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.

Dilmah Tea founder honoured by World Association of Chefs’ Societies Lifetime Achievement Award

Dilmah Founder Merrill J Fernando receiving the Lifetime Achievement Award from WorldChefs President Thomas Gugler (far right). Also pictured: Dilmah Tea CEO Dilhan 

C Fernando, World Association of Chefs’ Societies Managing Director Ragnar Fridriksson


Sri Lankan tea pioneer Merrill J. Fernando was honoured at the WorldChefs Congress 2018 with the prestigious Lifetime Achievement Award, for his extraordinary passion and commitment to tea, and for his unique philosophy of making business a matter of human service. The Award was presented by WorldChefs President Thomas Gugler at the biennial global Congress which took place in Kuala Lumpur last week, with the participation of over 1,000 chefs representing 100 Chefs’ Societies from around the world. 

Merrill J. Fernando is recognised for his commitment to tea, especially the harsh early years when he fought for value addition at source, and against the colonial economic system that saw his country’s prized crop sold at auction in London. When eventually he succeeded, his struggle against the interests of big businesses that dominate the global tea industry had taken nearly 40 years. When his brand Dilmah was born in 1988, it was a victory for farmers around the world as it was the first time tea, coffee or cocoa was offered grown, picked, packed and branded at source by a farmer.  The benefit of that accrues to tea drinkers around the world, and to workers and their families alike, for tea that is packed at source is fresh and therefore richer in flavour and natural antioxidant goodness. A farmer’s desire is for quality, fundamentally different to the objective of a trader who buys and sells tea purely for profit from any source to a buyer in any market, and that was so for Merrill J. Fernando, whose words, ‘I devoted my life to tea,’ resonate powerfully in this time of commodisation and compromise. His tea was named after his sons Dilhan and Malik, and underlined by an uncompromising commitment to quality, traditional manufacture, freshness and single origin tea (www.dilmahtea.com).  Less well known is Merrill J. Fernando’s commitment to family values and their embodiment in his brand through the philosophy of making business a matter of human service. That principle requires each of the Dilmah Tea, plantation, packaging and ancillary businesses to contribute a minimum 10% of their pre-tax profits to the Merrill J. Fernando Charitable Foundation (www.mjffoundation.org) which utilises these funds to empower youth, and women in difficult economic and social circumstances, children with special needs, communities that are economically marginalised, and the environment. 

Amongst the outcomes of the Dilmah philosophy is the Empower Culinary School, a WorldChefs approved training school that offers culinary training free of charge to young women and men who are economically, socially or otherwise disadvantaged. Amongst those that have benefited from the Empower School are youth with cerebral palsy and Downs syndrome, amongst other typical persons. The second Empower Culinary & Hospitality School will open in August this year at the MJF Centre East, the largest privately funded charitable initiative in Sri Lanka, which is designed to serve differently abled children, youth, women and communities that are economically disadvantaged through the principle of empowerment with dignity.

 

Daily FT, 17th July 2018.

Navin discusses plantation issues and development with ADB

Officials of the Asian Development Bank met Minister of Plantation Industries Navin Dissanayake and informed him of their commitment to fund the rehabilitation and development of the tea sector of the plantation industry. 

The Minister informed the delegation that the tea sector was badly in need of capital to replacing aging tea bushes with new and vibrant cultivars in order to increase our production to 400 to 450 million kg of tea per year. Currently the country as a whole produces about 300 million kg of tea.

Ceylon Tea is considered the Champaign of teas and still attracts a premium in the world market. There is a growing demand for these teas and new markets are opening up and the demand is getting greater for quality teas. In order to manufacture this type of tea, we need to find solutions to the labour shortage and one area which needs to be addressed is mechanisation. Plucking machines have now been developed and could provide quality leaf to the factory if the technicians are trained on the proper technics of using these machines. We also need to develop our factories to meet the demand of an increase in production. 

The ADB officials told the minister that they had done a thorough study with the assistance of officials of the Ministry of Plantation Industries and have identified areas where ADB funding will be available for the development of the tea sector. 

