Dilmah founder urges setting of Special Tea Authority to revive Ceylon Tea
View(s):The urgent formation of a Special Tea Authority that would take Ceylon Tea to the next level has been proposed by veteran tea producer and trader Merrill J. Fernando. Founder of tea brand ‘Dilmah’, Mr. Fernando – a long-time campaigner for a high-end Ceylon Tea brand – has said that the industry needs to be placed under the full responsibility of this proposed authority. “It will work on a 5-year plan to revive tea, establish a meaningful marketing plan to take Ceylon Tea back to all previously Ceylon Tea dominated nations and take control of all existing institutions geared to the interests of tea (same can be replicated for rubber and coconut industries among others). It would seek approval from government for a 5-year plan and proceed to implement it without fear or favour,” the 86-year-old-still-active Dilmah founder said in the recently released 2015-16 Ceylon Tea Services PLC report.
The company said it would be renamed Dilmah Ceylon Tea Co. PLC. “There should be no government interference, once the 5 year plan is approved. Political favours towards any particular sector should be avoided at all cost,” Mr. Fernando, who has expressed his opposition to large-scale import of teas for blending purposes and in that context a tea hub, said in the report. In terms of its performance, group revenue was down marginally to Rs. 7.3 billion as at end March 2016 from Rs. 7.4 billion. Post-tax profit also fell to Rs.729.9 million from Rs. 884 million earlier. The company which practices a philosophy where ‘business is a matter of human service’ has pumped in large sums of socially beneficial projects. In the year under review it donated Rs.100 million, same as last year, to the MJF Charitable Foundation while other donations totalled Rs.4.1 million against Rs.600,000 in 2013-14.
In his comments, Mr. Fernando said: “The importance of Russia and other CIS countries to Ceylon tea continues, though on reduced volumes of bulk tea and value added exports. This trend is likely to continue. As I pointed out in several of my previous reports, this misfortune is our exporters own creation; developing importers’ own brand names at very cheap price levels which are extremely harmful to long-term interests of our tea industry. “My warnings, sounded year after year, on this pending danger were not heeded by tea interests or by the government. Now, we have begun to pay the penalty for this neglect resulting in far less demand for bulk tea resulting in lower prices and negligible demand for value added tea from the very sources that benefited from our exporters’ generosity towards establishing their own brand names at low cost. “Those brand names now purchase cheaper tea from other sources such as Vietnam, Indonesia, China, causing serious harm to the quality and image of Ceylon tea by supplying under the same brand names and labeling cheap blends as “CEYLON TEA”.
They inflict even greater harm by re-exporting their “CEYLON TEA” to other countries at price levels which are 40 per cent to 50 per cent below the genuine Ceylon Tea exported from Sri Lanka. Such are the rewards reaped by our exporters, who helped build Russian brand names at the expense of our own Ceylon Tea! All exporters, as well as Ceylon tea, are paying the penalty for the folly of a few tea traders. Government and semi government bodies as well as private sector institutions watch helplessly while our most valuable industry is destroyed. “I sincerely hope the new government, we elected last August, will realize the desperate need to salvage Ceylon tea from the deep pit it has been driven into by exploitation, not only by foreign traders but also by our own traders, our own producers and by our own governments too.
State of plantations
Plantations require complete restructuring today following successive governments’ failure to monitor their progress although tools for doing so are in place. As a result, while some regional plantation companies have done well by investing in the development of their properties, others have ruthlessly exploited theirs. Several estates have been leased out at high rates, completely disproportionate to the lease rentals paid to government by RPCs. Lease extensions to RPCs should be reviewed, based on performance and on specific terms and conditions which should be monitored by a very experienced, competent management body formed from the private sector. Tea, today, functions in several sectors – plantations, smallholders, private factory owners, brokers and exporters.
Each one protecting one’s own interests and not the interests and welfare of the tea industry in general. If each sector wakes up or is woken up to the reality and understands the plight of the industry, a new dawn may await Ceylon Tea. With a strong and knowledgeable Tea Authority, it should be possible to develop a common marketing strategy with the likes of India, Indonesia and Kenya with the aim of retaining the ‘wealth’ we export in the form of raw materials to enrich foreign traders within the respective countries themselves. Dilmah undertook this mission 30 years ago and it is now prepared to show the way towards eliminating poverty in our countries by developing value adding industries which will enrich our countries instead of foreign traders.