many indicators, be they economic, social or environmental. 

Significant investments were made by shareholders in the 1995/96 privatisation era, based on the several opportunities laid out in the bid document. These included agri-diversification, forestry, the setting up of hydro-power projects, and total autonomy on how the land should be best utilised.

Post privatisation, salaries of estate staff increased with employees confirming that there were more opportunities for promotions linked to performance rather than political connections and influence. Previous insecurities present in State-owned plantations, where political affiliation and influence determined employee security, were tempered down, as a performance-based culture was instilled by the new management.

Weathering all storms and hurdles, along with ad-hoc policy decisions detrimental to best agri-practices, the 2016 edition of world fact book on exports and commodities, stated Sri Lanka as second in total USD worth of exported tea, next to China. China at $ 1.5 billion commands 22.8% of total tea exports, Sri Lanka: $ 1.3 billion – 19.2%, Kenya: $680.6 million at 10.4%, India: $ 661.7 million at 10.1% and United Arab Emirates, the newest entrant that does not grow any tea: $ 287.9 million at 4.4%. 

While Kenya has beaten Sri Lanka as the biggest tea exporter, Sri Lanka continues to maintain its position as the world’s highest tea exports revenue earner, losing its number one position to Kenya as the highest exporter in the world a few years ago. Notably, Sri Lanka also remains as the most expensive tea producing nation in the world, with average wages having steadily increased, at a rate higher than the General Sales Average of Pure Ceylon Tea in international markets. 

Facing severe encroachments, a shrinking labour force, and the periodical obstacles created by Government policy interventions, RPC tea production reduced to 72.9 million kg, but the yield per hectare improved to 1,138 kg per ha in 2016, as compared with 1,021 kg per ha in 1992. However with another ad hoc decision of the Glyphosate ban since March 2015 the YPH dropped to 900 by end March 2017.

At this point, it must be mentioned that the glyphosate ban, a decision made on a whim, with no scientific evidence to justify such a drastic action has caused a total colossal loss of Rs. 35 b to the industry while the Country risks losing a longstanding, lucrative export market in Japan. 

Meanwhile, rubber YPH has recorded a sharp increase from 647.3 kg per ha in 1992 to 862 kg per ha in 2016. Since 1992 the RPCs have replanted vast extents, at times exceeding the average 3% replanting per annum. 

The RPCs strategic forward planning saw the need for diversification within a short period which prompted many RPCs to diversify in to another major crop oil palm in the best suitable areas. Mitigating total dependency on tea and rubber, factoring in shortage of workers was the strategic decision for oil palm – justifiably so, given that the financial performance of oil palm during the period 2013 to 2016, a tenure in which both tea and rubber prices crashed. Oil palm companies set up processing mills with their own funding which has saved the national economy valuable foreign exchange by curtailing edible oil importation. 

Today, it is the RPCs which are leading the charge on crop diversification, with upwards of 2,300 hectares of RPC land now under diversification on crops other than oil palm. 

The oil palm plantation industry is also facing turmoil with a temporary ban being enforced for the cultivation, based on emotional agitation by some groups with vested interests, sharply interrupting an entire development programme. Plants to the value of almost Rs. 400 m propagated with imported seeds with the necessary government approval is currently running the risk of being destroyed if they are not planted at the correct time.

Large-scale diversifications of innovative crops include arecanut, macadamia, pineapple, rambutan, soursop, lemon, oranges, papaya, avocado, passion fruit, pears, and vanilla together with spices like pepper, cloves, cardamom, and forestry initiatives from khaya, giant bamboo and other fuel-wood plantations. 

Meanwhile, the 36 State-managed estates which were also managed by the same JEDB and SLSPC during the nationalised era remain a horrendous burden on taxpayers, being in arrears of close to Rs. 3 billion on their statutory dues of EPF, ETF and Gratuity and the Government continues to subsidise them to the tune of Rs. 1.5 billion a year. Here, the State has ample opportunity to turn its attention to the massive loss making State-managed plantations and implement so called ‘alternative models’.

 

(The writer is Chairman, Planters’ Association of Ceylon.)

 

Government and stakeholders must clearly understand that plantations cannot be managed in the historical manner given the current political, environmental and economic issues and continue to be viable business entities. Provisions for changes are available in the lease document and RPCs must be given a free hand to exercise the rights without interference and subsequent directives which interrupt the development programmes. Each RPC has a business plan based on indicators such as location of the plantations, crop mix, availability of workers and several factors which are not common across all plantations. 

