Tea auctions this week


By Forbes and Walker Tea Brokers

At the end of the fifth month in 2017 prices at the Colombo tea auction continue to realise record levels in both Rupee and USD terms primarily due to the deficit in availability. Sri Lanka tea production is likely to be further impacted as the country experienced its worst disaster from torrential rain since 2003 last week. 


The worst affected are s the Southern and Sabaragamuwa Provinces. The death toll, from the floods and landslides rose to 194 as of last afternoon with 100 missing and 575,816 people from 149,678 families displaced. Needless to say, the current scenario would adversely impact the tea production particularly in the Low Grown sector.  


This week’s total offerings were 7.5M/kgs of which 1.3M/kgs comprised of Ex-Estate teas. There was good demand for well-made Low Grown/Leafy teas teas whilst the poorer sorts recorded a significant decline. High and Medium Growns small leaf – better teas were often easier following quality whilst it was encouraging to witness strong demand for teas at the lower end of the market.


In the Ex-Estate catalogues quality of teas on offer showed no significant change and consequently a greater weight of offerings comprised of fairly average quality teas. Best western BOP/BOPF declined Rs.20 per kg. In the below best category BOP/BOPF declined Rs.10-20 per kg. Plainer BOP declined Rs.10-20 per kg whilst corresponding BOPF were firm and Rs.10-20 per kg dearer particularly on last week closing levels. 


Nuwara Eliyas witnessed a sharp decline and could be attributed to the overall decline in quality. Uva/Udapussellawa BOP declined Rs.10 per kg and more following quality. Corresponding BOPF, Udapussellawa – firm on last week levels whilst Uva – clean leaf teas were Rs.20 per kg dearer whilst the others were mostly firm. CTC BP1’s were firm and upto Rs.20 per kg dearer. Corresponding PF1s – High Grown – mostly firm on last week closing levels. Medium and Low Growns Rs.10-20 per kg dearer.


Interest from UK and the continent continued to be selective. Japan, Hong Kong and China were less active whilst shippers to CIS were fairly aggressive on a wide cross section of teas.


At this week’s sale Leafy/Tippy catalogues comprised of approximately 3.2M/kgs. There was good demand. In the Leafy catalogues BOP1/OP1s were generally firm to dearer barring a few high priced teas which were irregular following quality. OP/OPAs too were mostly firm with the below best/bottom end teas gaining Rs.10-15 per kg. PEK/PEK1s too followed a similar trend. 


In the Tippy catalogue select best FBOPs were irregular. Others particularly the clean below best teas were fully firm. FF1s too met with good demand and were mostly firm. In the Premium catalogues better teas attracted good demand and were mostly dearer. Others were fully firm. There was good demand from shippers to CIS, Turkey, Dubai, Iraq, Kuwait and Saudi Arabia.


Date - 02nd June 2017, Daily FT


‘Land of the Great Wall’ mesmerised by Ceylon Tea auction system


The ‘cradle of tea civilisation’ is China and nobody in the global tea fraternity disputes this fact. However, what happened a few days ago in Beijing, the ancient ‘Forbidden City’ was truly remarkable. The Sri Lanka tea industry which celebrates its 150 years’ anniversary in 2017 from a small beginning in 1867 through 19 acres for tea plantations in Loolcondera Estate utilising the plants (tea cultivar) brought originally from China, presented it to their ancestors. A ‘Ceylon Tea Week’ full of activities and events was organised in Beijing through a public/private initiative by Sri Lanka Tea Board and Colombo Tea Traders Association. The focal point in Beijing was the Embassy of Sri Lanka while several Chinese organisations under their Ministry of Agriculture, Ministry of Commerce and Ministry of Cooperatives unhesitatingly joined hands to make the historical attempt, truly memorable.


The ‘Ceylon Tea Week’ rallied around a few major projects. The Ceylon Specialty Estate Tea of the Year Competition, Award Ceremony for the Factories which produced the winning teas and a Charity Tea Auctions where five kilos each of the winning teas were sold to the Chinese audience at a hotly contested bidding system. The preliminary rounds of the tea competition were held in Sri Lanka and 98 samples of the best teas under the seven main agro-climatic regions as well as Ceylon Green Teas, CTC Teas and Innovative Teas/Hand Made Teas were taken to china for the final. The grand finale was concluded at the National Agriculture Exhibition Centre in Beijing amid the 9th International Chinese Tea Exhibition. The first charity tea auction took place at the Event Hall of the exhibition location during the following day. An amount of RMB 104,300 was raised at the first ever tea auction Sri Lanka organised for Ceylon Tea in China.  


