Tea Board targets $2.1 billion export revenue

By Lalin Fernandopule

The Sri Lanka Tea Board targets an export revenue of $ 2.1 b and value-added tea exports to increase from 40 percent to 60 percent under a medium-term plan, Sri Lanka Tea Board, Chairperson Janaki Kuruppu told the Tea Strategy Forum organised by MTI Consultancy, a global consultancy firm, on Wednesday.

Janaki Kuruppu

She said that the tea export income last year was Rs. 160 b, a 9.5 percent increase from 2011 supported by the depreciation of the rupee.

The tea industry should not only take advantage of the weak currency but also strive to boost production and enhance revenue through value-added exports.

Sri Lanka's tea export volumes have been fluctuating since 2002. Sri Lanka was the world's second largest exporter in 2001 but since then we have been overtaken by China and Kenya. Sri Lanka's tea export share dwindled to around 25 percent in 1985 from around 35 percent in 1960.

“The average tea auction prices at the Colombo Tea Auction dropped slightly in 2012 and the FOB price marginally in 2011.

The Colombo Auction gets the highest price in the world. We need to maintain that reputation,” Kuruppu said.Sri Lanka's tea export destinations have declined to a few regions today.

Sri Lanka still exports only around 40 percent of its exports in value-added form. Value-added exports have been stagnant since the mid 1990s.

“If the tea export sector is to be resilient it has to analyse and change its strategies to be competitive in the global market.

The industry has to study emerging global trends,” the Chairperson said.Sri Lankan tea exports face stiff competition from Kenya, Vietnam and China. High prices, low value-added exports and lack of marketing are the some of the main reasons for Sri Lanka losing its market share. Kuruppu said that Sri Lanka's tea industry faces many challenges such as cost of production, adulteration and marketing. The Government's strategy is have more tea smallholders . Sri Lanka should promote the Ceylon Tea brand more aggressively.“We have lost key markets due to high prices, lack of promotion, distribution network, blending and tariffs imposed by certain countries.”

The International Tea Producer Forum comprising leading tea producing countries was formed in Colombo last week and it will help to solve the problems faced by the industry. Tea producing countries face common problems, challenges and objectives.MTI Consultancy, CEO Hilmy Cader said that Sri Lanka is not fully in the tea business. It is a big fish in a small pond. The tea industry follows a ‘keep going’ approach which does not help the industry to grow.

Investments in Research and Development (RandD) should increase. MAS Holdings and Brandix have added significant value and the they develop their products.

“The consumer should be the point of reference. The industry should identify the emerging consumer trends and cater to it. It should ask itself how much investment has it made on the brand ‘Ceylon',” Cader said.He said that the industry should ask where is its consumer. Sri Lanka's share in the UAE had dropped by about 30 percent. Price pressure is pushing out Sri Lankan tea.