Crisis in the tea industry: Some possible solutions - II

November 12, 2015, 8:02 pm 

By Dr. Janaka Ratnasiri
(Continued from Wednesday)

Manufacture of CTC tea

Currently, the major destinations of Ceylon Tea is Russia and several ME countries including Iraq, Iran and Libya, all in turmoil, accounting for over 70% of total exports and these comprise mostly bulk black tea. On the other hand, countries in the West prefer tea bags, and if Sri Lanka wishes to capture these markets, more tea needs to be manufactured as tea bags.

Tea being one of Sri Lanka’s primary sources of foreign exchange, it is surprising that neither the government nor the industry has not taken any meaningful measures to recapture the markets in the West that Ceylon Tea had many decades ago and be content with markets in countries whose economies are fragile.The industry appear to be continuing business-as-usual production which it has been doing for over a century with no drive to adapt to changing market trends, except perhaps a very few.The manufacture of tea bags require CTC tea, but as explained by a former Director of TRI, the industry was not willing to shift to CTC manufacture even though the government was willing to provide subsidies up to 85% to meet the capital cost.

According to a website on CTC tea (www.teamechindia.com/mini_tea.html), India has developed mini-plants for the manufacture of CTC as a cottage industry with capacity of only several hundreds of kilograms of green leaf per day. The investment is little and it is said the rate of return could be around 25%. Apparently, their production has a good demand. Traditionally, tea was grown by British companies owning large estates and hence large factories were built to cater to their own green leaf production. Despite the fact that the majority of tea production is now in the hands of small holders in the low country, the same tradition of building large factories continues. The SLTB could consider the introduction of these mini-plants enabling the small holder societies to undertake the manufacture of CTC tea by themselves under their supervision and promote their sales, if the large factories are not willing to manufacture CTC tea. The profits now earned by the large factories could then be diverted directly to the small holder.

The UK market

The 2012 Annual Report of SLTB says that "the UK market was transformed into a predominately tea bag market accounting for approximately 96% of tea cups drunk daily in UK brewed from tea bags". Tea consumption in UK which was 1.97 kg/capita/year is among the highest in the world.Total amount of tea imported to UK was 144.6 kt in 2012, out of which only 30 kt was imported from Asia, the balance coming from Africa. Regrettably, SLTB having identified the market needs in UK, has not taken any initiatives to capture that market for Ceylon Tea.

The exports to UK from Sri Lanka in 2012 was only 2,300 t which was only 0.7% of SL’s exports and 1.6% of all tea imported to UK. If SL wishes to capture a greater share for SL tea in UK, it will have to supply tea bags rather than bulk tea. Currently, tea bag production is only about 9%. What are the impediments against increasing this share? If the factories need to install new machinery, isn’t it worth government providing some assistance to tea factory owners to enhance their tea bag production?

Currently, tea marketing in UK is in the hands of three multi-national companies two of which have operations in Sri Lanka (SLTB AR 2012). The SLTB could initiate negotiations with them to get our products into the shelves of grocery shops and super markets in UK. Once they get firm orders with time targets, manufacture could commence to meet those targets. Concurrently, it could initiate a publicity campaign along with opening of a tea promotion unit in UK.

The North American market

With respect to USA market, the SLTB Annual Report says the highest growth in the USA market was for ready-to-drink (RTD) products sold in cans and bottles. SL’s export to USA in 2012 was only 3,277 t comprising only 1% of SL’s exports and 1.6% of tea, which is imported to USA predominantly from Argentina. At a National Tea Forum held in Colombo recently, a foreign guest speaker said that SL’s tea industry should endeavor to come up with innovative products rather than continuing with traditional products and he mentioned particularly RTD products as an example.

