Business
Colombo Tea Auction faces scrutiny as smallholders raise concerns about dollar gains
The structural framework of the Colombo Tea Auction has come under intense scrutiny as growing socio-economic disparities threaten the livelihoods of the grassroots producers who form the backbone of the nation’s tea industry.
Despite contributing well over 75% of Sri Lanka’s total tea production and serving as the primary lifeline for more than 500,000 smallholder families and an estimated two million livelihoods, the actual producers are reportedly systematically deprived of the true US dollar gains generated by premium Ceylon Tea exports. This widening disconnect between export earnings and ground-level compensation is said to have sparked a severe trust deficit across the tea smallholders.
Speaking to the The Island Financial Review, Ushan Dhammika Samarasinghe, Secretary, Tea Estate Owners Association (TEOA), expressed deep concerns over the current closed auction system, calling for urgent transparency, inclusivity, and fair play. He noted that while Sri Lanka possesses a unique equatorial geographical advantage with seven distinct agro-climatic zones producing globally unique, aromatic teas, the industry’s marketing strategies have stagnated. For decades, exporters have heavily relied on traditional, conflict-vulnerable markets and bulk tea exports rather than securing premium international prices through advanced value-added products and new global market penetration.
The financial fallout of this marketing failure is being borne entirely by the smallholders. While grassroots producers are pushed to the wall, struggling to purchase basic agricultural inputs, intermediaries at the top of the supply chain enjoy luxury lifestyles, high-end vehicles, and premium properties. In the current economic climate, where a fluctuating US dollar has drastically driven up national import costs, the primary argument of the growers remains clear: if import prices are rising exponentially due to the dollar’s strength, then a premium export commodity like tea should reflect that exact same dollar advantage in the payments received by leaf producers.
Official data from the Central Bank of Sri Lanka underscores this grim reality, showing that production costs and imported agricultural inputs have surged rapidly. Following the depreciation of the Sri Lankan Rupee, the prices of essential fertilisers, pesticides, and machinery have skyrocketed by nearly 300%. Yet, because the dollar revenues earned from exports do not flow directly back to the local producer, smallholders are forced to rely on a devalued rupee while absorbing these staggering production costs.
While expenses increase at dollar-pegged rates, real income remains severely depressed, and the conversion of auction values fails to reflect the higher exchange rate through increased rupee earnings.
At the Colombo Tea Auction, exporters consistently place their bids only after safeguarding their own profit margins and factoring in all overheads, including insurance, freight charges, packaging, and Simplified Value Added Tax (SVAT) liabilities. Consequently, while exporters successfully eliminate their own financial risks, the entire weight of agricultural inflation is shifted onto the back of the smallholder.
Furthermore, although the government’s SVAT system offers tax relief to exporters, brokers and exporters have failed to pass this benefit down to grassroots producers through higher competitive bidding.
Having made these comments, Samarasinghe dismissed the claim that the country needs massive dollar reserves to conduct the auction in US dollars as a myth, asserting that shifting the auction to direct dollar bidding would simultaneously benefit global buyers and local smallholders alike. Past data also indicates that the current closed auction system acts as a barrier, preventing new entrepreneurs from entering the industry.
Furthermore, while the government has actively intervened to increase the wages of estate workers managed by Regional Plantation Companies (RPCs) – entities that rarely make long-term investments in the soil – no such justice or equity has been extended to the small and medium-scale smallholders who make up the vast majority of the sector.
To rectify these deep-seated inequities, the TEOA is calling for immediate intervention from the Sri Lanka Tea Board, the Ministry of Plantations and the Ministry of Finance. Chief among these demands is the implementation of a definitive exchange-rate price formula for green leaf prices, indexed directly against the dollar value of the Colombo Auction. Such a mechanism would guarantee that small and medium-scale landholders receive a fair and premium value for their yield, empowering them to break free from a mindset of dependency on government subsidies.
With a fair and guaranteed income, smallholders would gain the financial stability to pay higher wages to their own estate workers and independently reinvest in the long-term advancement of the tea industry.
“The future of Sri Lanka’s tea sector can only be secured if the price discrepancies highlighted by the Central Bank data are eliminated, allowing the true dollar advantage to flow directly into the hands of the producer,” Samarasinghe said in conclusion.
By Sanath Nanayakkare
Business
Jaffna Teaching Hospital secures lifeline water supply via ADB-funded Thalaiyadi sea water desalination plant
It marks Sri Lanka’s first-ever large-scale SWRO desalination plant
By Sanath Nanayakkare
The Asian Development Bank (ADB)-funded sea water reverse osmosis (SWRO) desalination plant in Thalaiyadi has delivered a crucial operational boost to the Jaffna Teaching Hospital, securing a reliable supply of purified, low-calcium water for critical medical care and specialized equipment.
