TEA shows way forward for tea exports beyond 150 years


DFT-6-7

The members of Tea Exporters Association are concerned over the current status of Sri Lanka tea industry as tea production is on a declining trend in the last few years due to many issues. According to Sri Lanka Tea Board statistics the tea production has declined by 36 million kg or 11% last year compared to 2015. The tea crop figures registered for the first two months of 2017 also indicate a drop of 8 million kg or 20% against the corresponding period in 2016. 

 

Though the decline in tea production last year and during the first quarter of this year is largely attributed to the adverse weather conditions prevailed in the country, the overall downward trend in the tea production is due to a number of other factors such as aging tea bushes (on average over 80 years), non-availability of an alternate weedicide and low application of fertiliser, etc.

 

The tea producers are required to maintain a replanting level of 2-3% of the tea land extent annually but the actual replanting level is less than 1%. Most of the small holder farmers do not replant their tea gardens and it is the plantation companies that undertake some replanting. Sri Lanka crossed the 300 million kg mark in tea production in year 2000 and even after 16 years the country has not been able to reach the 350 million kg mark as yet. Although the Government provides a subsidy for replanting, most small holders are reluctant to undertake replanting as they have to wait for about four years to harvest the tea. However, the global tea production has increased steadily and recorded at 5.4 million metric tons or 5.4 billion kg in 2016. The Sri Lanka share in world tea production has now come down to 6% from 10.5% in 2000. 

 

The tea export sector cannot grow beyond the available tea crop volume in Sri Lanka. The declining trend in the tea crop has restricted the growth in tea export volume and value. The tea production issue also affects the growth of Sri Lankan tea brands and also the processing of Global Tea Brands by Sri Lankan companies. Since, importation of tea is not allowed the exporters are unable to improve their business and bring more revenue to the country. They are of the opinion that tea sector will find it difficult to achieve the revenue target of $ 5 billion by 2020 under the prevailing situation.

 

The decline in tea production has also led to increase in cost of production and deterioration of tea quality. The current high tea prices are mainly due to the crop shortage and not due to any enhanced demand for Ceylon Tea from consuming countries. The exporters are of the view that, the current prices are somewhat artificial and make our tea non- competitive in some tea importing countries. The country loses foreign buyers and markets to India, Kenya, and Vietnam etc due to crop shortage and high prices. Once the foreign consumers get used to other origin teas, it would be difficult to regain these markets. In view of the current situation in the tea production front, the exporters strongly request the government to liberalise tea imports at least on a control basis to resolve the current tea production issue in the country.       

 

The exporters have proposed for liberalisation of tea imports more than 15 years ago. The TEA request was included in the 2016 government budget approved by the parliament. However, it was not implemented due to strong objections from some stakeholder members. The current policy discourages any major investment by tea companies in the tea sector that is needed for expansion of the economic growth in the country. Some exporters are unable to cater to certain market segments due to non- availability of suitable type of tea locally. It has a negative impact on the growth of brands. 

 

In most markets the importance of origin of tea is gradually phasing out to the strength of brands. The exporters also believe that protection given to tea producers / manufactures does not expose them to real competition. The producer segment will not make any serious effort to improve tea quality, reduce COP and improve management efficiency. They will continue to depend on government protection and subsidiaries that would be a burden on the entire economy. 

 

The tea exporters are also concerned of the recent developments in Syria which may lead to a bigger military conflict in Middle East. Approximately 52% of Sri Lanka tea exports reach Middle Eastern countries and further escalation of military conflict in the region will have an adverse impact on the local tea industry. Therefore, finding new markets for Ceylon Tea is more important now than before. However, Sri Lanka will not be able to expand their business to more secure Europe or USA without having the right type of tea mix at competitive prices. The retail sale segment in these countries is controlled by hyper markets/ super markets and they maintain the retail prices without any change for 6-12 months. The high cost of production in Sri Lanka does not allow the Sri Lankan tea brands to get in to the mass market segment controlled by super market chains.   