In this respect, I recall a scientist who moved from the TRI to CISIR several decades ago developing a carbonated tea-based drink which was acceptable during trials. Subsequently TRI had also developed a RTD product in association with a private company (TRI, 2003). However, it was not picked up by the industry to make it a commercial product that time. Currently, however, a minute amount of RTD is exported, according to SLTB database. A tea-extract based tea syrup for preparing ice-tea was exhibited at a recent Tea and Coffee Show in Vienna, according to a recent issue of the Tea and Coffee Trade Journal. Perhaps, the carbonated-tea drink project could be revived with industry participation and marketed aggressively in the West as a substitute for "cola" drinkswhich is a multi-billion dollar industry.

Challenges in marketing tea overseas

The above propositions to capture markets in the West would take many years to accomplish as penetration of markets need long gestation periods. Shifting of the destinations to European and American markets need an aggressive approach by the government both at policy level and technology development initiatives. Such a move needs the cooperation of the private sector involved in the tea trade including tea factories. It is desirable if the government authorities undertake a study to determine the reasons for the industry not manufacturing tea to suit the international markets and to make recommendations to improve the situation enabling them to capture new markets.

Unlike in the past, selling food items today in Europe is subject to strict quality control and the industries will have to comply with all their standards, for which government intervention is necessary. The current practice of importing low grade tea from Asia and re-exporting after blending with local tea needs review, as it would tarnish the image of Ceylon Tea. Government should ensure that all varieties of tea exported meet currently available international standards. The quality control needs to beginning from the fields where the green leaves have no agro-chemical residues.

Another issue impacting on exports is Sri Lanka tea having the highest price in the region. According to SLTB annual Report 2012, the Colombo auction price was USD 3.07 per kg in 2012 while all other countries offer their tea at prices lower extending down to USD 1.70 per kg. In a report of the Indian Tea Board released in 2012, the average price paid for green leaf was INR 8 per kg, equivalent to LKR 18 per kg. In Sri Lanka, at the current rates of wages, pluckersworking in small holdings are paid LKR 648 (with EPF and ETF) for plucking 24 kg, the day’s minimum target, and this works out to LKR 27 per kg. So, the cost of plucking green leaf in Sri Lanka is 1½ times costlier than in India.

Issues on wages

Another development in the tea industry is the agreement reached recently by regional plantation companies (RPC) and worker trade unions to raise the maximum daily wages to LKR 790 as against the present maximum wage of LKR 620 with effect from April 2015, as reported in the media. Though the government holds discussions with RPCs and trade unions and make decisions, subsequently the decisions are enforced on the small sector also. There are two categories of small holders; those who grow tea in their backyards extending to an acre or less and others who may have extents of a few acres up to a few tens of acres. In the case of the former, no labour is hired and all work including plucking and weeding is done by members of the household. Whatever money received for leaf goes as income and wages board decisions do not affect them.

On the other hand, management of larger extents require hiredlabour who need to be paid at rates determined by the respective wages board including EPF and ETF. Wages and other costs need to be paid out of money paid by factories and this keeps declining. Under such a situation, if the wages are increased, management of small holdings no longer becomes viable. Nevertheless, tea pluckers deserve a better lot. Tea plucking is not like working in a factory or in an office. Pluckers have to be in the field in the sun and in rain, trudge up and down the hills carrying kilos of leaf on their back and then to the collection centre. However, at the end of the day, they get only a pittance while the staff in exporters’ and brokers’ offices sitting in air-conditioned environs get the lion share. This situation needs to change.

When this problem was posed tolabour officers, their answer was that the productivity of workers need to be increased, but there is a limit to it. Tea yield is subject to vagaries of weather including prolonged cloud cover depriving plants adequate radiation to produce shoots, and extended droughts depriving the plants adequate water. With the anticipated climate change, tea yield, particularly in the low country, is forecasted to decline significantly. Though adaptation measures are available, small holders may not have the capacity to implement them and the government intervention is necessary to source funds from international agencies providing funding for such activities under the Climate Change Convention, to provide relief to affected small holders.

