Challenges in Lanka's tea industry

by L. S. A. Wedaarachchi

The main challenges faced by Sri Lanka's tea industry are the requirements of the tea importing countries, increase of the cost of production, dependence on subsidies, taxation policies and technology.

Delivering the keynote address at the 113th annual general meeting of the Colombo Tea Traders' Association (CTTA) chairman, Sri Lanka Tea Board Lalith Hettiarachchi said that Sri Lanka has been the world's largest exporter of orthodox tea and Sri Lanka maintains that position even today.

"We are renowned for purity and quality. But purity and quality are relative terms. Consumers are more demanding today. A case in point is the question of residue levels. Countries which have come into the tea trade in recent years which do not use chemicals as much as us may get away from such requirements.

ISO and HACCP certification are now becoming increasingly insisted upon by importing countries. Sooner or later we have to fall in line and the sooner the better, he said.

"The cost of production has been increasing rapidly in recent years. Labour, fuel, electricity, fertiliser, chemical weedicides and pesticides are eating into the profits. But unlike many other products, the selling prices have been around two dollars over the past two decades. To face the cost of production efficiency in all activities in the estate and the factory floor should be improved, he said.

The tea industry is concerned on Taxation policies VAT or GST, Cess and income tax are fiscal measures and are an incentive to the sector.

When the profit is not adequate to be ploughed back to the industry, the money should be obtained from the banks. But the bank interest is prohibitively high and the schemes available do not cater to the needs of the industry. Planners have to be advised on what they should do.

The Treasury will not do the thinking for us. Under the tea sector policy we should get the dollar sales price up to $4 from the present $2 and the value added component from 35% to 65% by reversing the ratio between bulk and value added sales. The tea industry has to give the correct advice and guidelines, he said.

Chairman, CTTA and Director Akbar Brothers Limited Tyeab Akbarally said that 2006-2007 has been the most demanding and challenging year. However, on reflection members of the committee which devoted many hours of their time to the Association's activities derive great satisfaction from the achievements in accelerating many projects which have been long outstanding, he said.

Honorary members' plaques were presented to Abbas Akbarally, Tommy Ellawala, Michael Tissera, Michael de Zoysa, Austin Perera, Piyasiri Ratnayaka, Cedric de Silva, Ken Balendra, Ajit Chitty, Arjuna Dias, Kumar Paul (Snr), Dickie Juriansz and Mahen Dayananda.

The prizes were presented to the winners of the speciality tea of the year competition 2005.

[email protected]