The second charity tea auction was held during the subsequent day at the Beijing Exhibition Center (Russian Centre). While all the gold winners were auctioned, only a few selected Silver and Bronze winners were identified for sale. An amount of RMB, 41,600 was realised through the second auction. 


The total sum realised from both auctions amounted to RMB 145,900 which is approximately SL Rs. 3.2 million.


‘Shenzhen Shenbao’ a major buyer of Ceylon Teas who continue to patronise the importation of teas from Sri Lanka turned-out to be the highest bidder at the First Charity Tea Auction by securing the Nuwara Eliya Region Gold Award, Lovers Leap Garden Mark FBOP, at a price of RMB 10,000 for the five kilos package (approx. SL Rs. 44,000/kilo). The Pedro Estate under Kelani Valley Plantations own this garden marks. Fuzhou Bailitong was identified as a buyer of the largest number of winning tea lines at the Charity Auction. The Chinese importer was an active participant at the 1st ever Ceylon Tea Auction in China and strongly patronised some of the best teas from Sri Lanka while out bidding others to secure the lots.


The other largest Chinese Tea buyer was recognised at Baijing Chayuan Co. They also injected strong impetus to the Auction by purchasing four of the best lots.


China is the world’s largest producer and consumer of tea and also the second biggest exporter of tea after Kenya. The nation has been also identified as the country with the fastest growth for Ready to Drink (RTD) Teas although USA and Japan are considered as the two largest global customers in this category. From a traditional green tea consuming society for centuries, the elite, the new burgeoning middle class and the younger generation is moving gradually but steadily towards product innovations and novel differentiations even in the tea beverage. 


Thus, imported black tea has been caught in this current. Sri Lanka is ideally placed to take the advantage of this new trend as the globally reputed supplier of quality orthodox black tea. Since 2010 to 2016 period, the growth of Chinese tea exports to the world has been calculated at an annual 1.4%. In direct contrast, the annual increase of foreign tea imports to China during the same period has been registered at 14.3%. This implies that, China is bound to import a larger volume of black tea during the years to come. 


Sri Lanka who exported only just over one million kilos to China in 2010, has supplied 8 million kilos of Ceylon Tea in 2016. Further, Sri Lanka is the leader in the Chinese tea market in respect of the imported tea segment effectively relegating Vietnam and India to the second and third positions. Today, the Sri Lanka’s share in the Chinese tea imports has grown to 38% by end of 2016 and optimism are high for a rapid rise.


Date - 29th May 2017, Daily FT


Delmar does it again


Delmar estate established yet another all-time record price of Rs. 750 for a Pekoe grade at the weekly Tea Auctions held on 23 May in the Uva/Udapussellawa elevational category. This invoice was purchased by Union Commodities Ltd. and marketed by Forbes & Walker Tea Brokers Ltd.


Delmar added another feather in its cap this week as it bettered its previous record price for the Pekoe grade and now achieved all-time record prices for OP, OP1, BOP1 and Pekoe grades in its elevational catergory.


Delmar Estate is situated in Halgranoya, at an elevation of 1524 meters above sea level and is certified under ISO 9001:2008 and 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 - 26th May 2017, Daily FT


Sri Lanka tea features prominently at the United Nations in New York


New York: A spectacular week-long photo exhibition of Ceylon tea, including a tea tasting titled ‘The Story of Ceylon Tea’, is currently on display from 22-26 May at the United Nations in New York, to celebrate 150 years of Ceylon Tea.


The exhibition, featuring banner style story boards narrating the story of Ceylon Tea, photographs that include beautiful B&W prints of a bygone era and large colourful panels detailing the health benefits of tea, is organised by the Permanent Mission of Sri Lanka to the United Nation in New York in collaboration with the Sri Lanka Tea Board.


The featured daily tea tasting from 1.00 p.m.-3.00 p.m. during the week-long exhibition is currently attracting more than 150 guests per day.


