Sustainable solution to decline in tea production, export revenue and livelihood issues

by Jayampathy Molligoda

Chairman, Sri Lanka Tea Board

(1) Introduction:

The word “sustainability” is often distorted without being used in ecological context to get its proper meaning. In simple terms, we have the responsibility to protect the right of future generations to live in a safe environment. Similarly, Climate change can be understood as a set of alterations in the average weather caused by global warming due to the emission of greenhouse gases. Climate change phenomenon is serious, which is worse than the COVID-19 pandemic. it is the one challenge that potentially has the most severe impacts globally and on Sri Lanka. The very reason for this is that climate change affects virtually every aspect of our ‘every day today’ life, economic, social and environmental. It is a multidimensional challenge, with its impacts ranging from issues like human health, supply of safe water and food, biodiversity, economic development, etc.

(2) Systems view of life:

Modern Science has come to realize that all scientific theories are approximations to the true nature of reality. Science doesn’t have answers to natural phenomena. Mechanistic view looks at a closed view of a specific area which is a tiny part of a large system. They have dominated our culture for the past three hundred years and is now about to change. Before 1500 AD the dominant world view was that people lived in small communities and experienced nature by the interdependence of spiritual and material phenomena.

The Systems view looks at the world in terms of relationships and integration, inter-dependence of all phenomena i.e.: physical, biological, social, and cultural. Instead of concentrating on basic building blocks, the systems approach emphasizes basic principles of organization.

According to Prof. Fritjof Capra, an Austrian-born American physicist, the architect of “systems view of life” to find lasting solutions, there are solutions to the major problems of our time. They require a radical shift in our perceptions, our thinking, and our values. An “Eco system” is a living system of communities of plants and animals, microbes sharing an environment with non- living plants such as air, water, climate, soil. In my view, the above is the best illustration to understand the importance of adhering to the “system view of life” to find lasting solutions. Capra’s view is that our traditional politicians and business leaders have been unable to provide long term solutions to these problems and he welcomed the creation of social movements founded on the premises to change the current traditional sociological paradigm and to build sustainable communities.

From the systemic point of view, the only viable solutions are those that are “sustainable” Therefore, the challenge of our time is to create sustainable communities, that is, social and cultural environments in which we can satisfy our needs and aspirations without diminishing the chances of future generations. The sustainable communities need to be designed in such a way its social structures do not interfere with natures inherent ability to sustain life but support and corporate with natures inherent ability to sustain life.

(3) Structures, Processes and patterns:

The following ten points are useful in order to understand as to how the eco- system works.

1. Eco system is a living system of communities of plants and animals, microbes sharing an environment with non- living plants such as air, water, climate, soil

2. The theory of living system tries to understand this and the ecological literature deals with the basic principles of ecology (and live accordingly)

3. Nature, every organism, plant, micro-organism, cells, tissues all are in a living system.

4. All living systems need energy and food.

5. All living systems produce waste, but there is no net waste

6. Capra expresses the life of any living organism as made up of pattern, process and structure.

7. If we apply these ideas to ourselves or our organizations, we can see that in the patterns we find our identity.

8. In the processes we develop our relationships, our beliefs, our principles and behaviours becoming more conscious.

9. In the structures we become more fluid, more focused on the present moment; we become alive. 

10. The building of sustainable communities is deeply connected to our search for a new sociological paradigm.

This gave rise to the concept of Complex Adaptive Systems, as a multidisciplinary concept- are considered complex because they are made-up of diverse elements which are interconnected with each other and are adaptive in that they have the capacity to change and learn from experience.

(4) Decline in tea production, market share, revenue, despite chemical application:

In this connection, we wish to state that Sri Lankan tea production has been drastically declining over a period of time, despite supplying large quantities of imported artificial fertilizer. For an example, in 2010 the total tea production was 330 million kilos, covering 222,000 hectares, wherein some 160, 000 metric tons of fertilizer per year had been used on an average basis up to date on a regular basis, however, we have ended up with only 289 million kilos of tea production in 2020, covering 253,000 hectares. The compound annual average growth rate (CAGR) was negative 1.5% and the Sri Lankan tea industry cannot sustain anymore as both quality, quantity as well as the competitiveness have drastically eroded. As a result, our market share has come down and the foreign exchange revenue which was around US $ 1.6 Billion eight years back has now come down to US $ 1,24 million/year only. As you are aware, during the period 2017 to end 2019, a large number of tea factories had to close down and many smallholders were badly affected and the new/re planting extents were less than 1%, where as it should have been at least @2% of the cultivated extent.

As a result of excessive usage of agro-chemicals, there has been a number of rejections of our Ceylon tea consignments reported from the major important markets such as Japan, EU, UK, Saudi Arabia, Taiwan etc.  This situation has arisen due to detection of pesticide residues in the Ceylon Teas exported, which are over and the above the permitted maximum residue levels (MRLs). Tea Exporters Association (TEA) has brought to the notice of SLTB notice on number of occasions the serious non- compliances which includes detection of excessive pesticide and other chemical residues over and above MRLs. In addition, the presence of foreign/extraneous matters and high moisture levels which lead to microbial contamination & fungus formation may end up in development of micro toxin fungus – these will become health hazard.

(5) Tea plantation system as a complex adaptive system:

My own view is that the long- term goal of Sri Lankan tea industry would be to build “sustainable communities” for the tea plantations and, achieving higher foreign exchange earnings from tea exports may be only one of the unit objectives.

A sustainable community is one that is economically, environmentally, and socially healthy and resilient. It meets challenges through integrated solutions rather than through fragmented approaches that meet one of those goals at the expense of the others. And it takes a long-term perspective—one that’s focused on both the present and future.