In the Regional Plantation Companies, they will assist in undertaking replanting of 2% of the acreage every year. They will also support an infilling program where vacancies in productive tea fields will be filled. The also intend supporting efforts to overcome climate change and particularly in the Uva District will support drip irrigation schemes to mitigate the prolonged droughts that this district has been experiencing.

In the small holder sector, similar loans will be provided to them but in case of small holders who have less than one acre of land, they will help them by providing assistance for infilling rather than replanting. The small holder relies income he/she received from ½ acre or 1 acre cannot afford to sustain themselves economically if they uproot the tea and replant, as it will take about five years before they can commence obtaining an income from the newly planted tea. Infilling on the other hand is the answer to increased production. 

The ADB has also considered the shortage of workers on both RPC estates and in the Tea Small Holder sector and have undertaken to develop a scheme that will provide motorised plucking machines, pruning machines and other motorised devices that will eliminate the need for the heavy dependence on labour. 

The ADB program is set to commence in 2019.

 

Daily Ft, 10th July 2018.

Craighead Estate achieves all time record price

Craighead Estate, Udahentenna, achieved an all-time record price of Rs. 1300 per kg for an OP1 grade in the Western Medium category, at the weekly tea auctions held on 10 July. This line of teas was purchased by M/s. St Clair Teas Ltd and marketed by M/s. Forbes & Walker Tea Brokers Ltd. 

 

Craighead is reputed for producing high quality, award winning teas, and has the distinction of achieving the following all time record prices in the Western Medium Elevation category: FBOPF1 at Rs. 1100; FBOP at Rs. 1800; BOP1 at Rs. 1360; and OP1 at Rs. 1300.

 

Craighead is situated in Nawalapitiya in the Kandy planting district, at an elevation of 800 m above sea level, and was originally built in 1914. This factory has an annual capacity of 550,000 kgs of made tea, and is certified under UTZ, Ethical Tea Partnership and ISO 22000:2005 Management System Certified for Manufacture of Black Tea. 

 

Craighead is managed by Abhishek Samarakoon, assisted by factory manager K. G. Kudabanda, and comes under the purview of Plantation Director Chaminda Guneratna for Kahawatte Plantations PLC, who are the managing agents for this estate.

 

Daily FT, 12th July 2018.

Tea Traders Chief cries foul over heavy taxation; delay in glyphosate relief

The Ceylon Tea Traders Association recently pointed out that the new revised high levels of taxation introduced to investors in the plantation sector will demotivate entrepreneurs as heavy taxation will reduce profits and leave very little accumulation of funds for re-investments.

 

The association’s reappointed Chairman Anslem Perera addressing at the 124th Annual General Meeting (AGM) urged National Policies and Economic Affairs State Minister Dr. Harsha de Silva to address this issue that has been thrust upon them by the new taxation system that will seriously effect investment in the tea trade.

 

“This is an era where rural employment is only possible by offering higher wages, better status and good working conditions to the young workers.

The burden of heavy taxes will leave very little room for reasonably attractive wages to motivate village youth to stay back in the village. If not, they will naturally look for greener pastures in the big cities or overseas,” he added.

 

Noting that specialised warehousing was on a concessionary tax rate in the past, he said that this has now been brought into the same level as cooperate taxes, which will demotivate investors in creating much needed state of the art warehouses to meet international food standard.

 

He also said that despite announcing the lift on glyphosate ban in April, lift after two months it has still not been gazetted and regularized.

 

“It is ironic to note that three years ago the ban was effective from the very next day after the announcement, but de-banning of same takes many months to be implemented – this is the beauty of bureaucracy at its highest,” he pointed out.

 

He said the latest negative development as a consequence of the ban on glyphosate brought in greater disaster when Japan announced that they were imposing higher maximum residue levels for Hexaconazole and MCPA, while European Authorities have tightened on Diuron.

 

According to him shipments in Japan were held back and some returned as the MRL levels that were set made conformity almost unachievable. 

