The Sundaytimes Sri Lanka » Business Times http://www.sundaytimes.lk Official website of the Sunday Times Newspaper in Sri Lanka Sat, 23 Jun 2012 22:01:47 +0000 en hourly 1 http://wordpress.org/?v=3.3.2 Strengthening the hand of minority shareholders http://www.sundaytimes.lk/120624/business-times/strengthening-the-hand-of-minority-shareholders-3869.html http://www.sundaytimes.lk/120624/business-times/strengthening-the-hand-of-minority-shareholders-3869.html#comments Sat, 23 Jun 2012 09:09:47 +0000 ramesh http://192.168.210.154/sundaytimes/?p=3869 A shareholder raises an issue at a preliminary meeting held in Colombo on Wednesday to discuss the formation of an association to protect minority shareholders in the stock market. The well-attended meeting, which included representatives of the Securities and Exchange Commission, was facilitated by the Business Times. (See editorial and inside for more details). Pic by Amila Praboda

]]> http://www.sundaytimes.lk/120624/business-times/strengthening-the-hand-of-minority-shareholders-3869.html/feed 0 CB-appointed external auditors for finance, leasing companies http://www.sundaytimes.lk/120624/business-times/cb-appointed-external-auditors-for-finance-leasing-companies-3867.html http://www.sundaytimes.lk/120624/business-times/cb-appointed-external-auditors-for-finance-leasing-companies-3867.html#comments Sat, 23 Jun 2012 09:07:59 +0000 ramesh http://192.168.210.154/sundaytimes/?p=3867 Finance and leasing companies (non-banking financial institutions –NBFIs) will henceforth be compelled to use external auditors hand-picked by the Central Bank (CB), official sources said.These companies will not be permitted to select their own external auditors.
The move comes after the monetary regulator began cracking the whip over weak corporate governance in a majority of finance and leasing companies.

This is a step forward from the CB panel of 8-10 external auditors for the banking sector, which has been in existence over the years.
Under the move which should also ‘interest’ the Securities and Exchange Commission (SEC) in assigning independent auditors to listed companies, the CB wants to ensure clarity in financial reporting in the interest of wider financial system stability.

Ironically, the move has been welcomed by most finance companies. Chairman of the Finance Houses Association of Sri Lanka Kamal J. Yatawara, who is also the Director/CEO of The Finance Company told the Business Times that an external auditor must have independence when reviewing a company’s financial statements and the auditor cannot have any close ties with the company. He stressed the need of monitoring the viability of these institutions, although their asset base accounts for just 4.8% of total financial sector assets.

In newspaper advertisements this week, the CB called for expressions of interest from audit firms. They would be selected to the panel of qualified external auditors for the 57 NBFIs which include 43 finance companies and 14 leasing companies and examine the financial performance of these companies and its compliance with the law, a senior CB official told the Business Times.

Another objective is to direct these financial institutions to practise better auditing and accounting standards and follow rules and regulations set out by the regulator.The CB official said auditors of some companies were used to cook up figures to hide the true financial position thereby misleading the directors, a frequent complaint by minority shareholders in other listed companies.
This was one of the reasons for the collapse of some finance companies in the recent past, he revealed.

Shirley Perera, a former Association Chairman and Deputy Chairman Central Investments and Finance Ltd said that auditors of some finance and leasing companies were not fit to be auditors.These companies employed small audit firms without experience, facilities and adequate staff and they lacked the capacity to handle vast volume of accounts and financial transactions, he said.

The CB move, he added, would help review and verify the company’s financial statements to form an opinion about the company’s financial statements. He noted that the change of external auditors doesn’t happen regularly in finance and leasing companies.
The Monetary Board’s decision to appoint external auditors for finance and leasing companies is very prudent, he said. Managing Director, Abans Finance and another former Association chairman, Kithsiri Wanigasekera said the practice of deploying ill-reputed external auditors by some finance companies will have to stop with the CB initiative. Under the Finance and Banking Act auditors should be rotated every five years but this practice is not followed at present, he said.