Scientists began to observe certain properties in biological systems. The adaptation of the individual independent components within the system to the environment was one such property. The experts observed this phenomenon was visible in systems such as eco-systems, global economics systems, and social systems.

(6) Strategies implemented by the new administration:

With the new administration, the government together with the private sector stakeholders have been able to reverse the negative trends experienced previously and the higher fob prices and increased tea auction sale averages are now getting tricked down to growers, thus addressing the livelihood income issues systematically.

The Sri Lanka tea industry witnessed a recovery amidst the COVID pandemic, with a substantial increase in production and the export volume during the first quarter of 2021 compared to the corresponding period as well as the year 2020 compared to 2019.

During the Q 1- January to march ’21, the tea export revenue was Rs. 65 Billion, up by Rs. 16 billion YoY, from Rs 49 Billion during the 1Q, 2020.

Q 1- January to march ’21 cumulative production totaled 74 million kgs, up by 20 Mn. kg.

FOB price was Rs. 939/= per kilo during the Q1, which is an increase of 13%, from Rs. 827/= during the corresponding period 2020.

FOB price in US $ during the Q1 was US$ 4.77 as against US$ 4.47 during Q1 -20.

March fob in US $ was ($ 4.87) the highest ever.

FOB price during the year 2020 was Rs 867/=per kilo, when compared to Rs 823/= per kilo during the year 2019.

Consequent to this cabinet decision under the caption “Towards a green socio-economic pattern with sustainable solutions to climate change” actions have been taken by SLTB to request stakeholders to encourage them to produce, supply and use organic manure to be set up on each agro- climatic region in large quantities. It was suggested in the SLTB circular that immediate action be taken by TRI to formulate and prepare specifications of organic manure applications covering different applications such as Nursery stage, immature, mature VP and Seedling and recommendations for small holdings etc. The development of the organic fertilizer business needs high tech inputs based on R&D, the required raw material availability and market acceptance based on different crops. The regulatory issues that prohibit or delay arranging import of trial quantities of organic materials (without micro- organism) for R&D evaluation need to be addressed. The necessary guidelines from the regulatory authorities should support development of organic fertilizer at large scale.

(7) Implementation of tea industry strategic plan:

As a solution, we have recommended the stakeholders to follow strategies which includes ‘Integrated weed management system’ and migrate in to offering high quality ‘Ceylon Tea’ with near Zero pesticide & other chemicals to the global market in accordance with our ‘Tea industry strategic plan 20-25’ and CTTA tea strategy-road map.

One of the most striking features of the current operations of the stakeholders is the increased awareness and adherence of the social & environmental considerations at estate level. Ceylon tea is at an advantageous position in the global market viz; other competitors for reasons such as “Zero tolerance” policy on child labour, adherence to environmental considerations on a sustainable basis and of course the quality of Ceylon tea as perceived by the buyers. As a result, Ceylon tea continues to fetch a higher price at the Colombo auction compared to teas from other producing countries, although the cost structures and productivity levels of our estates are totally disproportionate to make the industry commercially viable in short to medium term scenario.

Tea plantations have to therefore pursue environmentally friendly and socially responsible practices & methods in all their agricultural field operations (i) tea manufacturing processes(ii) and managing its employees (iii)to ensure that all-natural resources and eco-systems will be managed in a sustainable manner. The companies will have to make every endeavor to conserve the usage of all resources by optimizing resource utilization and minimizing waste through practicing cleaner production principles. They will strive to be self-sufficient in green energy to operate all our tea factories through harnessing the hydropower potential within all the lands belonging to the company.

There are many strategies recommended by TRI and others such as development of Agro- forestry farming systems using all unutilised estate land to have ‘nitrogen fixation’ as suggested by Chairman TRI. This will improve the soil porosity, provided we issue guidelines instructing them to follow TRI guidelines on Integrated soil fertility management strategies as mandatory good agricultural practices (GAP)towards minimizing soil acidity, top soil erosion and wastage of inputs etc.

(8) Conclusion:

As stated, it is a fact that there has been no increase in productivity, but a gradual decline in tea productivity measured in terms of the yield per hectare in Sri Lankan tea estates, partly due to continuous application of chemical fertilizer and due to difficulties in adopting mitigating strategies to arrest negative impact of climate change. This depleted soil condition and land degradation issues need to be corrected as a matter of priority.  This proposed strategy will enable the growers at least to correct the high acidity levels in the soil and improve soil porosity and tea product quality.

In sustainability circles much is written about “three pillars of sustainability” or in other words, “triple bottom line” of environment, society, and economy. My own view is this is to confuse ends with means. The Environmental sustainability and Human well-being are two desirable points. Economic wellbeing in the long run is driven by those two. In other words, the necessary precondition for long term economic sustainability and profitability of the tea estates is environmental and social well-being from the long- term perspective.

As for marketing of tea in the global markets, the discerning customers have high expectations of the standards and practices applied by the supply chain including tea estates. For example, Tea” is made according to the principles of “sustainable food” thus providing values to discerning customers, employees and all other stake holders. SLTB global promotion campaign aims to popularize tea drinking around the world in order to expand demand and increase per capita consumption, using three USPs; authenticity means demonstrating sustainability credentials, wellness factor and the premium quality of Ceylon Tea.

If the estate management does not look at long term view, it is unlikely they make profits on a continuous basis. Eventually, the long- term value creation for the shareholders depends on the sustainable development of the estates and the community in which they operate. That is why I consider tea plantation sector as one of the truly complex adaptive systems.

Are we leaving the tea plantations to future generations in a better condition than the one we inherited?