 

The crisis has developed into international proportions. “Japan has already threatened total suspension of Ceylon Tea if the ban on glyphosate is not lifted immediately. We will then face an economic disaster,” he cautioned.

 

It has been revealed that the proposed revisions relating to the MRLs of some chemicals had been advised as way back as year 2017 by the Japanese authorities to the Embassy of Sri Lanka in Japan. This was well in advance of their introduction which would have given us adequate time for the submission of an appeal at a comfortable higher level.

 

“The embassy in 2017, perhaps due to an oversight, failed in their duty to transmit this information to the Tea Board and TRI in time. This naturally made the Japanese authorities place default higher levels for MRLs.

 

Once again a disastrous bureaucratic breakdown of a different dimension,” Perera said.

 

He asserted that the TRI is now the process of organising the required field trials to determine the revised residues for MRLs. “Reliable sources have informed us that Japanese Authorities are certainly in favour of revising the MRLs of Hexacionazole and MCPA based on TRI’s field trial data,” he quipped.

 

The imprudence of our authorities has already benefitted our competitors, as replacements for rejected consignments are being purchased from them, Perera lamented.

 

According to him around 10 million kilos of fine quality teas are purchased annually by Japan. “It may be argued that this is only a fraction of our 300million kilo annual production. It must be realised that purchasing this

 

10 million kg of premium grade Ceylon tea with a value of over 50 million dollars, creates great competition at the Colombo Tea Auction. The bidding encompasses a much larger volume of tea to at least 5 times the quantum that is purchased. This biding bolsters prices at the auction by as much as Rs. 150 – 200 per kilo.”

 

In the event of a total ban from Japan he warned that prices will be impacted seriously and lower auction prices will result in serious revenue losses to the entire plantation industry impacting the livelihood of over two million individuals involved in the industry.

 

“This will be a needless disaster inflicted upon the Tea Industry and consequent financial, commercial and credibility losses forced upon us will certainly be irrevocable,” he stressed.

 

He reiterate that the RPCs must act with trust and responsibility keeping to their promise as their fine quality teas are sort after by the Japanese buyers. 

 

“The prices that your teas fetch when they are free of MRLs, I am sure are attractive enough to keep away from the use of weedicides. Please do not let exporters and Japanese buyers be heavily burdened by these heavy expenses and lose confidence in you” he added.

 

Another disaster in the making Perera highlighted as the seriously suspected adulteration of tea with unauthorised additives such as glucose and sugar. Producers must act with caution and responsibility. 

 

“Tea is a food product, not a cosmetic item!” he added.

 

Noting Short term profits are short lived, he said those who dwell in such practices will soon suffer adverse consequences.

 

“Authorities must crack down on them and bring them to book. Ceylon Tea has a reputation of being the cleanest tea in the world. Don’t let us loose this. Once lost, regaining this status will not be an easy task,” he stated.

 

Further on the challenges that the industry faces Perera noted that six of the larger Middle Eastern buyers of Ceylon Tea continue to face turmoil.

 

“In consequence demand is further reduced. The Russian and Turkish de-valuations in their currencies have resulted in weaker buying power. Sanctions on Russia and Iran too have created practical payment issues for export remittances. Volatility in the Middle Eastern region continues. Syria a previously a lucrative market is now in shambles. The EU and US markets continue to face financial challenges,” he said.

 

In terms of weather he said the favourable conditions prevailed during the second half of the year and the consequent improved cropping helped production to catch up and surpass the poor results of the preceding year.

 

The notion of computerising the Colombo Tea Auction has been on the CTTA’s agenda for almost two decades. “I would be remiss if I did not mention here, Minister, and express to you the profound gratitude of the Colombo Tea Traders’ Association, that it was your pioneering vision, conceived nearly 18 years ago of an Integrated Computer System for Automation of Auction Procedures of the Colombo Tea Auction, that first drew the attention of the Tea Trade to this progressive initiative.

 

He said the concept of ‘Computerisation of the entire Value Chain of the Tea Industry was recently proposed by the immediate past Chairman of the Tea Board. This met with the unanimous concurrence of the CTTA Committee and a mechanism for funding it is being examined.