Director CEO of Asia Asset Finance Ltd Rajiv Gunawardena said that the finance companies will able to maintain a better uniformity and high accounting standards under the new scheme. This is a welcome move towards implementing International Financial Reporting Standards (IFRS), he said. Given the responsibility of finance and leasing companies, it is important to ensure that the company can function as a going concern and, re-pay the depositors’ funds as and when needed.

The auditors’ opinion lends credibility to the financial statements and promotes confidence in the system, he said.

]]> http://www.sundaytimes.lk/120624/business-times/cb-appointed-external-auditors-for-finance-leasing-companies-3867.html/feed 0 Kalpitiya lands on 99-year lease http://www.sundaytimes.lk/120624/business-times/kalpitiya-lands-on-99-year-lease-3865.html http://www.sundaytimes.lk/120624/business-times/kalpitiya-lands-on-99-year-lease-3865.html#comments Sat, 23 Jun 2012 09:05:41 +0000 ramesh http://192.168.210.154/sundaytimes/?p=3865 The government is planning to provide a 99-year lease for land to investors at the Kalpitiya Integrated Tourism Resort Project (KITRP) instead of the earlier 30-year lease and Cabinet approval to this effect will be sought soon, informed sources said.

They said the tender board for this project last year recommended that the Expressions of Interests (EOIs) that were called in 2010 to develop this zone be cancelled, while direct negotiations with the Treasury by interested parties were encouraged by Treasury officials. However with the change of plan KITRP is yet to get any investors.

When the Business Times asked a government official why the Procurement Committee (tender board) didn’t recommend any of the six parties that were shortlisted by the initial proposal evaluator of this project, the Technical Evaluation Committee (TEC), he said, “We are not here to accept everything that TEC recommends – this is why the tender board is there.”

He reiterated that they weren’t ‘serious’ investors. “What they want to do is reserve these lands and then look for investors. That’s why we say that they are not ‘real investors,” he added. One of the applicants of this project told the Business Times that they are scouting opportunities in Cambodia and other South East Asian countries and have given up on Sri Lanka, due to the delays.

Those who submitted proposals to put up tourist resorts, golf courses, marinas, etc at Kalpitiya were Senok Group, Evergreen Hotels, Jetwing Group, Mackwoods Travels, Pathfinder, Sapphire Bay Resorts, Abans, Sun Marina, Ambika Windmills, Upali Travels, Makara and Integrated Resorts.

]]> http://www.sundaytimes.lk/120624/business-times/kalpitiya-lands-on-99-year-lease-3865.html/feed 0 World Bank tourism project kick-starts http://www.sundaytimes.lk/120624/business-times/world-bank-tourism-project-kick-starts-3863.html http://www.sundaytimes.lk/120624/business-times/world-bank-tourism-project-kick-starts-3863.html#comments Sat, 23 Jun 2012 09:05:05 +0000 ramesh http://192.168.210.154/sundaytimes/?p=3863 The government on Monday gave the nod to immediately start the long delayed project on Sustainable Tourism Development backed by a World Bank loan of US$18 million, an official said.Following an emergency meeting convened by Economic Development Ministry Secretary Dr. P.B. Jayasundera on Monday, plans were called for the immediate implementation of the project, a ministry official told the Business Times on Friday.

On Wednesday, the government held a technical discussion in a bid to work out plans for the immediate implementation of the project.
The World Bank project has been delayed for nearly 18 months since it signed the Financing Agreement with the Ministry in 2010.
The project would be implemented through the Sri Lanka Tourism Development Authority (SLTDA) and monitored by the Economic Development Ministry, the official explained.

The project would provide technical assistance to institutions within Sri Lanka Tourism to improve its efficiency; improving tourism related infrastructure in the East; and providing grants for SME firms in tourism or suppliers for tourism firms, the World Bank website stated.

At present, the official observed that they were in the process of issuing the implementation strategy report. The World Bank last week stated they were finalizing the project with Sri Lanka Tourism.Sources told the Business Times that World Bank authorities had been aware through ministry officials that relevant authorities were previously not interested in this project.