Speaking during a site briefing with ADB officials headed by Country Director Shannon Cowlin, National Water Supply and Drainage Board engineers, and media representatives, Hospital Director Dr. T. Sathiyamoorthy confirmed that a dedicated supply line from the plant was successfully connected earlier this year following three years of planning and requests.
With a 175-year legacy of excellence, this 1,550-bed facility serves as the premier healthcare institution in the Northern Province. Currently providing specialized services—including neurosurgery, open-heart surgery, kidney transplants, and bone marrow transplants—the hospital is positioning itself for elevation to National Hospital status under Ministry of Health guidelines.
Operating across a sprawling 13.5-acre compound, the institution functions much like a self-contained township, managing a massive daily footfall that underscores its role as a vital regional lifeline. The hospital accommodates over 1,500 in-patients on any given day, while its outpatient services face a relentless stream of visitors. Daily arrivals typically include 900 to 1,000 OPD patients, accompanied by up to 2,800 clinic visitors distributed across more than 30 specialized medical and surgical units.
When factoring in the wider operational ecosystem, the total daily population within the compound swells to approximately 10,000 people. This high-volume environment is sustained by a dedicated workforce of 2,400 healthcare professionals, alongside a daily influx of over 3,000 visiting relatives who pass through the facility to support recovering patients.
For decades, the hospital’s reliance on local groundwater presented severe operational bottlenecks. Jaffna’s limestone-heavy geology yields water with high calcium concentrations, causing severe mineral build-up that damaged millions of rupees worth of high-value equipment ranging from large-scale sterilizers to delicate endoscopic instruments.
The introduction of low-calcium desalinated water has immediately safeguarded key operational areas. The initial phase of the connection delivers purified water directly to high-priority sections, including operating theaters, intensive care units (ICUs), and main entrance public drinking facilities.
While the hospital’s total assessed daily demand stands at 1,500 cubic meters, desalinated water currently covers approximately 30% of total usage. The remaining 70% continues to depend on legacy systems due to internal piping networks that are nearly 60 years old. To resolve this, hospital management has floated tenders to overhaul internal distribution lines, enabling pure desalinated water to reach all wards.

Jaffna Teaching Hospital Director Dr. T. Sathiyamoorthy and ADB Country Director Shannon Cowlin during a meeting at the hospital premises
Engineers confirmed that the SWRO plant operates with a capacity of 24,000 cubic meters per day, guaranteeing ample volume for full hospital coverage. Furthermore, the ADB is structuring a new municipal wastewater treatment project for Jaffna, which will integrate the hospital and replace its aging internal waste treatment system.
Dr. T. Sathiyamoorthy stressed that clean piped water is vital to public health in Jaffna, where groundwater remains vulnerable to agricultural fertilizer runoff, commercial effluents, and historical pollution concerns such as the Chunnakam oil contamination incident. He noted that encouraging piped water consumption also reduces dependence on single-use bottled water, which risks microplastic degradation when exposed to the region’s intense heat.
The Thalaiyadi seawater desalination plant represents a major financial investment coupled with rigorous environmental management to protect the surrounding coastal ecosystem. Financially, the project carries a total capital cost of USD 55 million, anchored by a primary contract valued at LKR 14,559 million—structured across multiple currencies including USD 49 million, EUR 15 million, and INR 314 million, alongside local allocations.
Awarded to M/s Suez International under a comprehensive Design, Build, and 7-Year Operation framework, the project involves an operational expenditure of USD 0.55 per cubic meter, with management scheduled to transfer to the National Water Supply and Drainage Board (NWSDB) following the completion of the operational term in October 2031.
Simultaneously, extensive ecological safeguards have been integrated into the facility’s design to mitigate marine disruption. The offshore intake system is positioned away from sensitive habitats and utilizes low-velocity grilles to prevent fish entrainment, safeguarding the interests of the local fishing community. Furthermore, waste discharge is strictly regulated under Central Environmental Authority (CEA) and Marine Environment Protection Authority (MEPA) guidelines. Brine concentrate is sent through an offshore outfall equipped with specialized diffusers located more than 500 meters from the shore, ensuring rapid dispersion and limiting salinity impact to a tightly controlled 50-meter mixing zone.
Business
Sri Lanka opens up: A new season of direct connectivity
For as long as we can remember, flying to Sri Lanka has meant relying on a handful of options — SriLankan Airlines direct services, useful but limited in schedule and market coverage, or a stop in Dubai, Doha, or Abu Dhabi. That is beginning to change, and this winter season marks one of the more significant shifts in our aviation connectivity.