Guests queue up to taste different flavoured teas, Sri Lankan tea biscuits including the traditional lemon puff and cheese bits, smell the aroma of Sri Lanka tea samples on display, view the gift teas and exhibits, experience the serenity of Sri Lanka’s cascading tea gardens and learn about tea production from leaf to exhilarating cup. 


Inquiries about how to purchase Ceylon Tea in New York have been mounting at the exhibition with many wanting to purchase the colourful packs on display.


To cater to the demand for Ceylon Tea generated by the current exhibition and popular tea tasting, the mission will prominently participate in another event - the Annual UN International Bazaar which will feature a wide variety of Sri Lankan teas including other Sri Lankan produce and cuisine. This bazaar will also be held at the UN premises on 25 May 2017. 


The International Bazaar, organised annually by the UN Women’s Guild, brings together all missions to share the best of their culture, national cuisine, handmade crafts and traditions. It is aimed to help children all over the world. This year’s proceeds will benefit Syrian refugees.


Tea has been the flavour of the month at the United Nations in New York due to the enthusiastic participation and organisation of events by the Permanent Mission of Sri Lanka to the UN in May. Last week on 18 May the mission actively participated at the Le Salon du Café/Thé - an international tasting adventure, organised by the UN Correspondents Association (UNCA) in collaboration with the Arab Ladies Club at the UN (ALUN).


Sri Lanka, as one of the foremost tea producing countries in the world, was one of about 10 countries featured at the event held on 18 May 2017 at the spacious General Assembly lobby at the UN headquarters in New York. The Sri Lanka Table offered a variety of teas including iced tea with lemon or ginger, which was a huge hit on a hot day. Traditional tea time favorites, coconut rock and milk toffee were also a popular hit with the stream of guests that congregated at the colorful Sri Lanka/Ceylon Tea Table. 


A DJ hired for the occasion played Sri Lanka favourites such as Udarata Kandukara, Ran Kurahan Mala and Sandawathiye.


The month-long celebrations to mark 150 years of the world’s finest teas will culminate with a global tea party to be held in July 2017 in New York and in other cities around the world.


26th May 2017, Daily FT


Chinese Agriculture Deputy Minister visits TRI



Minister of Plantation Industry Navin Dissanayake and Chinese Agriculture Deputy Minister Chen Xiaohua inspected Sri Lanka Tea Research Institute in Talawakele recently, and initiated discussions on increasing exports between the two countries especially ice tea and green tea.  

Date- 19th May 2017, Daily FT


Rain boosts April tea output by 20%

Reuters: Sri Lanka’s tea output rose 20% in April compared to a year earlier after rains ended a six-month drought that had lasted to February, the state-run Tea Board said on Monday. 

Production in the first four months of the year edged up 1.8% compared to the same period last year.

Sri Lanka Tea Board Director-General S.A. Siriwardena said rains were good in March and April, helping lift production.

Sri Lanka faced its worst drought in 40 years in the six months to February, hurting the island nation’s economy. Tea is Sri Lanka’s top agricultural export and a major foreign currency earner.

Siriwardena said he expected 2017 output to be more than 2016’s 292.36 million kg if weather conditions continued to be favourable.

In 2016, agriculture contracted 4.2% from 2015 when it had expanded 4.8%. Agriculture accounts for about 8% of the country’s gross domestic product.

 Sri Lanka’s tea output hit a seven-year low in 2016, falling 11.1% in its third straight year of declining production due to adverse weather. 

Tea export volume dropped to a 14-year low in 2016, broker data showed. Export earnings fell 5.3% to $ 1.26 billion in 2016 from $ 1.33 billion in 2015. Sri Lanka recorded its highest earnings of $ 1.63 billion in 2014.

Russia was the largest importer of Sri Lankan tea in 2016, followed by Iran and Iraq. Turkey dropped to fourth position in 2016 from second in 2015.

Export volumes to other major buyers such as the United Arab Emirates, Libya, Syria and Kuwait fell last year, the broker report said. 


Date- 23rd May 2017, Daily FT


India’s 2016-17 tea exports drop by 4.3% to 223 m kilos

MUMBAI (Reuters) - India’s tea exports in fiscal 2016-17 fell 4.3% from a year ago to 222.93 million kg as Pakistan and Russia trimmed purchases, the state-run Tea Board said in a statement. 

The south Asian country’s export to Pakistan plunged 42.7% to 11.11 million kg in the year ended March 31, while Russia bought 44.17 million kg, down 8.4% from a year ago, it said. 