]]> http://www.sundaytimes.lk/120624/business-times/world-bank-tourism-project-kick-starts-3863.html/feed 0 SEC seeks info from Deputy Speaker on stock market deals http://www.sundaytimes.lk/120624/business-times/sec-seeks-info-from-deputy-speaker-on-stock-market-deals-3861.html http://www.sundaytimes.lk/120624/business-times/sec-seeks-info-from-deputy-speaker-on-stock-market-deals-3861.html#comments Sat, 23 Jun 2012 09:04:18 +0000 ramesh http://192.168.210.154/sundaytimes/?p=3861 The Securities and Exchange Commission (SEC), continuing its longtime probe into manipulation and insider trading, took a new turn when it sought information from parliamentarian and Deputy Speaker Chandima Weerakkody, sources say.

“We have written to a politician and asked him certain things pertaining to an ongoing investigation in order to obtain different views from various people,” a SEC source told the Business Times, adding that the politician won’t be summoned to the SEC. He added that these views are sought from certain investors in a bid to ascertain specific information relating to patterns of trading.

“I heard this first from the media. When I checked, I saw a letter from the SEC and they wanted to know the beneficiary of my investment, who my stockbrokers are, etc,” Chandima Weerakkody, Deputy Speaker told the Business Times. He added that SEC is ascertaining some transactions pertaining to certain shares.

The SEC source said that this isn’t the first time a politician was asked for information. “Two politicians were sent letters sometime ago relating to a different case,” he said.� Meanwhile SEC Chairman Tilak Karunaratne, Treasury Secretary Dr. P.B. Jayasundera, Central Bank Governor Nivard Cabraal and former Attorney General Mohan Peiris met the President two weeks ago and had a ‘friendly chat’ on the economy.� “He was concerned about the small investors,” he said. He added that the President wanted to meet this team again on his return from Brazil.

Last year, a total of 20 cases of suspected market malpractices which included two insider dealing, two front running, one circular trading and 15 price manipulations were referred by the Colombo Stock Exchange (CSE) to the SEC for further investigations and necessary action. The SEC source said that selected cases are now being pursued.

]]> http://www.sundaytimes.lk/120624/business-times/sec-seeks-info-from-deputy-speaker-on-stock-market-deals-3861.html/feed 0 Delay in Mattala Airport opening http://www.sundaytimes.lk/120624/business-times/delay-in-mattala-airport-opening-3859.html http://www.sundaytimes.lk/120624/business-times/delay-in-mattala-airport-opening-3859.html#comments Sat, 23 Jun 2012 09:03:32 +0000 ramesh http://192.168.210.154/sundaytimes/?p=3859 Sri Lanka’s second international airport at Mattala in Hambantota is likely to delay its opening until a new date is fixed, an official said.
“We might push it to this year or next year in December or January (2013),” Airport and Aviation Services Ltd (AASL)� Chairman Prasanna Wickramasooriya told the Business Times on Wednesday.

Authorities had previously indicated that the opening of the new airport was scheduled for November this year.
While construction of stage one is expected to conclude by the end of this year, he said no opening date was finalized yet.
On the other hand the contract for the construction work on the first stage of the project is scheduled for completion in the first quarter of 2013, he said.

In this respect, Mr. Wickramasooriya observed that the airport would be ready by January, and trials would also be carried out.
“The President wants us to complete the work properly,” and so they are not in a hurry, the AASL Chairman pointed out.
Responding to queries of international airlines flying into Mattala, the airport’s chief said three airlines have agreed to fly into the new airport upon its opening apart – national carrier SriLankan Airlines and budget carrier Mihin Lanka. But he declinedto give out any names at this stage. However recent reports said budget carrier Flydubai has also agreed to use the airport.

He said Emirates Airlines had also expressed interest as “they have identified the potential there.” This came following their recent meeting at the opening of the new Emirates lounge at the Bandaranaike International Airport (BIA).

Ground handling, landing and parking fees would initially be provided via an attractive package for a period of six months, he said.
Authorities increased the workforce at the Mattala airport project last year in a bid to speed up work from 1200 to 1500 with most picked from the locality. Installations of escalators and lifts have already been carried out at the new airport that would be subjected to tests, Airport and Aviation Services Senior Civil Engineer Mr. Lalith Warusavitharana told the Business Times.

