By Dr. Roshan Rajadurai
The recent move by the government to ensure the availability of fertiliser critical for the country’s agriculture sector is welcomed by all industry stakeholders – including the Regional Plantation Companies (RPCs), which cultivate tea, rubber and other plantation crops. This is a crucial source of support at a time the tea industry in particular, is facing numerous challenges. Hence, the government’s actions are appreciated and commended by all RPCs.
However, recent discussions on fertiliser have brought to the fore certain misconceptions held by certain critics and members of the public on agricultural practices in Sri Lanka’s tea plantations – which produce the world-renowned ‘Ceylon Tea’, one of Sri Lanka’s largest exports and foreign exchange-earners.
Hence, this article will address such myths and misconceptions and put the record straight on the practices with regard to fertiliser and agro-chemical usage in tea plantations managed by Regional Plantation Companies (RPCs).
At the onset, it should be noted that more than 70% of Sri Lanka’s tea is produced by the smallholder sector, which does not come under the management of the RPCs. RPCs can only comment on practices adopted on plantations managed by Regional Plantation Companies.
Adherence to ‘Integrated Agriculture’
Integrated agriculture practices refer to the use of a combination of traditional and modern methods for cultivation, done with due focus on social and environmental factors (beyond mere commercial considerations), with the intention of ensuring long-term sustainability.
Sri Lanka’s tea plantations have been producing output of the highest quality, meeting highly rigorous international quality standards for more than 150 years, which would clearly not have been possible without the use of integrated agriculture practices.
To provide an example of how this is practised operationally, for weed management, RPC plantations use various biological methods (for instance, predators which consume and control the population of harmful insects) and do not rely exclusively on synthetic/chemical inputs. Similarly, all activities related to cultivation, plant protection etc., use a combination of traditional practices, organic material and recommended agro-chemicals used in prescribed quantities.
International accreditations and certifications
Some appear to be of the view that RPCs apply agro-chemicals liberally in large quantities. Firstly, this would be highly imprudent and would go against the very interests of the RPCs. Agro-chemicals are a notable component of the cost of production (CoP), and over-application would simply increase costs.
This myth is also dispelled by the fact that the tea industry of Sri Lanka is by far the most environmentally and otherwise certified tea industry in the world. RPC plantations have been accredited and certified by numerous internationally-reputed organisations such as Rainforest Alliance, Forest Stewardship Council, Fairtrade International and adhere to Good Agricultural Practices (GAP).
In addition, Sri Lankan tea has been recognised as the world’s ‘cleanest’ tea since 1975 by the Food and Agriculture Organisation (FAO) of the United Nations (UN).
95% of Sri Lanka’s tea production is exported. Shipments of tea produced in Sri Lanka are exported to countries, including European countries, with stringent standards in terms of maximum residue limit (MRL), which refers to the highest level of a chemical residue legally allowed in food and beverages.
Robust local framework on agro-chemical usage
Baseless allegations on high agro-chemical usage by tea plantations are also a disservice to the invaluable contributions of globally respected organisations such as the Tea Research Institute (TRI) of Sri Lanka. TRI follows a rigorous testing and approval process in allowing the use of agro-chemicals for tea cultivation.
Following trials, often conducted over several years, agro-chemicals have to be approved for use by an independent professional committee.
While some have claimed in the past that certain chemicals used in tea plantations contributed to health issues in non tea-growing parts of the country, reputed local bodies such as the National Science Foundation has refuted such baseless claims.
Multiple safeguards at the producer, national, international and buyer level ensure strict compliance of the RPCs with best practices in agro-chemical usage.
Niche markets are not a viable option
Some on the other hand, have speculated on the possibility of avoiding agro-chemical usage in Sri Lankan tea plantations by opting for organic cultivation.
Unfortunately, the biggest deterrent to organic tea cultivation is completely beyond the control of growers, as it is the preference of buyers of Ceylon Tea. Ceylon Tea is known and preferred due to certain properties such as aroma, taste and colour. These properties are impacted by the type of plant nutrients applied. When organic inputs are used, the final products tend to differ significantly in terms of appearance, taste, aroma etc. from Ceylon Tea that buyers prefer and are accustomed to. While few plantations have attempted cultivation of organic tea, a number of such experiments have failed due to lack of buyer demand.
There is certainly a small niche market globally for organic tea – which is less than one percent of the total market. However, Sri Lanka’s tea industry, which is already facing severe challenges on multiple fronts, is in absolutely no position to completely re-align itself (including by finding new markets and buyers) to switch and cater to this small segment. An industry which exceeds USD 1.2 billion in value (in terms of total export earnings in 2020) cannot sustain itself by catering to a small niche.
It should be noted that RPCs are responsible for providing employment to 105,000 workers in total and for providing various facilities for a total resident population of approximately one million. Beyond commercial considerations of individual companies, it would be highly irresponsible for the RPCs to ‘bet’ the wellbeing of nearly five percent of the country’s population resident on RPC plantations on a highly niche and a still emerging sector.