Conclusion

Considering the wide difference between the auction price of tea and its export value, as a short term measure,a mechanism should be established to divert part of the profits currently earned by the exporters to growers and processors, either by increasing the cess levy or introducing an export duty.As a mid-term measure, the government needs to explore aggressively the possibility of diverting Sri Lanka’s tea to new markets in the West in a form acceptable to them. The local industry also should adapt to changing trends in the global marketsincludingexpansion of the manufacture of tea bags and development of new forms of tea such as ready-to-drink products to cater to overseas markets. Being a primary source of revenue to the country, all stakeholders should join in safeguarding the industry.

(The writer was the Principal Investigator of a GEF funded Project on Impacts of Climate Change on Tea Plantations in Sri Lanka,carried out during 2002 – 2004 by a team of scientists from the TRI and Meteorological Dept. with assistance from the Indian Agricultural Research Institute, New Delhi. He is a small-holder of tea as well.)

Dailynews 11/11/2015

Resolving CKDu problem: Who should do what?

NOV

11

2015

0

Features

Ranjit Mulleriyawa

“Would you tell me please, which way I ought to go from here?” said Alice.

“That depends a good deal on where You want to get to”, said the cat.”
- Alice in Wonderland, Lewis Caroll

---

Chronic Kidney Disease of uncertain Origin (CKDu) is currently the most serious non communicable disease afflicting farming communities in Sri Lanka’s dry zone. It was first diagnosed in the mid 1990s in the North Central Province (NCP), and has now been positively diagnosed in six out of the nine provinces in the country. Over 25,000 people are estimated to have died from this kidney disease already. Approximately 1000 patients die from the disease each year and about 2000 new patients seek treatment for end stage renal disease each year at government hospitals. Many times that number may be developing clinical symptoms of the disease and progressing towards end stage renal failure.

The Ministry of Health currently spends over 400 million rupees annually in the management of renal disease (on dialysis, transplants etc). Costing the loss to the Nation’s labour force defies quantification.

The CKDu problem has been much talked about, dissected and debated on many occasions at several fora, but no cohesive plan of action to deal with it has still been formulated.

This should have been the responsibility of the Presidential task force specifically established to deal with the problem, but for reasons better known to itself, it has still failed to live up to expectations.

The magnitude and gravity of the CKDu problem is such that it clearly needs the concerted action of several ‘actors’ – government departments, universities, nongovernmental organisatons (NGOs), donors, corporate sector and civil society groups. This article attempts to spell out a few key areas which need to be addressed by various agencies.

The Ministry of health has played a valuable role in the treatment of CKDu patients (through dialysis, transplant programmes and medication) as well as screening communities in endemic areas. While appreciating these efforts, it needs to be recognized that screening programmes designed to detect CKDu in its early stages, have a long way to go. According to reliable estimates, less than five per cent of the population in the North Central region has still been screened. What about the rest of the country?

Department of Agriculture (DA)

CKDu appears to be essentially confined to areas where rice cultivation is the primary occupation of the people. As such, farming practices of rice farmers have been long suspected to be connected to the disease. Misuse of pesticides by farmers has been frequently pointed out as a matter needing urgent attention. However, the Department of Agriculture has still failed to revitalize its farmer education programme (extension service).

Banning the import of various pesticides appears to have been the DA’s major activity to date. Here too, the authority of its key decision making body (The Pesticides Technical Advisory Committee) has been usurped by politicians resulting in some hasty, misguided actions having far reaching negative impact on the island’s tea estates.

Detecting pesticide residues in vegetables and fruit has been long neglected. Does the DA have any clear programme or strategy to address this issue?

Water Board

All available evidence clearly indicates a strong association between CKDu and drinking water obtained from shallow dug wells. Analysis of water quality in many of these wells shows a high concentration of Fluoride, and dissolved Calcium and Magnesium salts. Yet, not all wells appear to be ‘bad’. There is considerable spatial variation in water quality of dug wells. This would indicate a need to analyze water in all wells in CKDu endemic areas and map the locations using the latest GPS technologies. Is the Water Board equal to this task?