]]> http://www.sundaytimes.lk/120624/business-times/delay-in-mattala-airport-opening-3859.html/feed 0 Rush Hour AGMs and credibility of audits http://www.sundaytimes.lk/120624/business-times/rush-hour-agms-and-credibility-of-audits-3855.html http://www.sundaytimes.lk/120624/business-times/rush-hour-agms-and-credibility-of-audits-3855.html#comments Sat, 23 Jun 2012 08:07:16 +0000 ramesh http://192.168.210.154/sundaytimes/?p=3855 Our lead story (on the previous page) refers to new rules governing the use of external auditors for non-banking financial institutions (finance and leasing companies). The Central Bank (CB) is setting up a panel of auditors, guided by CB rules, from which these institutions must pick a company for their external audit. Gone will be the days when auditors were chosen by the directors themselves, some of whom were inexperienced and often at the bidding of the top management – a case in point being Golden Key and other related companies that collapsed.

The CB move is laudable coming on the back of existing regulations where banks use external auditors from a CB panel of 8-10 auditors, and would ensure proper governance and transparency in the accounts for the benefit of all stakeholders including depositors.
Officials from finance companies have welcomed the move but unofficially there must a lot of squirming amongst directors and top management who often ‘guide’ external auditors to suit their own purpose, and to the detriment of depositors. The whole Golden Key/Sakvithi/Ceylinco saga is well known and essentially was a case of doctored accounts.

External auditors are an issue in many listed companies too. Minority shareholders have raised concerns about external auditors, chosen by the board of directors and often do as they are told. Maybe the Securities and Exchange Commission (SEC) should consider following the CB practice which could ensure properly audited accounts and also alleviate, to some extent, the concerns of all shareholders.

The appointment of independent directors is another sore point, another issue raised repeatedly by shareholders because these individuals are appointed by the companies themselves and are (well) paid. How independent are they — given that they are known or friendly with others on the board and get a ‘fat’ paycheck for their services — remains to be seen.

While it would be a cumbersome process for the SEC to be involved in the selection of independent directors, maybe the guidelines for such appointments need to be strengthened to ensure they maintain a strong degree of independence and protect the rights of all shareholders, not just a few.

In the meantime, the proposed formation of an association to represent minority shareholders facilitated by the Business Times (BT) drew a tremendous response. Investors came from far and wide keen to express their views and concerns and be part of such a grouping.Many of the issues they raised have been in the public domain for many years without sufficient redress.

One big problem is the rush to hold annual general meetings (AGMs) at the same time. For example this week (June 25-29), at least 60 AGMs were held with Friday alone having 27 meetings and 14 meetings on Thursday.As stated at the BT-facilitated forum on Wednesday (details of the meeting are reported elsewhere in this section), shareholders say they have brought this to the notice of the authorities to ensure meetings don’t clash because they need to attend all these meetings.

The woes of shareholders came out clearly at the BT forum leading to the appointment of a core group to draft a working proposal on the formation of this association.There have been many associations like this in the past, all of which have lacked legal teeth and clout to make the authorities wake up to their needs.

Thus the backing of the SEC is paramount in ensuring the success of such a grouping, and also the support of the entire media – print and electronic. The BT is acting as a facilitator, based on requests by readers and others to initiate such a forum, and would move out once a properly-elected association is formed and is able to operate independently.

2011 was a disastrous year when manipulation, insider dealing and ‘pump and dump’ figured prominently taking the market to unbelievable heights before collapsing. Efforts by the SEC to rein in the culprits were stymied by powerful interest groups resulting in the resignation of the SEC Chairperson Indranee Sugathadasa, a public officer with a lot of integrity.

The regulator was thus kept at bay until Thilak Karunaratne took over as SEC chief and is getting tough. But he too is confronted with huge challenges with many obstacles in the way.Many years ago, Prof. G.L. Peiris, as deputy Finance Minister, proclaimed that the government wants to promote a share-owning democracy with as many investors -big or small – investing in the share market.