In addition, practically, adoption of entirely organic cultivation would be highly challenging. At Rs. 1,900 per kilogram, the estimated production cost of one kilogram of organic tea would be equivalent to nearly three times the cost of production of one kilogram of tea produced via conventional methods.
Greater possibility of disease under organic methods
Another consideration which cannot be ignored is the probability of greater disease, if 100% organic cultivation methods were to be adopted. Many Sri Lankans would have heard of the famous ‘coffee leaf rust’ which commencing in 1869 entirely wiped out Sri Lanka’s significant extent of coffee plantations at the time.
Due to lack of ability (in terms of availability of agro-chemicals etc.) at that time to treat the fungal disease, the entire industry was wiped out. Now, while thanks to advances in agriculture and technology it is possible to address such challenges, it would be extremely difficult to do so, without the use of agro-chemicals to any degree.
For instance, at times of high humidity in plantations, it can be necessary to apply fungicides. If not, due to fungal diseases 20% to 30% of the crop could be lost within a relatively short period of time. Hence, while the coffee leaf rust example is an extreme scenario, it is not one which can be ruled out. Anywhere in the world where conventional agriculture is practiced, agro-chemicals are critical in dealing with such challenges.
Unlike fungicides, lack of application of suitable fertiliser in sufficient quantities may not be immediately apparent in tea. However, given that tea is perennial crop, with tea bushes being able to produce output for 30 or 40 years or more, once the changes start to manifest within a period of perhaps six months, the impact could potentially be long-term and last throughout the life of the tea bush.
Critics can perhaps make invalid comparisons to dispute the above, such as stating that even in midst of fertiliser shortages, national tea production has increased thus far this year, compared with the previous year. This is simply due to last year being unfavourable for tea production, with the drought resulting in a massive 40% crop loss.
RPCs invested in the industry’s future growth
In conclusion, despite certain claims to the contrary, Sri Lankan tea plantations managed by Regional Plantation Companies adhere to all necessary safeguards with regard to responsible agro-chemical usage at both national and international level. If not, the Ceylon Tea brand would not be as strong and internationally-acclaimed for its quality.
RPCs have actively and voluntarily adopted measures such as integrated agriculture practices, to minimise usage of agro-chemicals and incorporate organic elements and biological methods. However, there is an extent to which this can be done and converting to organic tea cultivation for the industry as a whole is not a feasible solution, considering that organic tea is a small, highly niche sector. In addition, converting entirely to organic creates other risks, including greater prevalence of disease.
RPCs have been part of the Ceylon Tea industry for many decades and are not looking to make a ‘quick buck’ and endanger the industry’s sustainability, our own and the livelihoods of our workers, by irresponsible usage of agro-chemicals. RPCs have made a significant contribution to the development of the Ceylon Tea industry and the long-term growth of the industry is very much in our interest. Hence, I would urge all industry stakeholders and members of the public to not be swayed by myths and misconceptions on the practices of RPCs with regard to agro-chemical usage.
Oil cartel leader warns of prolonged high prices
The price of oil will continue to stay elevated as demand for energy increases, says the secretary general of Opec+.
Opec+ is a group of 23 oil-exporting countries which decides how much crude oil to sell on the world market. “We see demand growing about 2.4 million barrels a day,” Haitham Al Ghais told the BBC.
Saudi Arabia said it would be cutting its production of crude oil by a million barrels a day to boost prices.
The International Energy Agency (IEA) said the decision by Saudi Arabia and Russia – two major oil producers and members of Opec+ – to cut production could cause a “significant supply shortfall” by the end of this year.
Al Ghais said: “This is a voluntary decision taken by two sovereign nations, Saudi Arabia and Russia. This decision can be described as precautionary or pre-emptive because of uncertainties”.
Following Russia’s invasion of Ukraine in February 2022, oil prices soared, hitting more than $120 a barrel in June last year. They fell back to a little above $70 a barrel in May this year, but have steadily risen since then as producers have tried to restrict output to support the market.
Brent crude, a benchmark for prices, breached $95 a barrel on Tuesday amid predictions of shorter supplies, with fears the price may breach $100 per barrel. The rise prompted a warning to drivers that fuel prices could rise in the coming 10 months, and stoked fears that inflation in key economies could be prolonged.
But Mr Al Ghais said Opec was more concerned about “under investment” in the oil sector. “Some have called for stopping investments in oil. We believe this is equally dangerous. It will lead to volatility in the future, possible supply shortages. And therefore we at Opec have always advocated for the importance of continuing to invest in the oil industry as we also invest in decarbonising the industry and move on to adding other forms of alternative energy such as renewables”.
Asked if he was concerned about rising oil prices affecting inflation around the world if it goes above $100 a barrel, Mr Al Ghais said it was “important not to look at things in a short-sighted manner”. “For next year we see demand continuing to grow north of 2 million barrels a day – of course, all subject to some of the uncertainties in the global market. Nevertheless, we still feel quite optimistic that global oil demand is going to be quite resilient this year”.