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-18th May 2017, Daily FT

Delmar achieves yet another record price!



Delmar Estate established yet another all-time record price of Rs. 740 for a BOP1 grade at the weekly tea auctions held on 8 May in the Uva/Udapussellawa elevational category. This invoice was purchased by M/s. Sunshine Tea Ltd. and marketed by M/s., Forbes & Walker Tea Brokers Ltd.


Delmar added another feather in its cap this week as they now hold the distinction of having established all-time record prices for OP, OP1, BOP1 and Pekoe grades in its elevational category.


Delmar Estate is situated in Halgranoya, at an elevation of 1,524 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-15th May 2017, Daily FT

Tea Board Chief on brewing a perfect cuppa!

The tea industry is one of the key pillars of Sri Lanka’s economy. But for some time Sri Lanka’s tea cup has been in a storm and a new recipe for revival and sustenance is imperative at this point of time.


Mirror Business recently sat down with Sri Lanka Tea Board Chairman Rohan Pethiyagoda for a detailed discussion over the current status and way forward for the country’s struggling tea industry, which still earns over a billion dollars in revenue per annum. Following are the excerpts from the interview.


Could you provide a snapshot of the current status of the industry? 


The year I came in, 2015, was probably the worst in the industry’s recent history. The prices were depressed, largely due to political instability and trade or financial sanctions in several of our best markets, including Russia, Iran, Turkey and Iraq. These are powerful markets for Ceylon Tea. The production exceeded the demand and the prices crashed. 


The past year has arguably been the best in recent times but that is no credit to me. We experienced a severe drought and the production fell by about 15 percent. That was enough to send the prices rocketing up by almost 50 percent. A lot of people who made losses in 2015 were finally able to return to profitability.  


At the same time, all is not well. Almost two years ago the government banned glyphosate, the main weedicide used in the tea industry. That was done without any planning or warning. As a result, in many tea-growing regions weed control has gone completely out of control. 


For regional plantations the cost of production is already high, so they can’t afford to hand-weed tea; it is simply too expensive. The worst part of this predicament is that because there is no weedicide legally available, illegal weed-killers are being used, such as those meant for paddy cultivation. 

If traces of them are found in the exported tea, we could face serious difficulties in importing countries. We are monitoring exports very carefully while urging the industry not to resort to such practices. Hopefully the government will reverse its policy on glyphosate; if it does not, we can expect major problems.


There is no scientific evidence from anywhere in the world that glyphosate causes any harm to human health. In most developed countries, this herbicide is considered safe enough to be sold even in garden stores. How come the issue is only for Sri Lanka? The fact is that glyphosate, when correctly used within a scientific weed-control regime, is very safe, especially when compared to the alternatives.


Has the industry collectively expressed its opinions?


The industry has been complaining for quite some time. We need to remember that we are competing with other countries. No other competing countries such as India and Kenya have banned glyphosate. They are thus at a huge advantage. As it is, the cost of plucking a kilo of tea in Kenya is one-third the cost in Sri Lanka. They are simply more efficient. 


The ban on herbicides puts a further disability in the way of our manufactures. How can we compete in the global market? No importing country has raised even slight concerns about glyphosate within legally-established residue limits. 


The tea industry has repeatedly highlighted this issue but has had little success in changing the government’s mind. I hope the government will take serious notice of this crisis and act soon. I think it will eventually, simply because economic forces will compel it to, but by then the damage may be irreversible. Well, they can’t say they haven’t been warned.


What are the other threats the industry faces?


Climate change! It is happening so fast that we simply won’t have time to adjust. The rainfall patterns in the island are changing rapidly and a ‘dry hole’ is developing in the centre of the country, in the heart of the tea-growing region, which used to be the wettest part of the island. No longer. For all practical purposes, even Nuwara Eliya is now in the dry zone: it receives substantially less than 2000 mm of rain annually.


We have no option but to develop new varieties of tea that will be drought resistant. That is a very slow process. We are not talking here specifically about genetically-engineered tea, but varieties developed through conventional selection. That said, we should develop genetic engineering technology, too. All options should be on the table.


Alongside this, the present 50 percent hike in raw material prices is something no exporter could have foreseen. This cannot immediately be passed on to their overseas customers. Even the biggest exporters are getting badly squeezed. And then there is the rising price of finance, with bank interest rates steadily edging upwards.