Sri Lanka is far from reaching that goal especially due to the machinations and manipulations of powerful interest groups with billions of rupees to throw. According to one small investor, “The Golden Key fraud and activities of Lalith Kotelawala is peanuts compared to these playmakers in the stock market.”

Given the highly-politicised environment which also affects the SEC and other independent institutions, the SEC needs a lot of strength and bodies like investor associations – designed to ensure a level-playing field for all – can help a lot in ensuring dignity, decorum and governance in the market place.

]]> http://www.sundaytimes.lk/120624/business-times/rush-hour-agms-and-credibility-of-audits-3855.html/feed 0 High performance work systems for high performance companies http://www.sundaytimes.lk/120624/business-times/high-performance-work-systems-for-high-performance-companies-3853.html http://www.sundaytimes.lk/120624/business-times/high-performance-work-systems-for-high-performance-companies-3853.html#comments Sat, 23 Jun 2012 08:05:11 +0000 ramesh http://192.168.210.154/sundaytimes/?p=3853 Introduction
People are our most important asset and the human resource management (HRM) is an essential function in organizations that affects the quality of organizational performance (OP). Most of the high performance companies such as Apple, Toyota, General Electric (GE), Singapore Airlines (SIA) and Google have proved that management systems that encourage commitment and competence of people achieve greater productivity. Over the past few years, much of the debate about the contribution of HRM to OP has been wrapped up around the concept of high performance work systems (HPWS).

Definition and companion terminologies
The term HPWS can be defined as a system of HRM practices that increase the employees’ empowerment, knowledge, skills and incentives that ultimately motivate them to achieve greater performance. The term HPWS is a fuzzy notion and many companion terminologies have emerged such as best practices, best HRM practices, high commitment management, high involvement work systems, progressive human resource management, high investment work system, human capital enhancing HRM practices, flexible work systems or high commitment human resource practices.� Additional but not very popular terms used in the business world include socio-technical systems, work harmonization, quality of life programs, high performance management system, hybrid labour management model, innovative work systems, new work systems and alternative work systems.

Birth place of the concept
The concept of HPWS mainly focuses on employee involvement and organizational commitment and it has a long history dating back to the Human Relations and Tavistock Socio-Technical Schools, as well as the quality of working life movement of the 1970s. The HPWS concept first evolved in U.S. In the 1970s and 1980s, with the rise of Japanese ‘lean-production’ systems, US firms found that their HRM systems did not fit with their competitive context. To survive, US firms introduced HPWS to their workplaces. In addition to the above challenges, the advent of advanced manufacturing technology (AMT) and the rise of ‘offshoring’ to low-cost producers like China and India encouraged the application of HPWS to business organizations over the last 25 years. Most interestingly now the concept of HPWS is not limited to the field of HRM or strategic HRM but can be seen in the fields of labour economics, industrial or employment relations, organizational behavior, and operations management.

Core features of HPWS
The notion of HPWS has gained a widespread popularity and it is used not only by academics but also by government ministers, think-tanks, HR professional associations, trade unions, and management consultancies. If organizations are interested in implementing HPWS successfully for their organizations, the following characteristics need to be supportive.

  • Self-managed teams and decentralization of decision making
  • Selective hiring of new personnel
  • Comparatively high compensation including performance and commitment incentives (e.g., financial incentives)
  • Management planning and measurement (e.g., improved systems to measure employee performance)
  • Extensive training
  • More cooperative labour relations (e.g., a more consultative partnership style of labour relations with unions)
  • Technology (e.g., better IT)
  • Employment security
  • Reduced status distinctions and barriers, including dress, language and office arrangements

HPWS generate positive outcomes for both individuals and organizations In recent years American- style HPWS have become the dominant global HRM system. Both researchers and practitioners report that the HPWS generate benefits to individual and organizational performances.

The application of HPWS helps to enhance trust in management and also organization’s capabilities. More specifically, HPWS are associated with lower employee turnover rates, higher employee satisfaction, higher employee commitment, higher labour productivity, lower injury rates and better safety performance, lower rate of burnout associated with emotional labour and better OP.