Mr Al Ghais said that the oil industry would need close to $14tn in investment to the year 2045. “Energy demand will grow by nearly 25% by the year 2045 compared to what it is today – and all forms of energy will be required”, he said.
His comments come ahead of a meeting of key oil players on Wednesday in Abu Dhabi for the International Petroleum Exhibition and Conference (ADIPEC).
Leading US-based international trade finance services provider to set up in Sri Lanka
By Hiran H.Senewiratne
Leading US-based international trade finance services provider, iBEX Global, will officially set up in Sri Lanka soon.
Chairman and founder of iBEX Global, based in Atlanta, Georgia, Maverick Robinson who is currently in Sri Lanka, at a special event held recently at Galle Face Hotel, said that Sri Lanka is the third country after UAE to launch their operations.
“We have been following developments in Sri Lanka since August 2022 and have appointed Jayamal Hewage as our Managing Director, Robinson said.
Hewage is the Group Managing Director of Jayamal Holdings Group of Companies.
Robinson said that iBEX Global was set up four years ago by him in the US in the thick of the COVID pandemic at a time when companies were shutting down.
Robinson added: “We saw a huge vacuum for logistics and international trade finance services, mainly to import personal protective clothing (PPE), like masks from countries like Malaysia and Indonesia. At that time the supply chains and support services were completely in disarray but we quickly gathered a professional team, created and opened a new supply chain, helping to save and protect the lives of many.
“By doing this we proved that there is opportunity in crises and we see similarities in Sri Lanka and this is why we decided to open here. Our primary focus centers on providing international trade finance services tailored to each customer’s unique needs.
“We see that with better marketing networks, attractive packaging and product financing (of which we are experts) Sri Lanka’s exports could be increased by almost 20% in less than a year.”
Meanwhile, Jayamal Hewage said: “In Sri Lanka we intend to cater to medium, small and macro sized companies and those who come on board with us will be provided technical advice on product development, superior packaging and other technical advice, all free of charge.
“iBEX Global can even offer financing up to USD 10 million for companies to develop their product range.
“They would also be linked with new global markets that were not accessible to them.
“Our services also include Standby Letters of Credit, Bank Guarantees, RWA Documents, Documentary Letters Credit and many other similar services.”
Sri Lanka slips in Economic Freedom
Sri Lanka ranks 116 out of 165 jurisdictions included in the Economic Freedom of the World: 2023 Annual Report, released by Advocata Institute in conjunction with Canada’s Fraser Institute. The current ranking represents a decline in the economic freedom of the country which ranked 104th during 2020.
The report measures the economic freedom of individuals—their ability to make their own economic decisions—by analyzing the policies and institutions of 165 jurisdictions. The policies examined include regulation, freedom to trade internationally, size of government, legal system and property rights, and sound monetary policy. The 2023 report is based on data from 2021, the last year with available comparable statistics across jurisdictions.
Sri Lanka’s decline in score was driven by 4 out of the 5 sub indicators of economic freedom registering declines in their respective individual scores. These indicators are the size of government, access to sound money, freedom to trade internationally, and the regulation of credit, labour, and business. The only indicators that registered an improvement in its score is the indicator of legal system and property rights.
“The report captured a stark warning: Sri Lanka’s economic freedom declined prior to the economic crisis of 2022, a testament to the vulnerability of nations with limited economic freedom in the face of economic turmoil. If the country is to recover, Sri Lanka must prioritize economic growth within the framework of maximising economic freedom for its citizens to trade, work, and transact freely in a stable monetary and fiscal environment” said Dhananath Fernando, Chief Executive Officer at the Advocata Institute.
The number one spot is now occupied by Singapore, followed by Hong Kong, Switzerland, New Zealand, the United States, Ireland, Denmark, Australia, the United Kingdom, and Canada. Other notable countries include Japan (20th), Germany (23th), France (47th) and Russia (104th).
Venezuela once again ranks last. Some countries such as North Korea and Cuba can’t be ranked due to lack of data.
The Fraser Institute produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 countries and territories. It’s the world’s premier measure of economic freedom.
The report was prepared by Professor James Gwartney of Florida State University and Professors Robert A. Lawson and Ryan Murphy of Southern Methodist University.
According to research in top peer-reviewed academic journals, people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives.
For example, countries in the top quartile of economic freedom had an average per-capita GDP of US$48,569, compared to US$6,324 for bottom quartile countries. Poverty rates are lower. In the top quartile, less than one per cent of the population experienced extreme poverty (US$1.90 a day) compared to 32 per cent in the lowest quartile. Finally, life expectancy is 81.1 years in the top quartile of countries compared to 65 years in the bottom quartile.
“Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives,” Fred McMahon, Dr. Michael A. Walker Research Chair in Economic Freedom with the Fraser Institute said.
See the full report at www.fraserinstitute.org/economic-freedom.
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