A wave of carriers is launching direct services into Colombo and it is worth taking stock of what that means for the industry — not just as a matter of flight schedules, but as a matter of strategy.
Europe, reconnecting
British Airways returns to Colombo on 23 October, restoring a non-stop link to London Gatwick. The UK remains one of our strongest, most loyal source markets, and a direct flight removes a genuine point of friction.
Edelweiss Air, part of the Lufthansa Group, is increasing its Zurich service to three times weekly from 26 October — a route that brings with it high-spending Swiss and DACH-region traveller our wellness and upscale properties need.
And in December, French Bee launches a new seasonal service from Paris, opening a cost-conscious but committed segment of the French long-haul market.
A first for Vietnam
A notable development is the arrival of two Vietnamese carriers — Vietnam Airlines and VietJet — both launching direct Ho Chi Minh City services. This is the first time Sri Lanka has a direct link to Vietnam, and it opens a corridor of travellers who may come to see Sri Lanka and Southeast Asia as a natural pairing. Beijing Capital Airlines and Batik Air are expected to add further capacity later in the season, strengthening our reach into China and Malaysia.
The Vietnam route connects us to more than tourists. Vietnam is drawing strong foreign investment and has established itself as a major manufacturing and export hub. A direct Colombo–Ho Chi Minh City link gives us an easier way to engage with that — not only holidaymakers, but business travellers, investors, and trade delegations.
Australia, and the low-cost gap it fills
SriLankan Airlines flies non-stop to Melbourne and Sydney, so Jetstar isn’t opening a new corridor — it’s opening a new price point, the first low-cost carrier to fly non-stop between Melbourne and Colombo, operating three times weekly, year-round, on its Boeing 787 Dreamliner fleet, adding over 100,000 seats a year.
More than “budget”: what these new entrants actually offer
It is worth being precise about what these new services bring, because labels like “low-cost” and “seasonal” can undersell the product. Several of the low-cost and long-haul entrants in this line-up — Jetstar, VietJet, French bee among them — offer proper business-class or premium-economy-style cabins, not a basic recline seat, and all of them are flying modern, widebody aircraft.
Just as important is brand familiarity. Jetstar is a household name across Australia, French Bee It’s trusted by French travellers, and British Airways needs no introduction. Recognisable, trusted brands lower the barrier to trying a new destination. And on the loyalty side, travellers on nearly every one of these routes can redeem frequent flyer points which is a genuine draw for the kind of higher-value, repeat visitor we want more of.
The new carriers market Sri Lanka in its home country with sophistication and reach — glossy campaigns, in-flight promotion, and placement across a crowded travel marketplace reaching the audience we most want to reach.
Why this matters beyond the season
For years, the majority of our long-haul arrivals have transited through the Middle East. That has served us well, but it has also meant a meaningful share of our connectivity has depended on a region that has had its share of instability.
Direct flights change that picture. They cut travel time, appeal to time-conscious, high-value holidaymakers, and, importantly, they diversify our routes to market. This is not a case against our Gulf carrier partners, who remain vital to our connectivity. It is simply a recognition that resilience comes from diversity.
What it means for the season ahead
Securing these routes is only half the job. It now falls to us, as an industry, to support the flights — through targeted destination marketing in each of these new source markets, so that load factors and yields justify the investment these airlines have made in Sri Lanka. Several of these services are seasonal, and our task is not simply to see them through a single winter, but to build the demand that gives an airline the confidence to extend a route year-round. We should not lose sight of the fact that Sri Lanka does not have an off-season — we are a year-round destination and our marketing should say so. Getting this right is as much our responsibility as it is the airlines’.
Business
‘Biodiversity imparting a powerful competitive advantage to SL’s businesses’
By Ifham Nizam
Biodiversity is rapidly moving beyond the traditional boundaries of conservation to become an increasingly important economic and business issue, with Sri Lankan companies being urged to recognise nature not simply as an environmental responsibility but as an asset capable of influencing competitiveness, investment and access to international markets.
This was among the key messages at the opening plenary of the 11th Annual Technical Sessions of Biodiversity Sri Lanka (BSL), held on Tuesday at the Shangri-La Colombo under the theme “Beyond Borders: Partnering for Business to Prosper with Nature.”
The panel brought together leading figures from economics, business and biodiversity, including Dr. Nishan de Mel, Founder and Executive Director of Verité Research; Dr. Ruchira Somaweera, National Technical Executive (Ecology), WSP Australia and Adjunct Professor at Murdoch University; Siddarth Hirdaramani, Director, Hirdaramani Group and Director, Biodiversity Sri Lanka; and Shiranee Yasaratne, Senior Technical Advisor, Biodiversity Sri Lanka.