Applicability of HPWS for Sri Lankan organizations
HPWS are concerned with how HRM can be used to improve performance in manufacturing or service organizations with various kinds of employees. However, managers in Sri Lankan organizations need to customize HPWS to their specific industry and occupational conditions. HPWS are very productive when the employees have high task interdependence and counterproductive for employees who have low interdependence. HPWS are likely to be economic in high-tech, capital intensive manufacturing firms (e.g., steel making, clothing, electronic and automobile manufacturing industries) but unlikely to be economic in low-tech, labour-intensive industries (e.g. apparel and toy manufacturing industries). As stated above, HPWS are not simply a manufacturing issue. There is also evidence of HPWS practices being applied to service organizations.

For example professional services like banks and luxury hotels can improve revenue and customer retention through HPWS. But HPWS are unlikely to be economic in mass services where customers are price conscious and prefer to engage in self-service (e.g. fast food industry).

Although HPWS are an important concept in contemporary business world, there has been little discussion about how HPWS is understood, interpreted, and operationalized across the organizations in Sri Lanka. Therefore, there is a need to explore the impact of HPWS practices in Sri Lanka to understanding the relative effectiveness of HPWS in the Sri Lankan context.

(This article is a part of the author’s current research work on HPWS and for a list of references of all the reviewed articles, he could be reached at d.dayarathna@yahoo.com).��

]]> http://www.sundaytimes.lk/120624/business-times/high-performance-work-systems-for-high-performance-companies-3853.html/feed 0 Biochar: Can it put the tea industry back in the black? http://www.sundaytimes.lk/120624/business-times/biochar-can-it-put-the-tea-industry-back-in-the-black-3850.html http://www.sundaytimes.lk/120624/business-times/biochar-can-it-put-the-tea-industry-back-in-the-black-3850.html#comments Sat, 23 Jun 2012 08:02:39 +0000 ramesh http://192.168.210.154/sundaytimes/?p=3850 Over the last several decades the tea industry in Sri Lanka has been buffeted by many factors, both external and internal. But largely internal. This essay will however concentrate on one major internal factor, the condition of soils in tea lands and technologies now available for bio-remediation.

Neglect, non-adherence to basic cultural practices and ever increasing costs of fossil fuel based fertilizers has resulted in overexploitation and degradation of the tea bush, a vital asset of the tea industry. So much so, that it would not be incorrect to compare a tea bush to a drug addict. Miss the regular dose and the addict goes into a shock, unable to function. Today, the tea bush is like that, an addict. A reduced, or missed dose, and the plant’s productivity drops.

In a sense, the soil today is only a medium to hold the plant up, requiring all nutrients to be fed from external sources. Over the years, the increasing cost of chemical fertilizers has contributed to this condition, with most of the smallholders having no choice but to cut down on fertilizer application.

This is exacerbated by planters having to compromise on other essential cultural practices as trenching and burial of prunings and maintaining soil conserving contour drains. In earlier days, the insistent shout of the Periya Dorai during rainy spells was “I want to see white water!” He was referring; of course, to surface water run off turning the stream brown as the best top soil was washed away. We have let the top soil go, and letting it happen, lament the fact that production is down.

The need then is to improve crop production, improve quality, reduce the cost of production and improve estate productivity. One might say a long task.However, a technology or a combination of related technologies is in fact available now, and being trialed, to reach a pragmatic solution to regenerative agriculture. Such a bio-remediation programme has been carried out over the last two years in selected tea estates.

The recorded data shows that sustained increase in leaf production in excess of 25% to 30% can be achieved after reducing fertilizer input by 50%. The difference has been more when a long dry spell follows a period of average rainfall with variances going up dramatically to over 70% between treated and control plots. During periods of rain, a noted tendency is for that gap in difference to become lesser. The interpretation is that application of Biochar helps the tea bush to last through dry periods better than the untreated ones and this fact is believed to be significant in view of the changes in climatic conditions that are taking place.

What then are these combined technologies that could assist the primary agriculture based industry of the country?
Biochar. The recently published definition of Biochar by the International Biochar Initiative states as follows: “a solid material obtained from thermo chemical decomposition of biomass in an oxygen limited environment”.