 

The tea exporters are also worried about the long delay in launching the Global Ceylon Tea Campaign by Sri Lanka Tea Board. The need to introduce a Tea Promotion Levy arose when Government was not allocating any funds for tea promotion activities from the Tea CESS. In 2010, then Minister of Plantation Industries proposed to introduce a levy of Rs. 3.50 per kg to be used only for tea promotion activities. The Minister consulted members of TEA and got their consent to introduce a new levy with the assurance that it would be levied only for a period of five years but collection of levy continues indefinitely.  

 

Since the establishment of the fund from November 2010 only a few useful promotional activities have been under taken in foreign markets and as a result the accumulation of the fund has now reached Rs. 6-7 billion. TEA members strongly believe that further accumulation of funds may prompt the Treasury to force Tea Board to use the idling funds for recurrent expenditure or for other non-promotional activities. The delay in implementation of the global Ceylon Tea campaign is not due to any fault of the tea exporters but due to strict government tender procedures and other regulations. 

 

In view of the current situation, TEA has requested SLTB to initiate action to suspend the tea promotion levy until the launch of Global Ceylon Tea Campaign is finalised and the accumulated funds are sufficiently utilised. This would be a relief for the tea exporters who are undergoing a difficult period due to the turmoil in leading tea importing countries in CIS and Middle East. 

 

The tea exporters also complain of the high taxes imposed on the sector. The CESS and Promotion Levy paid on export of value added teas come to Rs. 7.50 per kg and about Rs. 17.50 per kg on export of bulk tea. In addition, every exporter should renew their license with SLTB annually at a cost of Rs. 500,000.00 for large and medium tea companies and Rs. 50,000 for small companies. The income tax payment, economic service charge and other fees paid to SLTB and other state organisations also add to the operational cost of tea exporters. According to Sri Lanka custom data over Rs. 2 billion per annum is collected from tea exporters as CESS on bulk and value added tea exports. Further, Rs. 1 billion is collected as Tea Promotion Levy by SLTB from the exporters. The total CESS and tea promotion levy paid by the exporters’ amount to approximately 1.5% of the annual tea exports revenue. This may be the highest CESS payments made by the tea exporters in a tea producing country.  

 

The exporters are also worried about the slow implementation of budget proposals related to tea export sector. It has been proposed  to abolish the Import and Export Control Department Fee of 1% of CIF value on import of tea for re-export purposes to support the tea industry through a more simplified tax and tariff structure in the 2017 Budget.

 

In fact, Tea Exporters Association had been lobbying for removal of this fee as Tea Exporters pay a license fee of Rs. 5 per kg to Sri Lanka Tea Board also when importing tea for re-exports. The dual taxation on tea import licenses currently applicable for the import of CTC/Green and Specialty teas is negatively affecting the competitiveness of Sri Lanka tea brands. However, this proposal is yet to be implemented by the government. 

 

Although the Government has deferred the implementation of termination of SVAT system, the exporters strongly urge the government to continue with the SVAT system to facilitate their cash flow requirement. The termination of SVAT will  affect the competitiveness of Sri Lankan tea brands also as the exporters will have to borrow funds from banks at high interest rates which will naturally increase the cost of operation. 

 

Tea is the most regulated export industry in the country. This has caused delays, increase in operational cost etc. of the exporters. Therefore, the members of TEA urge the government to appoint a committee to look in to deregulating the tea industry to enhance its competitiveness.    

Date-02nd May 2017, Daily FT

 

Delmar establishes yet another record on bearish market!

DFT-6-5

 
Delmar Estate established an all time record price for the third consecutive week at the weekly tea auctions held on 25 April. A price of Rs. 730 per kg was achieved for a Pekoe-1 grade in the Uva/Udapussellawa elevational category. This invoice was purchased by M/s., Mabroc Teas Ltd. and marketed by M/s., Forbes & Walker Tea Brokers Ltd.
 
Currently Delmar has the distinction of having established all time record prices for OP, OP1 and Pekoe grades in its elevational category. Interestingly, the record price of 600 for an OP grade established by Delmar in 2016 was continuously bettered by them, and currently stands at 700; similarly the record price of 670 for an OP1 grade established in 2016 was also bettered by them and currently stands at 720.  
 
