By Jayampathy Molligoda/ Chairman,
Sri Lanka Tea Board

During the last 18 months, we have seen excellent performance by Sri Lankan tea industry, especially due to the efforts by the ‘Ceylon Tea’ promoters, exporters and producers who have taken up the challenges such as stiff competition from low- cost supplies of other origin teas, high Freight charges, difficulties in arranging logistics due to stringent health precautionary measures under COVID-19; even foreign and local media have commended Sri Lankan tea industry achievements. Before this administration took over, the fob prices of Ceylon Tea during the year 2018 and 2019 have been Rs 822/ per kilo and Rs 823 per kilo respectively. It had gone up to Rs 867/ per kilo during the year 2020 and, as a result the average sale price of tea at the Colombo auction had also increased to Rs 627 /- per kilo (increase of Rs. 82 during the year 2020 when compared to 2019).

Performance during the period January to end June 2021:

During the period, January to end June 2021, Sri Lankan tea export revenue has further increased to Rs. 127 billion from Rs 106 billion in end June 2020, whereas the fob price has increased to 932/ per kilo, which is US$ 4.75 compared to US $ 4.60 and UDS $ 4.67 in 2019 and 2020 respectively. This fob price is a substantial increase from 2019 and 2020 same period, where fob prices were only Rs. 839/ and Rs 855/= respectively. The national tea production during the first ‘six months’ has also increased to 160 million kilos, which is a 25% increase compared with the same period,2020. With the substantial increase in tea production, there is a general tendency for auction prices to come down, but it will pick it up by September with winter buying by our tea exporters. Nevertheless, the total revenue at Colombo tea auction level has increased to Rs.98 billion from Rs.82 billion during the first six months ending June 2021, although the sale average was one rupee less compared to end June. 2020. Tea small holders continue to receive good income under difficult conditions thus trickling down the benefits to the farmers.

Tea supply chain-real producers:

The tea smallholder sector is a sig­nificant contributor operates in 60% of the total tea land and account for more than 73% of the total tea produced in Sri Lanka. We could pay tribute for the invaluable service and enormous sacrifices made with the sweat of the toiling workers which ultimately serves the connoisseur to his or her satisfaction. It is a great story on uplifting women’s empowerment from birth to death.

Sri Lanka Tea industry was able to make progress for the betterment of Ceylon tea, through aggressive strategy implementation:

Launching the first ever E- Auction system for tea successfully.

Launching of a social media campaign for the promotion of Ceylon Tea globally.

Initiative for Tea Nursery Programme to produce 30 million quality tea plants.

Implementation of a Subsidy Scheme for Replanting and organic fertilisation

Introduction of Model Tea Garden Subsidy Scheme for dissemination modern technology in tea planting.

Exercising Special Investigations/enquiries to enhance the quality of Ceylon Tea.

Ceylon tea origin verification through ISOTOPE technique to obtain GI registration

Rolling out of programmes/ new initiatives to ensure reasonable price for tea growers.

Conventional plantation economy into green socio-economic pattern:

With the state policy decision to transform conventional plantation economy into green socio-economic pattern thus providing sustainable solutions to climate change and improve soil fertility and product quality, it has become a challenge for tea growers to provide with N, P, K nutrients. This is because there had been an excessive use of chemical fertiliser and undue overdependence, without following integrated balance nutrient management system and soil fertility management strategies by the stakeholders. As a result, the soil quality has deteriorated over the past many years, resulting a gradual decline in national tea production despite increase in cultivated extent and use of chemical fertilisation.

Arrangements have been made to bridge the gap between the requirement of nitrogen, P, K etc. and availability of balanced nutrients through increased domestic production as there is a time lag in putting this into action, both by the private sector and government authorities. In par with the Government’s decision to restrict and ban the import of synthetic fertilizers and agrochemicals and in line with the vistas of prosperity targets that State encouragement to promote organic fertiliser for tea sub sector, SLTB has taken several steps as shown below;

Registration of existing bio-fertiliser manufacturing companies and conducting several knowledge-sharing sessions with them to build a relationship and obtained their willingness to share their technical knowledge and knowhow with new entrepreneurs who wish to enter the fertilizer manufacturing process.

Introducing a Model

Organic/Biofertiliser producing plant with a subsidy scheme covering all Tea Inspector Regions under supervision of regional offices of Sri Lanka Tea Board- under the program – the subsidy amount per plant is Rs.500, 000/=

Other than Model projects, to encourage Organic/Biofertiliser producers by focusing new entrepreneurs who wish to establish Organic/Biofertiliser producing plants, another subsidy scheme to be introduced @ Rs 300,000/ subsidy per unit.