A recent COSTI (Coordinating Secretariat for Science, Technology and Innovation) report has highlighted the fact that many water purification facilities (R.O. Plants) in Anuradhapura area have been established in locations where there was no need for such purification in the first place! Besides engaging in this wasteful activity, the responsible agencies (mostly NGOs), have been charging rupees one to one fifty for each liter of “purified water” distributed to poor villagers. Had the Water Board been consulted before embarking on such expensive misadventures, much waste and unnecessary costs could have been avoided.

Universities

Universities have been in the forefront of CKDu research contributing much to our current understanding of the subject. However, the aetiology of the disease is still uncertain, and further research needs to be carried out in an effort to pin point the specific cause.

However, there appears to be a need to assess the current status of research programmes, and identify key areas needing further investigation. Would the National Academy of Sciences address this issue?

Shift in focus urgently required

With almost 2000 new CKDu patients joining the ranks of those already receiving treatment each year, there is an urgent need to pay more attention to CKDu preventive measures based on available evidence/knowledge. Providing access to clean drinking water, making health education more effective at village level, and farmer education in the rational use and safe handling of pesticides are some such interventions that need to be implemented immediately.

Non Governmental Organisations (NGOs)

Experience all over the world has shown that NGOs can be more effective than government departments in reaching out to people at the periphery. Sadly, government agencies in our country do not seem to realize this fact, and even the NGOs do not seem to be aware of what they could do in effectively dealing with the CKDu problem.

NGO involvement is essential in dealing with issues pertaining to people in CKDu endemic areas. They can play a vital role in CKDu prevention programmes (providing clean drinking water, improving health education at village level, environmental protection, preventing pollution of water resources and farmer education in safe handling of pesticides). All these activities require close interaction with under-privileged people (a subject that NGOs are good at). NGOs could also assist in counseling and providing psycho-social support to CKDu patients and their families. Many local NGOs tend to be funded and ‘donor driven’. Perhaps it is lack of donor support for CKDu related issues which prevent NGOs from playing a more assertive role in reaching out to villagers crying out for help.

Donors

Donors- particularly the large international agencies- tend to be looked upon as ‘Cash cows’ to be ‘milked’ as and when the need arises. But if donors are to be really effective, they must ensure that their assistance is properly focused and reaches the people in need. Their assistance is best linked to the NGO sector- particularly those with a proven track record. This should also go beyond provision of mere financial resources, but also address issues pertaining to capacity building of NGO personnel.

Donor assistance is frequently sought in purchasing ‘hardware’ (like water filtration plants). In all such instances, donors must consider the interests of the ultimate beneficiaries – the rural people. They must not forget the social context of dry zone villagers in prescribing solutions.

They need to be aware of the specific rural context- the conditions under which the people live, and ensure that the equipment provided can be maintained and sustained by the beneficiaries themselves. The history of rural development is replete with instances of misguided high cost ‘imported solutions’ which are beyond rural peoples’ capacity to maintain and sustain. Most appropriate solutions tend to be those that are technically effective, easy for rural people to understand and implement, and maintain themselves with minimum dependence on ‘outsiders’.

Sustaining development initiatives requires beneficiary participation in the decision making process. NGOs have the most experience in dealing with such activities, and donors may do well to ensure that NGOs funded by them have proven skills and experience in participatory development.

Corporate sector

Recent years have seen a marked increase in the growth and prosperity of the corporate sector in Sri Lanka. Some of them take a keen interest in sharing part of their prosperity through ‘Corporate Social Responsibility (CSR)’ projects. Many such laudable initiatives may be directed towards CKDu prevention programmes.