Delmar Estate is situated in Halgranoya, at an elevation of 1524 metres above sea level and is certified under ISO 9001:2008 & ISO 22000:2005 Management System Certified for Manufacture of Black Tea Food Sector. This estate is managed by Sudath Liyanage and comes under the purview of Udapusselawa Plantations PLC.  
 
Date-02nd May 2017, Daily FT

 

India’s February tea output drops 21%


MUMBAI (Reuters): India’s tea production in February fell 21% from a year earlier to 13.54 million kg as a severe drought in the southern state of Tamil Nadu hit plucking, the state-run Tea Board said.

 

Tamil Nadu produced 8.41 million kg of tea in February, down 20% from the year-earlier period, the Board said in a statement.

 

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

Date-21st April 2017 Daily FT

 

Hayleys Plantations shines with 20 awards at Forbes and Walker Tea Awards 2016

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 Sri Lanka’s leading tea producers from the Hayleys Group, Kelani Valley Plantations (KVPL) and Talawakelle Tea Estates PLC (TTEL), recorded resounding victories at the recently-concluded Forbes and Walker Tea Awards 2016.

 

The two companies, which together comprise the plantation arm of the Hayleys Group, secured a total of 20 awards in recognition of their outstanding achievements in securing productivity improvements and increases in sales volumes and prices across 2015 and 2016.

 

“The Hayleys Group through KVPL and TTEL has consistently worked to achieve performance excellence across all aspects of our tea business, and in that regard, we take great pride in the immense recognition that our companies received at the prestigious Forbes and Walker Tea Awards 2017. While the industry as a whole continues to face serious systemic challenges, both KVPL and TTEL have showed tremendous resilience and moving forward, we will continue to adapt our business models, augmenting them with international industry best practices to drive further improvements to the business while setting new benchmarks for the Sri Lankan tea industry,” KVPL and TTEL Managing Director Roshan Rajadurai stated.  

 

TTEL won tremendous recognition for its performances during the past two years being ranked as Best Performing RPC for the Highest GSA High Grown Category, Low Grown Category and Highest Overall GSA for both 2015 and 2016. Meanwhile, the company’s Great Western, Bearwell and Dessford Estates were all ranked among the Top 10 Marks in the Western High Grown Category in addition to winning the award for Most Number of Top Prices in the Western High Grown Category for both years, in addition to further awards for Highest Sales Average for Kiruwanaganga Estate in the RPC Low-Grown category and Deniyaya Estate recorded third Highest Sale Average in the RPC Low Grown Category.

 

Similarly, KVPL estates secured multiple awards for the Highest Agro-climatic Average for Black Tea in both 2015 and 2016, and was also ranked in the top two performers under the Best Performing Regional Plantation Companies (Sales Average) category for low grown in 2015 and high grown in 2016. Meanwhile, the company’s Fordyce estate won recognition for the largest improvement in turnover by elevation while KVPL’s Pedro Estate won the award for Highest Improvement in Sales Average for Black Tea.

 

The accolades won by Hayleys Plantations at the Forbes and Walker Tea Awards 2016 represents the latest in a long series of awards for both KVPL and TTEL. The Group’s plantation arm recently won the Gold Award for Leading HR Practices in Quality Work-Life at the Global HR Excellence Awards 2017, in addition to Gold and Silver Awards at the National Business Excellence Awards, National HR Excellence Award, Asia-Pacific HR Award, JASTECA CSR Award, Green Awards, Occupational Health & Safety, National Social Dialogue & Workplace Corporation Awards. 

 

Additionally, TTEL was declared winner and KVPL runners-up, for both the Best Presented Annual Report Award conducted by CA Sri Lanka, and at the South Asian Federation of Accountants (SAFA) Best Presented Annual Report Awards.

 

Since its entry into the plantation sector following the privatisation of State-owned estates in 1992 up to the present day, Hayleys Plantations sector’s extensive human development programs have resulted in the development and continues improvement in human care, living standards, health and nutrition, employee engagement and empowerment. These programs have been designed with a central focus on empowerment of both employees and the communities they live in. 