In practical terms, this is the pyrolising (decomposing organic compounds by heating to high temperatures in the absence of oxygen) of the biomass of plant origin from a stable carbon for application in soils as a means to sequester carbon as a major climate change mitigation tool.Further, Biochar systems at all scales can help solve the global food crisis by enhancing soil fertility and avoiding greenhouse gas (GHG) emissions.

Biochar is pyrolised at low temperatures in the range of 650 to 750 degrees Celsius. It is therefore heat stabilized and participates very little in any further chemical reactions in the soil and residence periods are counted in centuries to millennia. There is evidence for this in the Amazonian black soils or Terra Preta Do Indio.The Biochar placed two years ago under the trials under discussion was retrieved for examination recently. No change to physical size and form were noticed.

Other than the stated environmental and climate benefits, the specific agricultural benefits come from retention of nitrogen and water.
The present trials have shown that reducing down to 50% of recommendations has not impacted on yields but in fact still gives an increase of 25% or more in terms of plucked leaf. Further trials must and will be carried out to determine the maximum possible reduction of fertilizer input without compromising output.

In addition to the above-described characteristics of Biochar particles, there are other advantages for using Biochar in cultivating tea.
There has been a steady increase in demand for organically grown tea. One reason for the reluctance shown by growers is the three to five year conversion period required before obtaining organic certification. Not many RPC’s have the financial capacity to last through the crop loss period. For tea smallholders who contribute around 60% of the country’s tea production and tea is their major source of income, waiting this period without governmental support would be out of the question. Present field data indicates that the reported ability of Biochar to absorb and neutralize harmful pesticides could possibly contribute to reducing organic certification qualifying period by half the period now required.

To recapitulate, Biochar pyrolisers produce within the process – gas, liquid and solids. Syngas and biofuels can displace fossil fuels as energy sources and is in effect a renewable energy source. The final product is the solid content – Biochar. Because of its proven long residence period in soil, Biochar has been accepted worldwide as qualified material for carbon sequestration and can be traded for carbon credits under the clean development mechanism (CDM) of the extended Kyoto protocol. Sri Lanka is a signatory and has ratified the protocol. Depending upon the grade of Biochar produced, now classed as Grade 1, Grade 2 and Grade 3, at stable organic carbon content of 60% or more, 30% to 60%, and 10% to 30% respectively (1.0 MT of Biochar equals 3.3 MT of CO2 equivalent).
Gliricidia.

At a later date, we studied Gliricidia as a renewable biomass to produce Biochar. The positive factors which came of this study are numerous.Gliricidia (S. watahira, wetamara, Ladappa) is a ubiquitous plant of the deciduous family which is literally grown all over the country. It is not native to Sri Lanka, having been brought to the country by Christian missionaries, bringing it from the equatorial regions. In Sri Lanka, the only limiting factor to its successful establishment is the elevation factor. It does not do well above 2,000 metres.

It is a short rotation coppicing (SRC) plant and harvesting can commence 18 to 24 months after cuttings have been planted during rainy weather.When planted at 1m by 1m spacing, as a dedicated energy crop, it gives a stand of 8,000 plants… Harvested twice a year, yields up to 20 MT\H can be obtained.

In recognition of its value as a renewable fuel wood, the government, some years ago, gazetted Gliricidia as the fourth plantation crop after tea, rubber and coconut to have a subsidy scheme applicable to nationally important plantation crops.� Although cultivation of Gliricidia in coconut estates is not as widespread as it should be, conversely tea plantations have made a practice of growing this for low shade in the mid and low grown regions, and loppings are necessary, twice a year, just prior to the setting-in of the rainy period, to control the shade factor. It was the view held by the late Dr. Ray Wjewardene that there were 1,500,000 million acres of land in the North and East, which were sparsely used or unpopulated, and could not sustain any meaningful agriculture activities due to agro-climatic and soil conditions.