Civil society

Civil society represents a hitherto untapped resource rich in varied skills and resources, besides possessing much good will. We Sri Lankans appear to be weak in harnessing this potential. Let’s make an effort to involve them through better information and more effective community education programmes. The print and electronic media need to play a bigger role in galvanizing civil society to address this (CKDu), and other issues of national importance. Center for Education, Research and Training in Kidney Diseases (CERTKid)

This is a multi-disciplinary team of researchers (Nephrologists, Physicians, Pathologists, Geologists, Chemists, Agronomists and Rural Development Specialists) committed to comprehensive investigation of the CKDu problem. The organization is based at the Medical Faculty, University of Peradeniya. Its guidance and advisory services are available free of charge to any organization interested in addressing the problem of CKDu.

(The writer is a farmer, researcher and rural development activist interacting with dry zone farming communities for over 30 years. He is currently associated with the Center for Education, Research and Training in Kidney Diseases (CERTKid), University of Peradeniya. He may be contacted at: rangoviya2013@gmail.com) 

Kurundu – the spice of life

November 10, 2015, 7:44 pm 

"You touched

your belly to my hands

in the dry air and said

I am the cinnamon

peeler’s wife. Smell me"

- The Cinnamon Peeler - Michael Ondaatji

By Siri Ipalawatte - Australia

In his Heroides, the Augustan poet relates the agony undergone by Helen of Sparta as she tries to decide whether to abandon home, reputation, and family so as to run off with Paris, her smooth-talking and handsome house guest.

"You will go through Trojan towns, a great queen, and the common people will believe that a new goddess is among them. Wherever you are the flame with offer up cinnamon and a sacrificial victim with strike the bloody earth."

The precise force of the offer was unmistakable. It worked, and Helen of Sparta became Helen of Troy. As Paris promised Helen, cinnamon was burned in incense and added to the flame in the temple brazier during the performance of religious rituals.

When Nero’s consort, Poppaea, died from a kick he dealt to her stomach – according to historian Suetonius they had a row after he came late from the races – her body was cremated on a colossal pyre of cinnamon – a symbolic status and a gesture to represent the depth of his sadness.

Where the cinnamon of Nero and Paris was grown is a matter of some doubt: but the tree that bears the spice, Cinnamomum Zeylanicum, which derived from the Hebraic and Arabic term ‘ammom’ meaning fragrant plant, is a small, evergreen plant, native to Sri Lanka where the situation and climate are so exactly suited to it that none so fine and delicately aromatic has been found elsewhere. Although tea has long ousted cinnamon as Sri Lanka’s most famous export, it was cinnamon that placed Sri Lanka on the list of countries the colonial powers wanted to conquer. Among the first to mention cinnamon in Sri Lanka was Ibn Batuta who visited the island in the mid fourteenth century. He landed at Puttalam and found the shore covered with cinnamon wood, which the merchants of Malabar (the present Kerala) transported without any other price than a few articles of clothes given as presents to the king.

It was a drab evening in November 15, 1505 in the vast Indian Ocean. Captain Dom Lourenco de Almeida stood proudly on the quarterdeck of the flagship that belonged to the fleet of nine vessels he commanded. The fleet was bound for the Maldives at the express wish of his father on a specific mission but destiny decreed otherwise. The fleet was caught in a fierce storm, blown off course, and eventually anchored off Colombo. Dharma Parakramabahu VIII, the king of Kotte, sent emissaries to greet the visitors, and they were received at court shortly thereafter. Parakramabahu, made insecure by threats to his kingdom from within Sri Lanka, was quick to come to an arrangement with the Portuguese – especially in consideration of their artillery – for protection in exchange for 400 bahars (a bahar in the cinnamon trade weighted 744 Dutch pounds) of cinnamon annually.

For more than a century after they took control of Sri Lanka in 1658, the Dutch harvested only wild cinnamon. Then, during the tenure of Governor Wilhelm Falck (1765-1785), being unable to rely on the quality of cinnamon collected from the wild, the Dutch had begun planting it. The Dutch commissioned a Swedish botanist, Carl Peter Thunberg, to make a study of cinnamon in Sri Lanka. After years of travelling in the East, Thunberg resided in Sri Lanka between 4 January 1777 and 14 March 1778. Following his return to Europe he published a two-volume account of his experiences and devoted several chapters to his stay in Ceylon.

