Tea, apparel hope to break COVID-19 barriers
View(s):Sri Lanka’s tea and apparel industry are working out mechanisms on overcoming the effects of the COVID-19 outbreak by breaking barriers to get to markets and suppliers and provision of loans to cushion the industry’s vulnerable sectors.
Ceylon Tea Traders Association Chairman Jayantha Karunaratne said that production had dropped but prices were much higher for low grown teas and since there is a shortage in supply the teas are being picked up at the auctions.
He noted however, that exporters were working around the border closures to get to their key markets like Iraq through Turkey.
Problems persist in the Commonwealth of Independent States countries as the industry is looking at avenues via China through the railway lines to channel Ceylon Tea into these markets. Russia is one of the biggest buyers of Ceylon Tea.
The industry is further hit by the drop in the Ruble due to the drop in oil prices in the world market. “Shipments are held up in the port of Bandar Abbas in Iran as borders of other countries remain closed,” he said.
Commenting on receiving their stocks of packaging material sourced from China, Mr. Karunaratne said that supplies are coming in. Metal caddies use to pack teas come from China and are used for export to some markets.
Production stopped for about two-and-a-half months but now suppliers in China were said to be in correspondence with them and shipments are coming back, he said.
Moreover, over the past few months lesser vessels plying from China had also affected shipments of tea to the West but now some movement is happening, he noted.
In addition Ceylon Tea is taking a further beating as the tea hub of Dubai is refusing to buy large quantities as most markets are closing. Dubai is limiting purchases of new stocks.
The situation in Iran is said to be “bad” as neither shipments of airline movements is happening between Dubai. With no mode of transportation Mr. Karunaratne explained “even sending documents is not possible.”
He noted that production by companies has also dropped and so have their prices due to the poor quality of the leaves. The industry is faced with an overall drop in production due to the drought.
Meanwhile, the apparel industry is likely to be further affected by an anticipated less number of orders as Europe takes a beating from the coronavirus.
Joint Apparel Association Forum General Secretary Tuly Cooray said the SME sector in the apparel industry is the worst affected.
The payment of salaries and bonuses will become a problem and the crisis would be severe due to the New Year holidays in April that would impact on salaries, overtime, attendance bonuses, bonuses and festival advances.
“We requested the government to give a guarantee on a loan to be obtained from the bank to meet the salary related costs for a period of two to three months at a discussion with the relevant authorities this week,” Mr. Cooray explained.
Under the government SME concession package offered this year for companies with a turnover of less than Rs.750 million those companies have been given various moratoriums and reduction of interests among others applicable only in relation to rupee loans. Now under the current crisis, the industry has requested that the government extend this to cover loans obtained in foreign currency.
“At the moment we really don’t know the situation – until the Italian situation gets stabilised we won’t know – restriction on mobility means people are not going to malls,” he said. This would mean less spend on non essentials like garments. “We are expecting for the worst,” Mr. Cooray said.
Large and extra-large cash flow companies are able to withstand the production and continue to be there as COVID-19 is a short term scenario, he explained.
The apparel sector is currently facing the problem of a lack of material from China but with the number of infections slowing down the industry expects all delayed shipments to come in by June or July.
“We will be able to sustain the levels of last year,” Mr. Cooray said adding that they remain hopeful and worried at the same time.
(SD)