Policy certainty vital for growth of Ceylon Tea
View(s):Sri Lanka’s tea industry wants stability in terms of government policies to ensure commercial progress that will increase investments into the sector, the apex plantation body stated at an annual gathering.
This industry’s future depends on the adoption of technology, raising productivity, consolidating for scale, diversifying on science, and policy certainty on leases and agreed rights that will ensure investments will flow in, Planters Association Chairman Sunil Poholiyadde said at the recently-held 171st Annual General Meeting of the Planters Association in Colombo.
He highlighted the need to ensure consistent policy by the state to ensure progress of the industry as “policy volatility has been costly.” It was pointed while the bans on chemical and inorganic fertiliser pushed tea output down from roughly 300 million kg pre-ban; the damage is not quickly reversed.
He explained that a harvest block on timber has locked up value and risks environmental harm if stands collapse without replanting.
Further, on land they have also faced ad hoc acquisitions of productive agricultural areas, he said adding that one of the most productive low country estates was taken over; to this day it is mainly surrounding villages that enjoy the benefit, while companies continue to pay the same lease rental even when the cultivated area is reduced.
Mr. Poholiyadde noted that for investments to flow, investors need confidence that rules will hold and that returns are achievable. First recognise RPCs as strategic agribusiness units; honour Lease Indenture Clause 4(a), which explicitly allows substitution of one plantation crop for another and other reasonable, productive uses of the demised premises.
Also he pointed out that authorities need to extend the RPC leases beyond 2045 in time for 20-30 year replanting and factory cycles.
The Chairman traced back the history of the association and noted that since taking over the plantations by the private sector it has grown to become an approximately Rs.113 billion industry as a result of around Rs.19 billion in equity, Rs.16 billion in interest bearing borrowings, and approximately Rs.78 billion in retained earnings and reserves.
He continued to insist that the labour sector wages needs to be remodelled in line with a productivity-based model as labour numbers keep falling and the employers fail to attract talent. The current framework will be maintained for three years – until November 2027 – to restore certainty.
Chief Guest at the event Presidential Advisor Duminda Hulangamuwa noted that under the President’s direction authorities are moving to monetise underperforming state plantation, especially in Matale, Kandy and Nawalapitiya, by leasing to capable operators. Demand will be strongest where land can be diversified beyond traditional crops.
Commenting on the state plans for State-Owned Enterprises he said the bill in this regard will be tabled in September to bring selected SOEs under a holding company model, similar to Temasek and Malaysian structures. A new PPP Act will also enable private participation in ports, logistics, agriculture and related sectors, he said.
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