In his study, Thunberg listed ten varieties of cinnamon grown in Sri Lanka; rasa kurundu, nai kurundu, capuru kurundu, kahata kurundu, sevel kurundu, davul kurundu, nica kurundu, kathuru kurundu, mal kurundu, and tom-pat kurundu. He wrote how the cinnamon trees were naturally spread around the forest with the help of birds who dumped the pits after eating its fruits.

As a result of this initiative ‘cinnamon gardens’ sprang up in and around Colombo; however, it was under Governor Van de Graaff that the cinnamon plantations really took off. Through rewards he managed to excite many headmen into cultivating the tree. Even military and civil servants of the Dutch East India Company began planting trees. When the Batavia administration wrote to Colombo in 1789 that the expenses for the cinnamon gardens in Ceylon were growing out of hand, and instructed the government to delay the work for the time being, Van de Graaff, on the advice of his Mahamudaliyar, Nicholaas Dias Abeysinghe, decided to hand over the company’s plantations to the cinnamon peelers in small plots. In 1793, fifteen hundred deeds were printed for this purpose and given to Salagama caste.

So unjustly rigid was the monopoly on cinnamon maintained by the Dutch Government that neither the European nor native proprietors of the land were allowed to iestroy, cut, touch the bark, or pluck the leaves of any cinnamon plant that grew on their properties. They were also compelled to give notice to the superintendent of cinnamon plantations when a cinnamon sprouted from the earth or severe penalties were imposed. From Old Dutch records the British learned that for more than one hundred years, the revenue derived annually from the sale of cinnamon was seldom less than four hundred thousand English pounds. With a strictly enforced export monopoly, they ensured that world consumption stayed almost at around 182,000 kg from 1691 to the end of Dutch rule in 1796.

When the British wrested control of the island from the Dutch in 1798, they continued the monopoly of cinnamon exports, which was eventually abandoned only in 1833 when it became clear that free trade could no longer be prevented.

Cinnamon is harvested every six months during the monsoon season. The moisture makes it easier to remove the cinnamon from the branches. The cinnamon trees are cut just above the ground and from the stump a new tree will grow ready for harvesting in another two years. The trees stumps have distinct reddish shoots whilst the mature trees are littered with acorn-like nuts, which are replanted to produce more trees.

"This is a physically demanding job, which requires the precision of a surgeon’s hand." Mendis looked at me and continued; " I learned the craft from my father and grand father". This was when I visited my friend’s ten-acre cinnamon plantation in Beliatta last year.

Mendis belongs to a special and ancient caste of people – the Salagama – that has for generations practised this art in the southwest of Sri Lanka, a group that is distinctly different from the cultivators. The Salagama (or Chalias as the Portuguese called them) formed the cinnamon peeling caste and collected and prepared the cinnamon for the Dutch as part of their ‘corvee labour’. Their department, called Mahabadda, was put under control of a Dutch officer, the captain of cinnamon (kapitein der kaneel).

And I patiently watched the amazing process: the shoots are first scraped off with a semi-circular blade, and then the stick is rubbed with a brass rod –

Pittala polla

– to loosen the bark, which then is split with a curved knife with a blade of copper two and a half inches long –

Kokaththa

– and peeled off. Mendis seated on the ground gently removed lengths of bark from the branch in one piece. The peeled bark is telescoped one into another forming a quill about 107 centimetres long and filled with trimmings of the same quality bark to maintain a cylindrical shape.

He told me that after four or five days drying, the quills are rolled on a board to tighten the fillings and then placed in subdued sunlight for further drying. Finally, they are bleached with sulphur dioxide and sorted into grades. The peelers cut the cinnamon into different sizes depending on the price of the different qualities on the world market. Sri Lanka is the world’s leading source of cinnamon, accounting for about 60 per cent of the total global output.