 

Sri Lanka’s tea industry should capitalise on China and India

Ceylon Tea Traders Association Chairman Anslem Perera said Sri Lanka’s tea industry should capitalise on China and India that are proving to be potential large markets with their rapidly increasing populations and their ever growing thirst for tea.

 

“As we know their own production cannot meet their growing domestic requirements. Hence we should actively nurture these markets,” he told addressing at the 124th AGM last Friday.

 

He insisted the Tea Board with the promotion and marketing committee to direct their attention to disbursing the already accumulated promotion fund for international initiatives in an aggressive and objective manner to capture these very important markets.

 

“If we do not move forward with our promotion efforts overcoming bureaucracy, we will allow our competitors to have a lead over us in these new markets,” Perera added.

 

He said the tea industry has failed to keep abreast of technological advances in its value chain though I hasten to add, not through the lack of trying.

 

Daily Ft , 02nd July 2018

Harsha calls on tea stakeholders to compromise to revitalise industry

 

 

National Policies and Economic Affairs State Minister Dr. Harsha de Silva

 


  • Insists not all woes can be pinned at the hands of the State or the wider economy, industry must also take responsibility for some of these issues
  • Says the route of extreme caution; of unwillingness to try new things of fearing disruptive business practices, too myopic to see positives of different models of development has doomed industry to face ever-mounting troubles
  • Urges industry to reconsider qualities of facing adversity with ingenuity and experiment with diversification 
  • Outlines need to focus and investment in R&D; says it’s a shame Govt. and private sector hasn’t adequately support research into this important industry
  • Suggests plucking and production process to be modernised, conduct better marketing of the Ceylon Tea brand, to automate Colombo Tea Auction
  • Admits the Governments have let down tea industry with inconsistent, non-scientific policy-making
  • Calls on the Tea Board of Sri Lanka to act as an effective regulatory agent, as the quality of doesn’t get tainted by accusations of corruption and favouritism
  • Affirms Sri Lankan tea is losing markets as the industry has become over-reliant on a few volatile buyers in the Middle East and Russia
  • Highlights insufficient production, poor marketing, focus on wrong products as possible reasons for current troubles

 

By Charumini de Silva 

 

In a fresh attempt to revitalise and take Sri Lankan brew to next great heights, National Policies and Economic Affairs State Minister Dr. Harsha de Silva called on the tea industry to come to a compromise with innovative solutions, diversifications and plug into global supply chain; cautioning that the procrastination will be immensely dangerous to the Ceylon Tea brand and to country’s tea trade as a whole.  

 

Addressing at the 124th Annual General Meeting (AGM) of the Ceylon Tea Traders Association in Colombo last Friday the State Minister said that for decades the industry has tried the route of extreme caution; of unwillingness to try new things of fearing disruptive business practices, which has failed the country, tea producers, exporters and many people who could be working in a thriving industry instead of one that is treading water. 

 

“I am not here to tell you which model and path to choose; I am here to appeal to you, as an industry; to come to some kind of consensus on how to take Sri Lankan tea to its next great heights. This is not the attitude that gave birth to the Sri Lankan tea industry. The Sri Lankan tea industry and the Ceylon Tea brand are both descended from people who faced adversity with ingenuity, and were not afraid to experiment with diversification. For there to be a future of Sri Lankan tea, all stakeholders in this room will have to exhibit those qualities yet again,” he stressed.
 
 
 While the Government must certainly play its part in taking Sri Lankan industries towards sustainable futures, Dr.de Silva however asserted that the future of our tea industry is something that transcends politics and parties. 
 
The State Minister highlighted three sets of challenges Sri Lanka’s tea industry is faced at present stemming from the Government, from the economy and within the industry. 
 
Pointing out not all woes can be pinned at the hands of the State or the wider economy, he said the industry must also take responsibility for some of these issues. 
 