 

In the spirit of a privatised plantation sector

RPCs have invested a cumulative Rs. 70 billion between 1992 and 2016, contributing seven billion in lease rentals and a further 1.72 billion in income tax, coupled with dividends to Sri Lankan shareholders, totalling Rs. 8.17 billion, despite continuing challenges from diminishing availability of labour, incessant increases in labour wages not linked to productivity. The emergence of competitors like Kenya, operating on significantly larger economies of scale to produce volumes of tea, at drastically lower costs of production poses a big risk. 

In addition to the clear superiority of RPC management in terms of productivity, it has only been under our stewardship that more uncompromising, environmental protection standards have been adopted. These include Rainforest Alliance certifications secured only upon the completion of a stringent process of auditing and the implementation of extensive environmental safeguards. To date most RPCs have secured the Green Frog seal of compliance propelling them to the prestigious Global Sustainable Agriculture Network standard. 

Similar efforts have been channelled towards forest conservation and rehabilitation, with the majority of RPCs certified with the Forest Stewardship Council. Membership requires organisations to develop national forestry standards, localised to meet the unique requirements of each natural habitat, as per global standards. 

To-date RPCs have cultivated in excess of 20,000 ha of forestry. 

We wish to recognise and thank the Governmental authorities for commencement of guidelines towards a national policy for commercial forestry, on a request by the Planters’ Association. Despite a five-year forestry plan in place, a sudden ban, imposed five years ago on felling timber which is grown for fuel wood, meant that estates had to transport their requirement of fuel wood at an additional cost, causing additional and unnecessary burden on the bottom-line.

At present, there are 688 International certifications for 297 RPC factories including HACCP, ISO 22000, Fair Trade, Forest Stewardship Certification (FSC) ISO 9000, Care Quality Commission (CQC), Ethical Tea Partnership (ETP), UTZ, Rainforest Alliance (RA), Global GAP, SA etc., thereby ensuring the maintenance of extremely strict production and processing standards that ensure the safety of consumers, workers and the wider environment.

Furthermore, the ‘Ceylon Tea’ image and the branding of Food Factory Concept, Chemical Free Tea, Cleanest Tea in the world, Ethically Managed Plantations, Zero Child Employment, Ozone Friendly Tea, Sustainable Agriculture, Product Traceability to Source and Single Origin Estate Marks are predominantly RPC standards which is a huge plus for the image of Ceylon Tea and its branding.

Other internationally-accepted certifications which entail rigorous compliances with environmental, agricultural, economic and social standards of conduct, obtained by RPCs include Good Manufacturing Practices (GMP) for Rubber and Cinnamon processing, Global Organic Latex Standard, for rubber ISO 9001:2008 Quality Management Systems Certification, for Oil Palm & Fruits, while the Round Table on Sustainable Palm Oil (RSPO) certification is work in progress.

To-date not a single estate worker has been laid off; instead, their opportunities have increased with the productivity linked clause attached to their daily wage. Living conditions have improved vastly with two-bedroom houses with en-suite toilets built to replace the line rooms. A total of 50,000 such homes have been built in an ongoing effort for the 180,000 families that still live on RPC estates – all of whom may not be actually working in the fields. 

From schools to hospitals, crèches to retirement homes, ongoing welfare activity to one-tenth of the country’s population is a priority of the RPCs which constitute the Plantations Human Development Trust (PHDT) along with trade unions and Government. Today an estate worker has the ability to earn in excess of Rs. 25,000 per month, in addition to all other infrastructure facilities provided by RPCs. 

 

The true strengths of Sri Lanka’s plantation industry and their source 

In light of these and many other achievements by the RPCs, standards of Sri Lanka’s plantations have been elevated far beyond its difficult past and therefore we assert that in truth, many of the strengths that remain in our industry today are initiatives taken by the RPCs. Environmental protection and quality standards have been implemented across the RPC sectors, where none were in place before privatisation. Our produce continues to fetch favourable – and often times record breaking prices from international buyers.

To say that worker wages have been increased periodically is an understatement. Wage increments have been awarded not commensurate with productivity, politically prodded and not considering the competitiveness of the company. Holding back wage increments was never the RPC agenda; however linking it to productivity will be the future of the plantation industry in Sri Lanka. 

Despite constant politically motivated interference, many RPCs have commenced investments into crop diversification in order to consolidate revenue streams, even when various Governments have continued to vacillate on vital policies such as the importation of seed material. Meanwhile, important progress is being made to emulate the successful examples of RPCs who have partnered with large conglomerates to enter into value addition; something which did not exist during the time of State management. 

Diversification through tea tourism is hugely successful. These include tea factory tours, hotels and niche luxury tea trails experiences –attracting high-spending tourists from across the globe – helping to further raise the profile of the island as a vibrant tourist destination. Many others are working on investments into this sector with the Planter’s Association committed to supporting the relentless exploration of innovative diversifications. 

