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The Sundaytimes Sri Lanka

Doubts cast over reaching $5 bln tea export target by 2020

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Doubts were raised by Treasury Secretary Dr P. B. Jayasundera on whether tea production could be increased to reach a target of US$5 billion tea exports by 2020 as earmarked by the Export Development Board (EDB). Speaking at the 118th AGM of the Ceylon Tea Traders Association (CTTA) in Colombo last week, he said the increase would be three fold from the present $1.5 billion to $5 billion by 2020, eight years from now and if at all, the way out is to increase the price of tea by three fold by 2020 from the present price of $4.50 to $15.

Dr Jayasundera suggested that this could only be done by marketing people. He said that several decades ago the world was poor and at that point of time it was not feasible to export branded tea. But he said that now the world is getting richer suggesting that the price of tea could be increased by branding and value addition. Dwelling upon the doubts cast by Jayantha Keragala, Chairman, CTTA of achieving this ambitious target of the EDB as part of the $20 billion export target by 2020, Dr Jayasundera said that Sri Lanka would not have the capacity to increase tea production to that magnitude by volume. He said, “Probably we cannot have that capacity to generate a 3-fold increase in export volume of tea, but if at all you can increase the price.” He said that tea is a rich man’s beverage and thus it should be targeted to that export market. He said that Sri Lanka should consider approaching new rich markets, not only depend on conventional tea markets which are now struggling.

Mr Keragala, in his annual report indicated that ‘Ceylon Tea’ has put this little island on the world map in a distinctive manner. He said the tea industry is presently facing serious constraints. The wages of workers have increased by 27% and the workers resist any links to productivity in the current wage package, while the average yield remained stagnant and continues to be the lowest of all major tea producing countries. He said that there was no inclination of replanting, as economies of scale do not permit them to sustain during the period of gestation as the monthly income would be severely impaired. He raised serious doubts as to how they could achieve the EDB target of $5 billion in 2020 by tea exports indicating ‘it would be extremely remote”.

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