Moving on to our status in the global front, how well is Sri Lanka performing on that stage?


I worry that, because of the rising cost of production, we’re struggling to maintain the superlative quality that made Ceylon Tea world famous. The solution to this lies in a closer integration of the production and export arms of the industry and especially a move to increase the present 40 percent market share of value-added teas. This is, of course, already a remarkable achievement compared to our competitors, but we’re in a different economic league from our competitors now and have to think in terms of value, not just volume.


Unfortunately for us, our best markets are politically unstable: Russia, Turkey, Iran, Iraq and Syria are all under stress. Selling to them is difficult. It is astonishing that Ceylon Tea still makes it into Iraq despite all the trouble there, even when such countries have economic problems. However, they tend to buy our cheaper teas and when they can’t afford even those, they turn to teas from our competitors. 


This has happened in the past. Egypt and Pakistan were among our best customers but we lost them for the simple reason that they could no longer afford to buy our tea and so turned to Kenya. These unreasonably high prices will damage us in the long term and—I never thought I’d say this but I would actually like to see the market cool down a bit. Our challenge is to improve our productivity. While a Sri Lankan worker plucks 18 kilogrammes of tea a day, Kenyans pluck 55 kilogrammes a day and get paid half as much. We need to realize that we are pricing ourselves out of our own market.


If you were to point out three areas that need urgent attention, what would they be and why? 


The reintroduction of glyphosate would be a good signal since it will reduce the cost of production and also deliver better environment and soil nutrition outcomes by reducing the silt run-off that results from manual weeding. 


Second, the tea industry is heavily over-regulated. There are literally hundreds of circulars, rules, guidelines and regulations that the industry is bound by. Every little aspect is governed by some regulation. That doesn’t allow for a flexible industry. I would like to see a drastic reduction in red tape and give more responsibility to the industry to regulate itself. The industry must decide how it should operate, not the government. All governments are to varying degrees both inefficient and corrupt. We all know that. If the industry regulates itself, I think we will see much better outcomes. But Sri Lankans even in the private sector are suspicious of the private sector: in many ways, we have fallen victim to the Marxist rhetoric of the 1960s, which touted the government as the only honest broker for the popular interest. 


Thirdly, I would like to see a single IT system that monitors and auto-regulates the whole of the industry’s value chain, from the tea bush to the ship. This is the only way you can cut down excessive regulation. We should get to the point where we can use technology to audit the value chain in real time. 


There has been an ongoing issue on refuse tea. What measures have been taken to nip the problem?


A small proportion produced by every factory, 6 to 10 percent, is considered to have too much crude fibre to comply with the ISO3720 export standard. There are a few unscrupulous exporters who buy such teas from middlemen and mix them illegally in their blends. Refuse tea used to be sold at factories at around Rs.40 per kilogramme. By the time it reaches Colombo, the price approaches Rs.200 since a lot of people have to be looked after along the way. That’s why the STF has been to such pains to curb this illegal practice. It’s a bit like the ‘kassipu’ industry. 

Sri Lanka produces 25 to 30 million kilogrammes of such tea a year. So we decided to try an innovation. We told the refuse tea operators in Gampola that if they build processing centres to extract the good tea from it, we would allow this to be legally sold through the Colombo auction. We registered the first six centres that achieved 80 percent in the good manufacturing practices (GMP) scale. 


We licensed them to sell the reprocessed tea at the auction. By this means, those who were operating in the black economy came into the white economy. The processed tea they were illegally selling for Rs.200 now fetches more than Rs.500 at the auction. Now dozens more want to join the legal framework. We might not approve all but would encourage them to form cooperatives. This type of innovation is important. I am not saying it is perfect. There are issues and some are trying to exploit the system. If the initiative does not succeed, we will shut it down.


Ceylon Tea is considered premium in most part of the world due to its quality. However, a section of the industry players have alleged there is a drop in the same due to lack of focus on quality control.


Could you shed light on the efforts taken to ensure quality?  


This is a huge challenge. We produce about 300 million kilogrammes of tea a year. Kenya generates about 30 percent more than us. Yet, they have only some 110 factories whereas we have 715. They produce 30 percent more tea with one-seventh the factories. Almost 70 percent of Sri Lanka’s tea comes from smallholders and given the large number of factories, there is strong competition for the available leaf. When prices are good, like this year, there is huge demand to set up new factories and when times are bad they come to the government for handouts.


