All Sri Lankan regional plantation companies (RPCs) will come under Parliamentary scrutiny using a more active golden shareholder, the Treasury, Prime Minister Ranil Wickremesinghe said on Wednesday. He was speaking as the chief guest at the opening ceremony of the Colombo International Tea Convention at the BMICH in Colombo which is part of the year-long [...]

Business Times

PM tells plantation companies: “Nothing for nothing”


All Sri Lankan regional plantation companies (RPCs) will come under Parliamentary scrutiny using a more active golden shareholder, the Treasury, Prime Minister Ranil Wickremesinghe said on Wednesday.

PM speaking

He was speaking as the chief guest at the opening ceremony of the Colombo International Tea Convention at the BMICH in Colombo which is part of the year-long celebrations to mark 150 years of tea.

While RPCs have been given total management control of tea, rubber and coconut plantations owned by the Government, under the 1992 privatisation process, the state retained a stake titled “the golden share”.

The PM said that the government plans to bring in new legislation highlighting the duties and functions of the RPCs and thus ensure RPCs are answerable to Parliament (like all public institutions and agencies).

Performance of the RPCs would be assessed. “Nothing for nothing,” Mr. Wickremesinghe said. The country should not be made to face the brunt of the losses made by the RPCs, he added. RPCs by private sector companies have been functioning with mounting losses which they say was due to lower tea prices, higher costs of production including wage increases despite falling tea prices. The Government however says the losses were also partly due to management issues.

The PM said that RPCs should be a standalone company where the group balance sheets (meaning non plantation companies in the group that runs the RPC) should not be accumulated to spell out the profits.

He also questioned the role of workers whether plantations can be sustained under a traditional model or use contract labour.

In addition the Prime Minister pointed out that there is a need to look at family holdings of 50 acres and ensure they have easy access to credit and how to modernise them.

He also referred to the Tea Research Institute (TRI) and said it needs to be examined to ensure it is self-sustaining.

Taking a peak into the future of the tea factory, he asked whether it could be a modernisation that would mean a machine small enough to fit into a garage.

The Prime Minister also noted that with the world population expected to increase by another two billion more people coming into the wealthy class means the industry could be looking at attracting more high spenders to become consumers of tea.

Online auctions were likely to overtake the traditional Colombo tea auctions currently underway and he pointed out that tea would not be served in its traditional form of a tea cup and is tipped to face the stiff competition from coffee and Coca-cola.

But despite the world population increasing by two billion, Mr. Wickremesinghe noted that Sri Lanka would increase its numbers only by two million in 2050 as a result of which there would be less pressure for land but with more moving out a shortage of labour could also arise.
Soon the different districts would stand to compete against each other like Badulla with Hambantota industrial zones; he explained taking a peek into the future.

He wrapped up the speech asking Plantation Minister Navin Dissanayake to deliver on Ceylon Tea as his father, the late Gamini Dissanayake, did on the accelerated Mahaweli project in the late 1970s.

Minister Dissanayake in his speech told the industry that they needed to work together and not as separate entities to lobby for their various concerns.

He commended the Indian labour that toiled on the tea estates ages ago adding that today they were discussing ways to bring about a new model by providing some rights over lands with an out grower system.

He also reminded the gathering about the contribution of former Minister Monty Jayawickreme towards the plantations sector in extending the tea crop to the Galle and Matara districts as well.

The Minister also pointed out that the industry should push for a transparent and ethical tea sector with best practices.

Another look at the changes of the tea industry was spelt out by the Sri Lanka Tea Board (SLTB) Chairman Dr. Rohan Pethiyagoda who highlighted that the face of the tea industry was changing in ways “we wouldn’t have imagined”.

He pointed out that negotiating the maximum levels of residue in chemicals, non-tariff barriers and the changing quality standards over the years were the key issues today.

Key players who contributed a lot to the sector’s performance over many decades were speakers at the 150-year celebrations.
Akbar Brothers Executive Director Hussein Akbarally highlighted the feats of their company noting that they were in possession of what could be termed the largest tea room in the country.

He insisted that teas sent out from their factories were personally inspected by a family member to ensure the highest quality standards were maintained.

Dilmah Founder Merril J. Fernando addressing the gathering spoke at length about the journey they made into the tea industry and how they retained their position amidst opposition and setbacks.

Dilmah Director Dilhan Fernando also spoke at the event as a pioneer in setting up a learning centre for the future entrants to the plantation industry.

Another key factor that was brought out in the speeches was the youth or the millennials.

Audience . Pix by M.. A. Pushpa Kumara

The status of tea in Russia is currently changing but it continues to retain its position as it has now become part of their culture as well, Orimi Trade Group of Companies Executive Board Chairman Sergey Kasyanenko said at the convention.

He pointed out that they were engaged in marketing to the youth the fact that tea was a youth thing in order to entice more drinkers of the traditional beverage. Looking further at the next generation, another speaker queried whether today’s youth were in fact aware of this blend from Ceylon.

R Twining and Company Director Nick Revett asked, “Do millennials know where Ceylon Tea comes from?”

In fact he queried whether they would even prefer the beverage clearly highlighting the importance of attracting the next generation in order to ensure tea continues to thrive in the global economy.

Chemical warfare
With an increasing number of people willing to pay for the quality through sustainability measures adopted in the production process, the demand for high standards continues, UTZ Executive Director Han De Groot said on the second day of the convention.
He pointed out that in future the concept of sustainability would become the norm and not just a requirement.