Favourable policies that will look at the industry 50 years from now and start sowing the seeds to propel it to a future-ready, economic power base, is the need of the hour. As an industry we cannot afford any more random ad-hoc policy decisions. Extending leases is an economic imperative, given crop cycles of rubber and oil palm. RPCs must be assured that leased land will not be annexed or encroached through political heavy handedness. 

Ultimately, the RPCs each need to be allowed to draw upon their precious experience gained from the last quarter century of management, in a rapidly changing environment, to autonomously decide on the best course of action for each company, in alignment with a common ethic of sustainable, profitable, diversified plantations.  

(The writer is Chairman, Planters’ Association of Ceylon.)


Daily FT, 13th August 2018 

Rs. 500 m boost for Ceylon Tea promotion

Government this week decided to extend the brand promotion scheme available for Sri Lankan-owned tea brands selling under the Pure Ceylon Tea label for 2018/2019, allocating Rs. 500 million.

The extension of the scheme was approved by the Cabinet this week with a few amendments, Cabinet Co-spokesperson Rajitha Senaratne said yesterday.

Under the scheme, eligible brands will have 50% of the promotional spend of their marketing campaign granted by the Tea Board, with a cap of Rs. 50 million.

The decision was taken to ensure that individual brand promotions happen parallel to the Ceylon Tea global promotional campaign, as requested by tea exporters, Plantation Industries Minister Navin Dissanayake informed Cabinet when presenting the paper.

Brands which have contributed to the promotion and marketing levy fund gazetted on 27 October 2010, and have demonstrated their ability to implement aninternational marketing campaign to penetrate new markets, sustain or increase the share in existing markets, or recover lost markets will be eligible. Further, brands applying for the fund should also have obtained prior approval from the Technical Evaluation Committee of the Sri Lanka Tea Board for their brand promotional plans to qualify.

These should contain tested methods of Above the Line (ATL) and Below the Line (BTL) promotions, and advertising and social media targeted marketing strategies and objectives.

Brands eligible for a matching grant should have achieved a minimum of 50% of the agreed export target, while securing 50% of the approved budget to qualify for the grant. Further, the Tea Board may consider partial reimbursement after six months based on the progress of the project.

The Tea Board will take steps to monitor the promotional campaign projects, and requires the companies to submit quarterly reports.

The companies obtaining the grant will also be required to submit documentary proof of exports and brand promotional spending, including certified copies of CUSDECs, and packing lists and relevant endorsements by company auditors as proof.

 

Daily FT, 26th July 2018.

Navin tours Japan, assures quality Sri Lankan tea

Minister of Plantation Industries Navin Dissanayake has attended series of meetings on Tuesday during his four-day visit to Japan. 

He had a meeting with Japanese Minister of Health Labour and Welfare Katsunobu Kato. In his opening remarks, the Minister expressed the solidarity of Sri Lanka and its people with Japan on this hour of tragedy occurred due to recent floods in Western Japan. He also indicated the historical bond and affinity between Japan and Sri Lanka.

Dissanayake briefed the Minister of Health Labour and Welfare in Japan on number of progressive steps taken by his Ministry to ensure the utmost quality of Ceylon Tea being exported to Japan. The Minister also emphasised on the importance of the Japanese consumers’ confidence which is placed on Ceylon Tea, and assure Sri Lanka’s commitment to keep this confidence intact for decades to come.

The Minister also indicated Sri Lanka’s willingness to work with Japanese health authorities in resolving any pending matters pertaining to supply of highest quality teas for Japanese consumers.

In welcoming Dissanayake, the Minister of Health Labour and Welfare in Japan stated the bigger role that the Minister could play to develop the two country relations being the President of Japan-Sri Lanka Parliamentary Friendship League. In responding to the Minister’s detailed explanation on the current status of tea exports to Japan, the Minister of Health in Japan appreciated the steps taken by the Ministry of Plantation Industries. He also noted the ongoing dialogue between the authorities in two countries.  

Along with the Minister, this meeting was attended by the Ambassador to Sri Lanka in Japan and its officials, Official from the Ministry of Plantation Industries and delegates from the Sri Lanka Tea Exporters Association.

The Minister also attended a meeting with higher officials of the Tokyo MUFG Bank to discuss the proposed loan arrangement for the modernisation of tea smallholderfactories in Sri Lanka. During the discussion the Minister highlighted the importance of the project for both countries.

The Tokyo MUFG Bank is the largest bank in Japan and it was named as the 10thTop Bank in the World by ‘The Banker’ and was the only Japanese bank to feature in the Top 10.

The Minister was also invited for an interaction with the Executive Committee members of Sri Lanka Business Council in Japan. The Minister and members of Council held detailed discussions on promotion of economic and commercial relations between the two countries.


Daily FT, 19th July 2018.

About F&W

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