The Sunday Leader

Promoting Tea On Eve Of Wage Hike

  • Going Offshore, Option

A seminar on the tea industry held last week was inferred as being akin to “Admiral Horthy without a ship” by at least one of the speakers on the alleged grounds that policymakers were absent at this meeting to make decisions, though Sri Lanka Tea Board (SLTB) Chairman Ms. Janaki Kuruppu was among the participants.
Rohan Fernando who heads HVA Group told the audience that this was a forum to discuss issues.
Policy matters cannot be discussed as decision makers are absent at this event. This matter arose after this reporter asked the forum whether the way forward for the industry was through the liberalization of the tea sector?
Malik Fernando of Dilma, a grower and exporter of tea, and an opponent of the liberalization of the industry, was of the opinion that if that was to happen, Sri Lanka would end up being a tea supplier, with the “Ceylon Tea” brand equity lost to foreign brands.
Rohan’s point was while protecting the “Ceylon Tea” brand, for the country to open up the industry to cater to the other category of global consumers. He said that there are three options available: Either Sri Lanka opens up, or continues the way it has been doing for the over 100 years of existence of the tea industry or  for Sri Lankan tea exporters to go out of the island to establish tea blending plants in overseas markets where there are no  such restrictions as currently found here,
Further, the views of some, including Hilmy Cader of MTI Consultancy, responsible for organizing this forum, were that in major markets for Sri Lankan tea, particularly the Middle East, North African and the Russian/CIS regions which absorb 78% of Sri Lankan teas, those markets were moving over from traditional trade (grocery stores, corner shops and such like) to modern trade / retail (supermarkets).
The catch was that Sri Lanka tea was catering to the traditional trade in those markets, he said, whereas modern trade was all about branding. The question then arose as to whether Sri Lanka has the necessary wherewithal to undertake an expensive branding campaign in international media? A solution touted to this was the importance of having the industry united so that resources may be pooled to launch such a campaign.
This forum was held on the eve of the industry together with the SLTB about to launch a campaign to promote the “Ceylon Tea” generic identity worldwide. Kuruppu said that though the “Ceylon Tea” generic brand name and the complementary “geographic indicator” to the same have had been registered internationally, the logistical problem faced by SLTB was in its implementation.Another bug affecting the competitiveness of the industry was its high cost of production egged on by high labour rates in the plantation industry.
With the next collective agreement pertaining to wages in the plantation sector due to start in March, this politicized industry, since its reprivatisation  in 1992 has been dogged by a politicized labour force, where winning salary hikes successfully was not necessarily linked to merit or on productivity, but to the political muscle of unions.
Ceylon Tea yet fetches a premium price in world markets, but with production stagnating, whereas globally production has been steadily growing, the island has been losing its market share in volume terms from first to third position as an exporter, with Kenya currently occupying the number one slot, followed by China.
Another problem highlighted at this forum was the poor investment in research and development, whilst also giving scant respect to the importance of producing green teas and CTCs, for which demand in the world market has been increasing.
A point made by Kuruppu was the dependence on the rupee depreciation for enhancing export income in this US$ 1.4 billion industry, rather than by value addition and enhanced export volumes.

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