 

TTEL was able to maintain the number one tea ranking among all Regional Plantations Companies and KVPL also maintained their position been number one in rubber ranking with the highest recorded yield of 1008 Kg/ha.

 

Hayleys Plantations Sector is comprised of Kelani Valley Plantations (KVPL) and Talawakelle Tea Estates (TTEL). Both companies have consistently been ranked number one among Sri Lanka’s regional plantation companies in rubber and tea respectively. The sector manages 44 tea and rubber estates, with KVPL holding the record for the country’s highest ever yield of 1008 kg per hectare. In total, Hayleys Plantations manages over 19,500 hectares of land and accounts for 4.5% and 2.5% of Sri Lanka’s tea and rubber production respectively. 

Date-21st April 2017 Daily FT 

Mt. Vernon Estates achieves all-time record


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Mt. Vernon estate achieved an all-time record price of Rs. 540 for a BPS grade in the Western High Grown CTC category at the Weekly Tea Auctions held on 15 March. This line of tea was purchased by Vanrees Ceylon Ltd. and was marketed by Forbes & Walker Tea Brokers Ltd. Mt. Vernon estate is situated in Kotagala Agro Climatic Sub-District in the Dimbula Planting district, at an elevation of 1188mts above sea level. This estate is certified under ISO 22000 – Food, Safety & Hygiene Management Standard and produces over a million kgs of high quality CTC teas annually. Mt. Vernon estate is managed by Kotagala Plantations PLC. 

 

Date-17th March 2017 Daily FT 

Nildalukanda Tea Factory sets new record



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 Nildalukanda Factory achieved an all-time record price of Rs. 560 for a BPS grade in the Low Grown CTC category at the weekly Tea Auctions held on 15 March bettering its previous record price of Rs. 530. This line of tea was purchased by Akbar Brothers Ltd. and marketed by Forbes and Walker Tea Brokers Ltd. Nildalukanda Tea Factory is situated in Gampola at an elevation of 470mts above sea level and has an annual production capacity of 1.2 million kgs. This factory comes under the purview of Indika Guruge, Group Manager and is managed by Walters Bay Tea Estates Ltd.

 

Date-17th March 2017 Daily FT

All-time record price for Morawakkorale Tea Factory


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Morawakkorale Tea Factory situated in Kotapola in the Matara District established an all-time record price for a BOP1A grade selling at Rs. 700 per kg at the weekly Tea Auction held on 14 March, surpassing the previous all-time record price of Rs. 680 per kg which was also established by Morawakkorale Tea Factory. This invoice was purchased by Uniworld Teas Ltd. and marketed by Forbes and Walker Tea Brokers Ltd. Morawakkorale Tea Factory is managed by Morawakkorale Tea Producers Co-operative Society Ltd., Kotapola. This factory has been producing good quality Orthodox teas, which have been attracting good prices at the Colombo Tea Auctions. The factory has a base of 5,000 smallholders supplying green leaf directly to the factory.

 

Date- 17th March 2017 Daily FT

Dunsinane, Strathdon and Nildalukanda Estates achieve record prices

 

 

Dunsinane Estate, Punduloya achieved all-time record prices of Rs. 580 for a BP1 grade and Rs. 630 for a PF1 grade in the Western High Grown CTC category at the Weekly Tea Auctions held on 18 January 2017. 

Dunsinane Estate is situated in the Dimbula Planting district at an elevation of 1,400 metres above sea level and is Rainforest Alliance, ISO 22000 – food, safety and hygiene management standard certified. This estate comes under the purview of Asela Udumullage and managed by M/s Elpitiya Plantations PLC and has been producing over a million kg of high quality CTC teas consistently. The above lines were purchased by M/s George Steuat Teas & Marketing Ltd., M/s Regency Teas Ltd. and M/s Akbar Brothers Ltd. respectively and marketed by M/s Forbes & Walker Tea Brokers Ltd. 

