Business Times

Plantations Minister targets trade barriers against Ceylon Tea

By Dilshani Samaraweera

The new Minister of Plantation Industries says he will target trade barriers against Ceylon Tea, to grow Sri Lanka’s tea exports.“We will be looking at tariff and non-tariff barriers affecting tea exports and we will try to negotiate a way out. I will use whatever international clout I have developed over my years of international work for this purpose,” said the newly appointed Minister of Plantation Industries, Mahinda Samarasinghe, speaking at the Colombo Tea Traders Association Annual General Meeting, last Friday.

Tea is Sri Lanka’s biggest cash crop bringing in export earnings of over US $ 1 billion annually, but export growth is slowed down by trade barriers and domestic conditions. At this point, the industry is also worried about losing market share in Russia, Sri Lanka’s single biggest tea buyer. Traders say Russia is reducing value added tea imports to build up its own industry. So the local tea industry is urgently looking for new export markets.

“With Russia looking at reducing its value added imports, in an endeavour to strengthen their domestic industry in this sphere, it is imperative that we identify and penetrate new markets with Sri Lankan owned brands, to ensure that our volumes of value added exports is at least maintained, and the value of our exorts does not record a decline,” said the Chairman of the Colombo Tea Traders Association, Avindra de Silva.

Given these market developments, the national authorities are looking at tapping alternative export markets. However, the focus is on upping production of value added teas, instead of low-value bulk tea exports. The Minister said he is willing to talk to the private sector about incentives to encourage output of value added teas.

“The time has come to increase exports of value added teas. Our policy is to find markets in value added form and I am willing to discuss industry incentives to do so,” said the Minister. In the short term, attention will be on increasing tea output and quality, by focusing on replanting, infilling, factory modifications and post-harvest quality improvements. As part of the overall tea sector spring cleaning, stakeholders have also been told to re-examine the laws relevant to the industry.

“We are looking at various legislative amendments so that the laws in the sector will be in line with our objectives,” said Minister Samarasinghe. The tea authorities are also looking at brand building, to develop international markets for Ceylon Tea, and called on private sector cooperation to maintain the Ceylon Tea image.

“One reason our tea lost out on international markets, is because of the export of substandard tea. This situation must be rectified without delay to regain lost ground. The tea traders and the Tea Board must work together to safeguard the good name of Ceylon Tea,” said the Minister.

However, tea traders noted that the trend of mushrooming tea factories is pushing down the quality of Sri Lankan tea. The increasing number of tea factories has increased the demand for green leaf from small holders, as many of these new factories do not grow their own tea. To meet the demand, the supply of poor quality leaf is increasing. This, in turn, is lowering the quality of Sri Lankan tea.

“There are over 700 tea factories presently in operation, of which a very large number fall into this category ( of not growing their own tea),” said Mr de Silva. These new tea factories are seen as going against a policy decision by the tea sector.

“Despite a decision by the Sri Lanka Tea Board to suspend approval for the construction of new factories, and a notification to this effect published in the print media, it appears there have been instances of such factories being registered, mainly on account of external pressure,” said Mr de Silva..
Tea traders say new factories should not be given approval to operate unless each factory has a minimum cultivated tea extent of 50 hectares.

The private sector is also saying part of the tea cess collection must be made available for international marketing and promotional activities. Tea traders say promotional activities by individual companies are just not big enough to make an impact in te international market.

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