I would like to see maybe 150 fewer factories than we have today. My view is that the next time they are under stress the weaker factories should not be given subsidies but allowed to go out of business. Creative destruction is an important part of a successful economy. For the good to succeed, the bad must be allowed to fail. 


The same principle applies also to the regional plantation companies (RPCs). By continually forgiving their debts and defaults the government is not doing the country a favour. So, if 100 factories shut shop, I won’t be shedding any tears. The industry will be the better for it. The quality must be underpinned by market demand, not regulations.


Cost of labour is quite significant in the industry and the extension of the minimum wage bill was more of a patch-up to buy more time. Any long-term win-win solution being thought out?


The cost of living goes up as a result of several factors, including inflation, currency depreciation and, of course, economic growth. Sri Lanka is subject to all these forces and, of course, labour will demand ever higher wages. There is nothing wrong with this. However, unless wage increases are tied to productivity increases, no business model can succeed.


Up to now it has been the government that has been the middle-man in wage negotiations. That is very dangerous because it interferes with the employer-employee collective bargaining process. Also, the governments are by definition political and tend to look at wage increases as vote-winning handouts. The unions need to realize that productivity is the key to sustainable growth. We need to allow a free dialogue between the unions and RPCs. Unfortunately, I don’t think any Sri Lankan government will let that happen; the temptation to pander to unions, which are themselves politicized, is too high.


The truth is our plantation workers are not paid enough. Let’s face it; Rs.700 or Rs.800 a day is not enough to live on. Our cost of living is very high. Yet, Ceylon Tea is expensive to produce for a reason. Our per capita GDP is about US $ 4000 a year. That of India, our nearest competitor, is US $ 1800, less than half ours, whereas Kenya’s is just US $ 1400. So our tea is expensive and will become more expensive still. We must remember that as our cost of living goes up, our earnings expectations too will go up and we will have to meet that demand. Up to now the message to the industry has been ‘produce more tea!’ But my message to the industry is, ‘produce better tea!’ Factories and plantations 

that cannot do that should look at doing something else.


You must realize that tea plantation workers too have aspirations. Even today, 70 years after independence, plantation workers remain to be fully invested in the mainstream of Sri Lankan society. They are ‘given’ housing and social services but do they own any land? No. Are they part of a revenue-sharing model? No. The most fundamental thing a person wants his child to have is a piece of land. But plantation workers are perpetual tenants. There is simply no land to buy in the plantation areas. No government or union will address this. The unions won’t do it because the moment a worker owns a piece of land she will cease to be a union member. The fundamental issue is land. This is a politically toxic subject but it must be faced. And we need to come to grips with the fact that land reform in Sri Lanka was a farce that hugely hurt the plantation economy with no compensatory social dividend. The state is hogging all the land. My view is that land should be the property of the people, not the state.


It’s no doubt the industry is facing challenges from all sides. If this situation continues to persist do you opine the industry would diminish?


In a sense, I hope it will diminish! I would like to see a cleaner, smaller, higher-value tea industry, like Japan’s. We should not emphasize volume over value. We should be producing the world’s best tea and selling it at the highest price. The bottom end of the producers should be allowed to drift out. 


Sri Lanka is never going to succeed by producing cheap tea and competing with countries that can do it at half the cost. Our cost of production is too high for that. We need to look at US $ 5 as a minimum price per kilo at the auction. We need to strengthen value-added exporters and not strangle them with red tape and taxes. And we need to look at tea as part of our national value chain, not in rupees but in social dividend. 


Why is branding Ceylon Tea on a global scale a hassle? There are the funds, commitment of the industry, but still for all a five-year delay.


I am very frustrated by this. The government’s tender process for intangible services such as advertising is very cumbersome and inefficient. When you are buying such a service how do you demonstrate objectivity?


Appreciation of an advertisement is subjective. This is something the government is not well equipped to do as they are averse to risk. When you do take a risk and something goes wrong, as in the oil hedging deal, the public has no mercy. So the mantra is to avoid risk.


So what do you suggest be done?


We need to think carefully whether the government should do this at all. This is the stakeholders’ money, not the government money. The basic problem is having to go through these rigorous procedures. Even I am cautious since I am accountable. The best way is perhaps to have the industry collect the money through one of their institutions, such as the Tea Traders’ Association (TEA), and then conduct the campaign through an international media firm. 