The fact that tea estates already carry significant planted stocks of Gliricidia biomass and the availability of a large extents of non-irrigable lands in the North and East of the country makes it possible to have different systems of deploying pyroliser plants. A significant improvement to the Gliricidia planting density can be carried out on tea estates, especially low growns as it has been noted that many vacancies exist in the bush count per hectare. These vacancies can be planted with Gliricidia as its root system hosts biological nitrogen fixing microbes and the land can only benefit from this plant, even if it is for a short period until programmed in-filling is carried out.

Deploying pyrolising plants
Under serious consideration are small skid mounted plants (processing operations) which are to be deployed covering a grouping of estates within a given region and where the feed stock could be transported from a maximum radius of 20 km. Even in the event of a shortfall of feed stock from within the group, there already exists a bought leaf operation in the estates which could be adapted and employed to fill the short fall.

In the North and East, agro-climatic conditions, present vegetation cover and demographic situation makes it possible to deploy high production capacity static plants set in the middle of a dedicated plantation of Gliricidia. Here, the scenario would be to set up a Gliricidia growers’ cooperative to whom the required extent of state land is alienated and to whom the available planting subsidy could be granted. Each settler family could cultivate three hectares of Gliricidia. Until the plantation gets established and foliage reduces sunlight and also after each harvest of feedstock, inter row cultivation of pulses and grains as sustenance crops is possible. This is also the case with engaging in animal husbandry for additional income generation.

On the assumption of 20,000 kg per hectare times three hectares, based on a guaranteed price of Rs. 5 per kg, each family could earn an annual income of Rs. 300,000 after the second year from planting. Many other cascading benefits, including economic and social, have been factored into a program of this nature.

The plant operator’s prime responsibility is to ensure the setting up of a central nursery to supply the seed or planting material for initial planting and supply of vacancy filling material, set up and operate the pyroliser plant, and above all to make payment for delivered raw material on time. It goes without saying that the government authorities have their own specific role to play in providing health, education and necessary infra-structure.

Conclusions based on trials
A combination of Biochar – pyrolised Gliricidia, with microbial inoculants applied at the correct time (after pruning), in the correct manner (trenching and placement in Rhizosphere) – brings immediate and long term benefits to the plantation industry. This may well be the combination of locally available technologies that the tea industry needs so badly to improve crop and quality in order to ensure that the pure Ceylon tea brand is preserved for the future, without having to import tea for blending.

(The writer is Director R&D at the Biochar Initiative Co. and can be reached at smilingsoil@gmail.com).

]]> http://www.sundaytimes.lk/120624/business-times/biochar-can-it-put-the-tea-industry-back-in-the-black-3850.html/feed 0 Tea grown and ‘sipped’ the Dilmah way at the STBC http://www.sundaytimes.lk/120624/business-times/tea-grown-and-sipped-the-dilmah-way-at-the-stbc-3846.html http://www.sundaytimes.lk/120624/business-times/tea-grown-and-sipped-the-dilmah-way-at-the-stbc-3846.html#comments Sat, 23 Jun 2012 07:54:52 +0000 ramesh http://192.168.210.154/sundaytimes/?p=3846

Merril J Fernando

When the Sunday Times Business Club (STBC) meets on Thursday, June 28 for its monthly meeting, veteran tea industry personality and the pioneer of the single origin tea concept Merril J Fernando is expected to regale the audience with the story of tea – the Dilmah way.
Dilmah has led Sri Lanka into a new world of “Pure Ceylon Tea” building a brand that stands on the shelves of supermarkets across the world and is among the top three selling brands in many countries.

In Poland for instance, walk into any restaurant, and Dilmah tea is on the table.� Mr Fernando, who has shown the way for other Sri Lankan entrepreneurs to build their own Ceylon Tea brands, is expected to share his experiences on the industry and its future.
“Mr Fernando rarely speaks in public and the STBC is privileged to have a personality of his calibre addressing us and sharing his thoughts on entrepreneurship,” said a spokesperson for the club.

The meeting starts at 6.30pm at the Golden Pond of the Taj Samudra, the club’s host hotel, and is for members and invitees only. Etisalat is the sponsor of the club with Hameedia as the co-sponsor.

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