“What does everyone agree on? The Sri Lankan tea industry is losing ground to competitor countries, and sharply needs revitalisation and rescue. What do they disagree on? How to fix it. What do you need? The capacity to consider the other side’s point of view and reach a level of compromise about how to take the tea industry forward,” he stated. The State Minister said an industry which is at each other’s throats and too myopic and blinkered to see the positives of different models of development, is doomed to face ever-mounting troubles.
 
To face the future and to revitalise the tea industry, he urged the industry to reconsider qualities of facing adversity with ingenuity and experiment with diversification which once saved Sri Lanka’s planters and could do so yet again. 
 
 
 
“We need more focus and investment in research and development (R&D). It is a shame that the Government and the private sector have not adequately supported research into this important industry. Science graduates should be thronging to conduct research in this industry, instead they are sprinting overseas for lack of job opportunities,” he added. 
 
He suggested plucking and production process should be modernised via mechanisation or different harvesting systems such as out-grower systems as well as better marketing of the “Ceylon Tea” brand by using the funds collected through the Tea Promotion Levy.
 
 
In terms of post-production he outlined automating the Colombo Tea Auction. “Years ago, I was involved in a study/proposal for an Integrated Computer System for Automation of Auction Procedures of the Colombo Tea Auction. This could enable each tea offered for sale through the Auction to be monitored from the point of cataloguing until settlement of payment and simplify export documentation, curtail costs, and increase transparency and efficiency throughout the value chain.”
 
He acknowledged that both the present Government and successive governments in a number of ways has let down this important industry with failures of inconsistent and non-scientific policy-making. 
 
Exemplified by the glyphosate ban and its complicated fall out the Minister insisted that the Government must strive to reduce these uncertainties by making decisions based on scientific evidence, research and careful weighing of options, noting that once a good decision is made, barring new evidence, they must stick to those policies. 
 
 
 
 
 
 
“Many in the industry are hesitant to diversify into crops like palm oil because the Government line on whether it supports palm oil is unclear,” he added. 
 
Dr.de Silva also called on the Tea Board of Sri Lanka to act as a more effective regulatory agent to improve the governing environment around tea. 
 
“Last year, 53 factories were investigated and named as adulterating tea with sugar dust. These ongoing investigations must be completed quickly, and fairly. When factories are not abiding by the rules and regulations, those factories must be shut down or suspended, not given leeway because they know the right people and can pull the correct strings. It is crucial that the caretaker of the quality of tea in Sri Lanka does not get tainted by accusations of corruption and favouritism,” he emphasised.
 
In terms of the economy, he said that at home or abroad, the economy in which we produce and sell tea today is drastically different to what it was a couple of decades ago.
 
 
“While at home the tea industry faces factor market limitations such as land and labour as well as environmental threats to our resources; abroad, we combat the rise of competing suppliers that are buoyed by factors like cheaper labour, more land availability, and fewer import restrictions,” he said.
 
Considering domestic and external threats together, the State Minster said it was clear that Sri Lankan tea is losing markets as the industry has become over-reliant on a few volatile buyers in the Middle East and Russia and called it as a the main pitfall plaguing Sri Lankan tea. Referring to statistics from Harvard Center for International Development (CID) Atlas he noted that Sri Lanka previously supplied the majority of their tea, but in 2016 made up only 3.04% of UK’s tea imports, and 2.13% of Pakistan’s, whereas Kenya in 2016 supplied 47.12% of the UK’s tea, and a whopping 60.05% of Pakistan’s. 
 
Dr. de Silva highlighted insufficient production, poor marketing and continuing to focus on the wrong products were the remaining possible reasons for current troubles in tea industry.
 
 
Daily Ft, 02nd July 2018.

About F&W

Forbes & Walker was set up in 1881 as a partnership between James Forbes and Chapmen Walker. Although there is no actual record of the date on which it was established the very first cash book, still in the possession of the Finance Director, indicates the brokerages were earned from 1st August 1881. In Sir Thomas Villiers' book “Mercantile Lore” the date of establishment of Forbes & Walker has been put down      Read More...

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