The project would further boost the total tea industry Organic/Bio fertiliser requirement and solid compost/Bio char/Liquid fertiliser and related pesticides are planned to produce under the project. The good news is there has been a greater awareness and active participation by stakeholders to manufacture organic fertiliser stemming from conventional composting, bio liquid fertiliser, vermi composting, fish tonic liquid fertiliser, request for importation of need seed and humic acid/sea weed without having harmful ‘micro- organism’. The reality is that we are reluctantly compelled to import single source nitrogen extracts to meet the demand during the transitional period in order to meet the nutrient deficiency. One important aspect is, as a country we need to enhance laboratory testing capabilities for both organic and conventional teas and fertilizer samples- as currently ‘organic’ exporters send samples to Germany before they are used in production.

Focus on Ceylon Tea quality as perceived by discerning consumer:

Towards quality improvements, SLTB has given strict instructions and actively involved with stakeholders, where there had been some malpractices committed for a long period of time by few unscrupulous tea producers adding sugar and other chemicals during manufacture, which the authorities have detected and stern action has been taken by SLTB to arrest the situation. It had improved the prices, consistency in the products and overall quality, thus maintaining Ceylon tea image with purity, naturalness and freshness. We have repeatedly stressed that we need to maintain the momentum by offering quality Ceylon tea packaging to discerning consumers world over without compromising quality. However excessive residues of agro-chemicals have been detected recently in few isolated invoices produced by RPCs -as a result some sophisticated markets such as Japan and EU have expressed concerns, and stringent action is being taken by SLTB to arrest the situation.

In line with the targets set under CTRM strategic plan-2030 drawn up by CTTA and Tea Board in consultation with all the stakeholders, one of the objectives set by the private sector stakeholders’ is the glowers, manufacturers and value- added marketers jointly deliver a pure, healthy beverage that is environmentally friendly and ethically sustainable. During the last 18 months, Sri Lanka Tea board implemented many promotional activities in the overseas markets. As a result, it increased the Ceylon Tea awareness and facilitated the exporters to increase the exports in terms of value and volume as explained above.

The exchange rate policy of the government also would have contributed to the increase in rupee fob tea prices. In real terms, the US $ price of teas have gone up to US $ 4.75 due to efforts by our tea exporters, Ceylon Tea promotion campaign by Tea Board. Obviously, the naturalness and purity of Ceylon teas have also helped to improve these price levels. The large plantation companies have now reported net margins and profits during the year 2020 and up to first quarter 2021 partly due to these government actions. We have also been receiving favourable responses from international agencies, discerning tea consumers who really appreciate engaging responsible business of marketing Ceylon Tea under ‘sustainable food’ concept. The government policy shift from use of agro-chemicals and artificial fertiliser to organic /bio fertiliser should be viewed in that perspective in order to realise true potential of our tea marketing efforts gaining higher revenue. In other words, this should not be construed as a directive to immediately produce and market organic tea, but start the journey of offering pesticide free Ceylon tea in the niche markets and eventually moving towards adhering to organic farming of tea. It is true that organic tea market is around US &$ 900 million only and it’s growing around CAGR of 11.2 %. Let us start marketing 30-50 million kilos.

Conclusion:

Ceylon Tea is considered the “Best in Class” orthodox teas in the world tea scenario, stemming from the high quality of our tea leaves and unique characteristics of Ceylon tea, enriched by diverse micro-climatic conditions of our tea estates. SLTB has commenced “Ceylon Tea Global Promotional Campaign” in the overseas markets after consulting private sector stakeholders within the overall tea strategy- road map 2030. The promotional campaign has specifically planned through social media, with the use of Key Opinion Leaders (KOLs), public relation activities as well as strong digital presence and e commerce platform, search engine optimisation etc. following three unique characters will discuss through the campaign

1. Authentic Product – Sense of Realness

2. Wellness – Drinking natural healthy stuff

3. Premium – because of that, high price.

In view of the foregoing, it is important to pay tribute to the stakeholders of Sri Lankan tea industry which is a vital sector for the progress of our economy. The involved people need to be recognized. The global value chain players in the tea value addition cycle from the farmers to pluckers, manufacturers, brokers and right up to the exporters /brand marketers along with the government regulators/ facilitators must be given due recognition. What is needed today is a shared understanding. So, this is a fascinating story where all the stakeholders in the tea industry could bravely “walk the talk and demonstrate sustainable credentials.

Challenges are there but this will separate men from boys.