Strathdon Estate, Hatton also achieved all-time record prices of Rs. 580 for a BP1 grade and Rs. 560 for a BPS grade in the Western Medium Grown CTC category at the Weekly Tea Auctions held on 18 January 2017. 

Both lines of tea was purchased by M/s Zenra Teas Ltd. and was marketed by M/s Forbes & Walker Tea Brokers Ltd. Strathdon Estate is situated in Hatton/Watawala agro climatic district at an elevation of 1,066 metres above sea level. This estate is certified under Rainforest Alliance and Ethical Tea Partnership. Strathdon Estate comes under the purview of Lalindra Abeywadena and managed by M/s Watawala Plantation PLC. 

Nildalukanda Factory, Gampola achieved an all time record price of Rs. 520 for a BPS grade in the Low grown CTC category at the weekly Tea Auctions held on 18 January 2017 bettering its previous record price of Rs. 510 achieved last week. 

This line of tea was purchased by M/s Expo Tea Ceylon Ltd. and marketed by M/s Forbes and Walker Tea Brokers Ltd. Nildalukanda Tea Factory is situated in Gampola at an elevation of 470 metres above sea level and has an annual production capacity of 1.2 million kg. This factory is ISO 22000 – food, safety and hygiene management standard, HACCP and FSSC 22000 certified and comes under the purview of Group Manager Indika Guruge and is managed by M/s Walters Bay Tea Estates Ltd. 

Cee Tee Hills Tea Factory achieves all time record price

Cee Tee Hills Tea Factory situated in Beralapanatara, Deniyaya, achieved an all-time record price of Rs. 725 for a CTC PD grade at the weekly tea auctions held on 18 January 2017.

This invoice was purchased by Stassen Exports Ltd. and was marketed by Forbes & Walker Tea brokers Ltd., the exclusive broker for Cee Tee Hills Tea Factory. This factory is a GMP, ISO 22000 – Food, Safety and Hygiene Management standard certified facility. Cee Tee Hills Tea Factory is owned and managed by Southern Group of companies and has been at the forefront of manufacturing high quality low Grown CTC teas for almost two decades.


Date : 18 January 2017/ Daily FT

Cee Tee Hills Tea Factory achieves all-time high price


Cee Tee Hills Tea Factory, situated in Beralapanatara, Deniyaya, achieved an all-time record price of Rs. 665 for a CTC PD grade at the weekly tea auctions held on 16 November. 

This invoice was purchased by Stassen Exports Ltd. and was marketed by Forbes & Walker Tea Brokers Ltd, the exclusive broker for Cee Tee Hills Tea Factory. This factory is a GMP, ISO 22000 - Food, Safety and Hygiene Management Standard certified facility. Cee Tee Hills Tea Factory is owned and managed by the Southern Group of Companies and has been at the forefront of manufacturing high-quality low grown CTC teas for almost two decades. 


Daily FT

Published: November 17, 2016

 

Norwood and Bridwell estates achieve all-time record prices for high grown FGS 1 Grade


The Norwood and Bridwell estates situated in the Bogawantalawa region achieved an all-time record price of Rs. 600 for a High Grown FGS1 grade at the weekly tea auctions held on 16 November. 

These invoices were purchased by Unilever Lipton Ceylon Ltd. and marketed by Forbes & Walker Tea Brokers Ltd. These two estates are managed by Bogawantalawa Plantations Plc and are certified under ISO 22000:2005, FLO, ETP and the Rain Forest Alliance.  

Daily FT

Published: November 17, 2016


 

Delmar Estate sets another all-time high price


Delmar Estate Halgranoya achieved yet another record price of Rs. 690 for an OP grade in the Udapussellawa category at the weekly tea auction held on 15 November. 

This line of tea was purchased by Tea Tang Ltd. and marketed by Forbes & Walker Tea Brokers Ltd.

Delmar is an ISO 22000 – Food, Safety and Hygiene Management Standard certified facility situated in the Udapussellawa Planting District. Udapussellawa Plantations Plc is the managing agent for Delmar Estate. 


Daily FT

Published: 17 November 2016

 

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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