Despite displeasure of the Treasury Secretary and Dilmah, the best and only way for the one time lucrative tea industry to regain its momentum is through ‘liberalization’– that is to allow more imports for value addition and ‘blending’, a concept mooted as ‘Tea Hub’, former president of the Tea Exporters Association (TEA), Niraj de Mel reiterated last week. His comment came in the midst of total volumes exported in the year 2012 falling for the second consecutive year to about 320 million Kilograms from about 323 million Kgs exported in 2011 despite tea export revenues seeing an increase by about 9.5% to Rs.180bn partly owing to the depreciated Rupee.
Addressing the dealer conference of Dilmah last year, the Treasury Secretary Dr. P. B. Jayasundara had mentioned that in order to maintain quality and image of the local product, it is vital that import of tea is ‘banned’. But however, looking at the current situation, the industry expert, De Mel noted that the government should negotiate with local suppliers and look at ways in which they can increase production levels, so that the drop in volume that occurred last year can be recovered thereby.
“The volume of exports had dropped by some million kilograms last year from 2011. In monetary terms too, with the rupee depreciating by a near 12 percent, there was a visible crisis in the industry”, de Mel noted. “The value addition was seen stagnant as well. In most plantations, for better harvest, the old bushes need to be replaced. So unless these matters are addressed, the sector will remain stagnant, if not further drop to unhealthy levels”, the Secretary General of Tea Exporters Association remarked.
“Liberalizing is not opening flood-gates. What most exporters requested was to set the bar low on imports so that with better volumes and varieties, the ‘brands’ can expand their portfolios and stand ahead of competitive countries like Kenya and India in terms of volume and variety” he said. Also he mentioned that these ‘imports’ naturally should be varieties of tea, that are not available locally. As Sri Lanka is looking at becoming world’s hub for tea – such blending and extensive value addition must be encouraged he further stressed.
“The government, on their part should burrow whatever technology and resources needed and dedicate to improving the industry instead of tightening restrictions” de Mel who recently retired as the Managing Director of Van Rees Ceylon said. Adding to it he also said that, the future of the industry is secure as, “Good news is that the populations had risen, and so has the demand for tea in the world market”.
Also de Mel said that to maintain the status in the market until the matters are addressed, the regulator must ensure that no tea of substandard leaves the country. Elaborating, he added, “For we call ourselves suppliers of premium tea, government should ensure that all players ‘walk the talk’. And the current trend is that, if one of the competitive countries face with some disaster natural or otherwise unexpectedly, we must have volumes to cater to their markets gain advantage over such circumstances”