But that would mean the government handing over much of its control to a private-sector stakeholder and the governments hate to give up control of billions of rupees! For the moment, we don’t have a choice but to go with the system: once the money comes to the government there is no provision to give it away.


How are the industry stakeholders reacting to this? The fund is built by them by way of a levy.


They are very frustrated. So am I. They have been putting pressure on me to stop collecting the money and frankly, I think they have a good case. I am willing to have that discussion with them. The decision is not mine alone to make but I am sure the minister too will be open to discussing this openly and finding a solution that would work best for all. But I do admit that there is a lot of justifiable irritation in the industry about the money not being spent. 


Is the Tea Board supported well enough by the Plantations Ministry? I ask this because with the earlier leadership there were hiccups and delays in implementing strategies and they were partly attributed to that.


The ministry is responsible for financial and administrative oversight and I am okay with that. The minister directs policy and that is how it should be too. Things go wrong when these roles are switched. For example, if a minister directs finance or administration, you have a disaster. But I think that we have the right balance. Of course there are tensions to deal with, but these result more from style than substance.


In many cases this is because I see myself as a servant of the industry and not as a servant of the government. But we always seem to find a constructive way forward. The more important thing is that the industry’s voice gets heard, both at the Tea Board and the ministry. 


I think anyone in the industry will confirm that they have an unprecedented level of access both to me and the minister and everything is open for discussion and debate. My mobile number is openly available and I take every call and return every missed call within the day. All my commuting time is spent on the phone. The answer may be ‘No’, but everyone is heard. And that’s how it should be.


Venturing into new markets has been on the cards for quite a few years, given the volatile situation in the Middle East. How successful such efforts have been? 


Most certainly. Both China and the US are going well. China has been growing by 20 percent to 30 percent a year for the past several years. Similarly, the US too is performing well. There are lots of innovative Sri Lankan companies operating there. Ceylon Tea has made huge inroads in hotspots such as California and New York and even into multinationals such as Coca Cola. 


What are the targets set for the industry in terms of export earnings?


At the moment we are looking at US $ 1.3 billion a year. I have seen a target of US $ 5 billion by 2020 being mentioned but that was contingent on the free import of foreign teas for blending and re-export. That did not happen and the exporters are constrained to buying only Ceylon Tea at the auction. I think even US $ 2 billion is ambitious at present. Such targets need to be based on fact, not wishful thinking.


Our challenge is to establish a premium. Yes, high-end Ceylon Tea is streets ahead but we are still producing 40-50 percent of our tea that is substandard compared with the rest of the world. Our challenge should be to deliver better quality and add value, rather than hoping that somehow the world market will pay a higher price. 


Any other areas that require emphasis?


I am disappointed that we have still not been able to give a legal meaning to the word ‘Ceylon’, which is such a great brand not just for tea but also for the country itself. How much Coke would be drunk if ‘Coca Cola’ changed its name to ‘Another Fizz? Brands must never be discarded: they must be built on. 


Just look at Singapore and the Raffles brand. Buyers may not know what Ceylon was, just as they do not know who Raffles was, but they associate good things with it. But without a legal recognition for ‘Ceylon’ we cannot stop others from using it in their branding, since legally the name doesn’t belong to us. 

Date-04th May 2017, Mirror Business

Adisham Estate brews all time high price


Dickoya Estate which markets its produce under the ‘Adisham’ selling mark achieved an all-time record price of Rs. 715 for a FNGS1 grade in the Western High Grown category at the weekly tea auctions held on 2 May. This line of tea was purchased by M/s Vivo Tea Company Ceylon Ltd., and was marketed by M/s., Forbes & Walker Tea Brokers Ltd. Dickoya Estate is situated in the Hatton Dickoya region at an elevation of 1292mts above mean sea level. Interestingly Sir Thomas Lister Villiars who bought over Dickoya Estate in 1900 changed the selling mark to Adisham since he was born in a town by the name of Adisham in the English county of Kent. 


This estate produces thick coloury teas throughout the year and is ranked number one in the Hatton/Dickoya agro climatic region. Currently Adisham is a Rainforest Alliance and fair-trade organisation Cartified facility. This estate is managed by Mihiraj Samaraweera and comes under the purview of Watawala Plantations PLC. 