The discussion placed particular emphasis on the growing role of biodiversity science in business decision-making, with Dr. Ruchira Somaweera bringing an important scientific perspective to the question of how companies—large and small—should respond to the rapidly changing global biodiversity agenda.
Somaweera, a wildlife biologist with extensive international experience in scientific research, environmental consultancy and biodiversity conservation, currently provides expert advice on biodiversity conservation and environmental management through his work in Australia. He is also an Adjunct Professor at Murdoch University and contributes to international scientific and conservation initiatives.
His participation in the panel underscored an increasingly important reality for business: biodiversity cannot be addressed only through isolated conservation projects, but needs to be understood in terms of how companies interact with ecosystems, supply chains and natural resources.
Opening the discussion, Dr. Nishan de Mel said he had been invited to step outside his familiar field of economics and examine biodiversity from an economist’s perspective.
Drawing a parallel with biodiversity, de Mel said economists had traditionally developed sophisticated ways of measuring inflation, productivity, employment and economic growth, but had failed to adequately measure the natural systems on which economic activity depends.
“The single largest input into the world economy, the one without which no one can get anything done, appears not to get measured at all by economists, he said.
That missing element, he noted, was nature.
De Mel referred to research by the World Economic Forum and PwC which examined the dependence of 163 industries and their supply chains on nature and biodiversity. He said the research estimated that economic activities moderately or highly dependent on nature represented an enormous share of global economic output.
The significance of those figures, he stressed, was not that nature could simply be assigned a monetary value equivalent to global GDP. Rather, they represented the exposure of the global economy to the degradation of natural systems.
The concept of risk extending beyond the traditional boundaries of a company’s balance sheet was particularly relevant to the theme of the forum, “Beyond Borders”.
For Dr. Ruchira Somaweera, the scientific dimensions of that relationship between business and biodiversity are increasingly difficult for companies to ignore.
The panel’s decision to bring a leading wildlife biologist into a discussion dominated by business and economics reflected the changing nature of the biodiversity debate itself. Biodiversity is no longer being discussed solely as a matter for conservationists, wildlife specialists or environmental organisations.
Businesses are increasingly being asked to understand what ecosystems provide, how their operations affect those systems and what risks arise when biodiversity is degraded.
The moderator specifically turned to Somaweera after hearing how major international companies and buyers were increasingly concerned about environmental performance.
He raised the question of whether the business advantages of biodiversity were confined to large corporations dealing with sophisticated international buyers, or whether small companies and firms should also be taking biodiversity seriously.
The scientific perspective offered by Somaweera is therefore critical to ensuring that biodiversity is not reduced merely to a corporate branding exercise.
Earlier, Yasaratne explained how the business community’s approach to biodiversity had changed considerably over the past 11 years.
She recalled that when the platform was established, businesses were still trying to understand how they could engage with biodiversity and ecosystem issues.
‘At that time there was more philanthropic activity for biodiversity, she said, referring to popular initiatives such as tree-planting campaigns.
The emphasis, however, has increasingly shifted towards understanding the science behind biodiversity and the business implications of ecosystem degradation.
From the business perspective, Hirdaramani said Sri Lanka’s biodiversity and environmental credentials could provide a genuine competitive advantage.
He used the apparel industry to illustrate the point.
Sri Lanka cannot compete with countries such as Bangladesh, India, Vietnam and China purely on the basis of low production costs or manufacturing scale, he said. Labour costs are higher, the country’s manufacturing base is smaller and Sri Lanka does not possess the extensive domestic supply chains available in some larger manufacturing economies.
“What we do have is a very positive biodiversity environment,” Hirdaramani said.
He argued that Sri Lanka’s environmental credentials, together with its strong labour standards and social compliance, had helped create a reputation as a responsible manufacturing destination.
Hirdaramani said this could translate directly into business opportunities, particularly when competing for customers who are prepared to pay a premium for responsible production.
The discussion also highlighted another fundamental economic problem: natural capital is often depleted without being properly reflected in conventional measures of economic performance.
De Mel referred to the work of economist Professor Sir Partha Dasgupta, whose landmark review for the UK Treasury reframed the environmental challenge as an issue of asset depletion rather than merely pollution.
He argued that countries routinely account for the depreciation of physical infrastructure and machinery, but national accounts generally fail to properly reflect the depletion of forests, fisheries, watersheds and other natural assets.
The message emerging from the BSL panel was therefore that biodiversity must increasingly be incorporated into the way businesses understand risk, competitiveness and long-term value.
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