It has been found that at least 91 per cent of consumers expect companies to address social and environmental issues and for which they were willing to pay more.

“It’s not anymore about getting ahead but more about not being left behind,” Mr. De Groot observed.

UTZ and the Rain Forest Alliance, it was noted, are joining up two programmes carried out by them, in a new collaboration to ensure sustainability on the plantations.

Rain Forest Alliance Executive Director Anna Tavares noted that they were looking at assisting the smallholders to ensure they were not left behind and that they too could take advantage of the industrial opportunities.

She also spoke at length on the non application of chemical for weed management stating that eliminating weedicide use by covering the land with grass where no tea is grown could have a tremendous positive impact on Sri Lankan estates.

Ms. Tavares noted that the protection of top soil, avoiding erosion and making the production system resilient to climate change was all possible through these measures.

She cited studies carried out at the Hapugastenne, Maskeliya and Dambatenne estates to prove her case adding that the elimination of weedicides could significantly reduce the use of fertilizer.

However, this came in for a thrashing from the industry that strongly protested against the proposed elimination of chemicals being used on the plantations.

In fact Maskeliya Plantations PLC CEO Manoj Pathiraja revealed that it was still too early to draw conclusions that the absence of chemicals on the estates could prove results.

He pointed out that in this respect the use of chemicals on the plantations was still required. “We need it,” he said.

Dambethenne estate owners stood up to state that although the estate was earmarked to carry out this experiment of not using chemicals and to understand its benefits, however, this was yet to be carried out.

However, some panellists pointed out that there needs to be an effort to move out of the use of chemicals on the plantations in order to save the land.

Economic future
Central Bank Governor Dr. Indrajit Coomaraswamy addressing the tea industry spoke about the efforts made by the government to bring in stability to the economic climate and ensure that the exporters were given a fair share in making significant earnings by allowing the economies of scale to take their course.

The government is looking at giving a competitive exchange rate that could assist the industry’s exports sector, he said. “We want to make sure the real effective interest rate will give the export sector a competitive exchange rate,” he said.

A flexible interest rate would be the monetary policy decision in order to ensure the economy would be more proactive and forward looking, Dr. Coomaraswamy said.

Reducing the trade deficit in the government budget is another factor that could assist the industries, he said adding that the government is hoping to reduce this to bring about revenue enhancement.

Moreover, he explained that since the government was lacking in the required credit and fiscal space they needed the private sector to get ahead and move the industries forward.

An increase in foreign direct investments and increased exports could bring in the necessary balance into the economy, he pointed out.
In addition he said that de-regulation was required today to bring about an ease in operations; the increasing use of technology to make things expeditious.

The governor spelt out ways of achieving FDIs by identifying the sub sectors to attract investments from and how to reduce trade cost by increasing cross border movement of goods and services.

He also pointed out that there were plans to bring in anti-dumping laws to ensure sufficient protection of local products.
However, at the same time he noted that the reason for the lack of investments in the past was due to a wide amount of para tariffs adopted by the country to protect home industries.

Speaking on the exports sector, Export Development Board (EDB) Director General Jeevanie Siriwardene said that product innovation and development was crucial to increase revenues from tea exports.

In addition, there is a need to explore emerging markets and position tea as a luxury brand and market it as a product from an eco friendly, ozone free and ethically produced product, she said.

Sri Lanka needs to explore the largely untapped African region, Ms. Siriwardene said and the luxury market by marketing through premier hotels, resorts and spas and through upmarket in-store promotions like Harrods in London which had requested for a Ceylon Tea stall.
The EDB has started discussions with Alibaba on how Sri Lanka could use this platform for trade.

Commerce Department Director General Sonali Wijeratne questioned the industry’s insistence of harping on its connections to the UK which is today slowly moving away from the tea drinking habit.

In fact she said, the claims of being a product brought to the island by James Taylor is now just part of history as even the land he came from was reducing consumption of the beverage.

She pointed out that the bulk of UK teas were blended teas that were consumed by a majority of the people compared to orthodox teas marketed under the Ceylon tea brand.

Having served in the UK as an ex-tea Commissioner herself, Ms. Wijeratne said it was frustrating how the UK market is being pursued by the industry but asked “to what extent can we penetrate.”

In fact, in the UK today Ceylon tea is considered expensive and there is a shift from black tea to specialty teas.

Ms. Wijeratne also cautioned the industry against the trade agreements that might seem good to Sri Lanka with preferential access to markets like China by pointing out that at the same time China too was asking for preferential access to the Sri Lankan market as well.

The concluding event was held on Friday with the discussions centred on how coffee has overtaken tea and why do things go better with Coca – Cola and not tea.

The convention organized by the Colombo Tea Traders Association was a feat amassing a wealth of information and discussions on current topics and insights into how the next 50 years of tea could be celebrated.

Prime Minister Wickremesinghe quipped in his concluding remarks that after the proposed changes to the industry, they could have a better celebration in 50 years time when “we will not be here”.

Hambantota port not just a deal
Central Bank Governor Dr. Indrajit Coomaraswamy, deviating from the topic of tea, took time to explain the Hambantota port deal noting that “this was not just a deal involving a leasing of the port”.

On the other hand, he explained that 69 years after independence Sri Lanka has been able to do next to nothing for the people of districts like Moneragala and Hambantota.

But this kind of lease agreement could help transform these areas in the future reminding everyone that this was once the heartland of the JVP. In this respect, the people should look at the big picture.

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