Date-08th May 2017, Daily FT


Ministry of Plantation Industries takes on TEA


The Ministry is of the view that certain aspects and facts have been left out so that a more complete and holistic view of the industry was not given and the TEA media release gives a totally negative view of the tea industry which is incorrect.


The broad categories of TEA’s concern are:


1.Falling tea production


2.Liberalising tea imports 


3.Delay in launching the global campaign and 6


4.Tax issues concerning the exporters 


We would like to take these issues up individually.



The falling tea production has been a case of concern for everybody. In 2014 the highest tea production was reached at 340 m MT and since then 320 m MT and 292 m MT was recorded in 2015 and 2016. The reasons for this are several. Incre

mental weather patterns, the weedicide issue and falling tea prices are the main reasons. While TEA gives the low figures for January and February this year it conveniently omits the fact that in March tea production came to normalcy as 26 m MT was produced as the drought conditions were reversed. 


To state that tea production has drastically come down is not correct as tea production is continuing in a stable manner. When the current minister took office tea prices were at an absolute rock bottom with a price range of Rs. 400-450 and there was much protest, agitations and threat of social unrest if subsidies were not increased. However today the prices have 

increased between Rs. 550-600 and a large sector of the tea industry is satisfied with the current situation. 


The Government has despite financial problems maintained the fertiliser subsidy allocating Rs. 1,500 million for years

 2016 and 2017 separately giving weight and importance to the small tea producer. The minister has also ensured a more transparent and democratic process in the tea board where all stakeholder ideas and inputs can be expressed and if consensus is obtained to make it into policy.


The ministry and its officials together with the minister and the chairman tea board are fully aware of the arguments for and against the importation of teas to Sri Lanka. While appreciating the arguments stated in the TEA statement producers are highly concerned that importation of teas even under strict conditions will impact the price of Sri Lankan teas and this will have a severe impact on the current financial models in place and a collapse of the prices will lead to a severe social c

haos especially among the small holders. 


It is too much of a risk to take as one erroneous policy decision can severely hamper the industry for years to come. A majority of the stakeholders are against the idea of importing tea. The ministry has asked TEA to come with a viable and practical model to be implemented even on ‘pilot project’ basis but TEA has not done so. As TEA is promoting the importation of teas isn’t it the duty and function of TEA to involve the other stakeholders in a more meaningful dialo

gue and obtain their consensus for their idea?


TEA has also raised the issue of the global tea campaign to be launched by the ‘export levy’ on tea exports that is in


place. The ministry sincerely thanks all the exporters who contributed to the export levy that has now accumulated to approximately $ 50 million. The current minister and the chairman tea board went out of their way to ensure these funds remain in the tea board as they realise the value and the need of a well targeted global campaign for Ceylon Tea. “Unfortunately Government regulations and procedures have meant some unwanted delays have arisen. The ministry also wants to absolutely ensure that the content is well targeted and has some real returns for the brand ‘Ceylon Tea’. It will be a pity if $ 50 m is just

 spent for the sake of spending it. Therefore the ministry is confident that this campaign will kick off in the next three-four months. TEA is fully aware of all these developments yet it repeatedly keeps coming in their media releases.


Tax issues concerning the TEA have been fully looked into. The minister and the chairman tea board have 

met representatives of TEA on numerous occasions to sort out their issues. The minister submitted a cabinet paper on the SVAT issue and it was decided by the Economic Sub Committee chaired by the prime minister to suspend the proposed new structure.


Under the current administration a large amount of funds and development work are envisaged to the tea sector. Among them are:


a) Strengthening of the plantation management monitoring unit, already underway


b) Development of the small holder sector under funding from FAO, a $ 65 million project already underway


c) A project to modernise tea factories under funding from JBIC, negotiations progressing well, and


d) A World Bank project to improve and modernise the regional plantation companies, negotiations almost complete


Hence these funds will be the largest amount of funds received by the tea industry at particular moment of time.


The ministry and the tea board have repeatedly asked for more unity among the stakeholders so that a single master plan taking account of the interest of all stakeholders together could be implemented. We urge that this happens. It will be more helpful to the industry than individual stakeholder organisations issuing media releases that portray a negative image about the Sri Lankan tea industry.


Date-04th May 2017, Daily FT



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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