Challenges Facing the Industry Front and Centre

Tea Exporters Association (TEA) Sri Lanka held its 23^rd Annual General Meeting on the 9^th of September 2022, at the Oak Room, Cinnamon Grand, Colombo. The theme of this year’s event, which is the first in-person AGM of the Association since the pandemic, was “The Challenge of Change”. The Chief Guest at the event was the Hon. Dr. Ramesh Pathirana, Minister of Plantation Industries, while Mr. Niraj De Mel, Chairman of the Sri Lanka Tea Board, was the Guest of Honour. The keynote address, entitled “The Challenge of Change for Tea” was delivered by Sri Lankan Economist, Social Scientist, and Senior Lecturer at Erasmus University – Rotterdam, International Institute of Social Studies – The Hague, Professor Howard Nicholas.

Mr. Ganesh Deivanayagam, Chairman of Eswaran Brothers Exports was elected as the new Chairman of the association for the 2022/2023 period. He succeeds Mr. Sanjaya Herath who led the association for three years from 2019-2022.

Speaking at the event, Minster of Plantation Industries, Dr. Ramesh Pathirana said, “Historically, Sri Lanka produced the highest quantity of tea in 2013. In recent years, China, India, and Kenya have overtaken us so we are 4th in relation to the production quantity, but Ceylon tea is still renowned as the highest quality tea. We looked at the values and by the end of July of this year, production was less than 20 million kilos than we had in 2021. However, our export income has not decreased and we recorded $695 million by the end of July. We will work together and do everything possible to uplift the state of tea production and its market values.”

A number of the challenges faced, and still to be faced, by the industry were discussed at TEA’s 23^rd AGM. It was noted that the industry had pivoted away from its traditional technophobic stance, having instead adapted to include technology wherever possible, including doing away with the iconic 150-year-old public tea auction by the open outcry, in favour of a digital, electronic auctioning system, helping to overcome many challenges.

Chairman of the Sri Lanka Tea Board, Mr. Niraj De Mel also commented saying, “We are more than convinced that there is no substitute for Ceylon Tea. It is our responsibility as stakeholders to draw up a blueprint for the tea industry by amalgamating the 5-year tea strategy and CTRM 2030 in order to take the Tea industry to new heights. I also take this opportunity to recognize the TEA scholarship programme which is seeing an annual contribution of 1 million rupees to help children in the estate sector and rural areas.”

‘’As a result of the seriously poor decision to ban chemical fertilizers, Sri Lanka’s tea crop, across all elevations, from January to July 2022 recorded a significant 18.6% decline, a shortfall of 35.07 million kilograms, when compared with the corresponding period in the previous year. This is even a marginal decrease when compared against the crop figures of January to July 2020, during

the height of the pandemic. In fact, this is the lowest crop on record for the comparable period since 1996’’, Mr. Sanjaya Herath, the outgoing Chairman stated.

In terms of tea export quantities too, the Association outlined that a significant decline of 9.77% was recorded from January to July 2022, when compared against the corresponding period in the year prior. Export quantities totaled 148.05 million kilograms for the period, which is a 14.47-million-kilogram shortfall when compared to 2021. The Association noted that the contraction in export volumes was almost entirely due to the crop shortfall, while exports to Russia were dampened owing to the tensions in Ukraine.

Speaking at the event, the new Chairman of the association, Mr. Ganesh Deivanayagam said, ‘’Our excellent primary conditions and strategic locations should optimize to enhance production and increase revenue respectively’’.

In terms of nominal export revenues in Sri Lanka Rupees, the industry witnessed a very handsome 37% growth rate for the period. However, this increase is largely attributed to the sudden depreciation of the Sri Lanka Rupee, which fell by about 80% against the US Dollar in March 2022. Consequently, prices at auction rose quite phenomenally, with teas hitting all-time-record Sri Lanka Rupee prices during the period.