While peeled cinnamon is the most famous product, oil extracted from the cinnamon leaves has become a lucrative industry in recent years. The cinnamon leaves are dried in a barn until golden brown. Steam is then put through the leaves in copper vats, and the oil-infused vapour rises into a pipe network, which is cooled in water tanks to return the vapour to liquid.

The golden cinnamon oil collects on the surface and is siphoned off via a series of buckets and then bottled. Sri Lankan cinnamon produces a scent far superior to that of cinnamon cultivated in other countries such as Madagascar, Burma and Indonesia; as a consequence Sri Lanka cinnamon continues even today to command the highest price.

In addition to its long history of use as a sweet spice used in cooking and as a perfume, cinnamon also has medicinal applications. Cinnamon contains a number of powerful antioxidant compounds that help to prevent premature destruction of healthy cells in the body. Studies have shown that cinnamon possesses anti-microbial properties that help to reduce the risk of food-borne diseases caused by bacteria, but the medicinal use of cinnamon gaining most attention these days concerns blood sugar stabilization.

One recent study at Joslin Diabetes Centre in Boston, which included 10 investigations and a total of 543 patients, was published earlier this year in the Annals of Family Medicine. "Doses in the studies ranged from 120 milligrams a day to six grams sprinkling cinnamon on food might help to control a diabetic's blood sugar," says Emmy Suhl, a certified diabetes educator and nutritionist at Joslin Diabetes Centre in Boston.

"If you decide to use a lot of cinnamon, you do need to use Sri Lankan cinnamon because it will lower your risk of liver damage," says Angela Ginn, who is an education coordinator at the University of Maryland Centre for Diabetes and Endocrinology in Baltimore.

In 2014, Sri Lanka produced 18,250 metric tonnes of cinnamon and exported 13,864 metric tonnes; the major importers were Mexico, USA, Colombia, Peru and Germany.

Sri Lanka has moved up a notch and ranked at eighth place in the 2015 World Giving Index (WGI), the UK based Charities Aid Foundation (CAF) reports. The index which looks at charitable behaviours of 145 countries including the tendency of helping strangers, donating money and volunteering was compiled by the CAF. Sri Lanka was ranked ninth last year. Myanmar has been ranked first in the index followed by the US, New Zealand, Canada, Australia and the UK. According to WGI, Burundi is the least charitable country followed by China, Yemen and Lithuania. Sri Lanka has scored 60 percent in the sub category of helping a stranger and 48 per cent at volunteering time. India has ranked 106th, Pakistan at 94th, Afghanistan at 84th, Nepal at 76th, Bhutan at 17th and Bangladesh at 95th places at the index. Several notable findings of this year’s index include a rising trend in donating money and helping a stranger while volunteering has recorded a minor downturn. For the first time in six years, the World Giving Index has revealed that men are more likely to donate money than women. “Behaviour in a few very large countries has significantly impacted the numbers of people giving worldwide. Cultural and religious practices as well as disruptive events, are at the root of a number of big changes seen this year. Despite their highly developed economies, only five G20 countries are in this year’s Top 20, reminding us that economic prosperity does not automatically lead to a rise in generosity,” the index report said. - See more at: http://www.dailymirror.lk/94733/sl-ranked-8th-in-world-giving-index#sthash.hGnV4taG.dpuf

 

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Home  » Features » Crisis in the tea industry: Some possible solutions - I

Crisis in the tea industry: Some possible solutions - I

November 10, 2015, 8:13 pm 

By Dr. Janaka Ratnasiri

There have been several media reports recently highlighting a drop in the revenue from tea exports and the resulting low prices paid to green leaf suppliers as well as tea factories. This issue was raised in Parliament the other day and the Prime Minister was heard over the electronic media saying that the government was planning to send ministerial delegations to other countries to explore new tea markets.

Decline in tea prices

Tea smallholders in the Ratnapura District were paid LKR 70 per kilo of green leaf 2 – 1½ years ago and LKR 60 a year ago, but only LKR 50 for the months of August and September this year. In keeping with the proposals made in the government’s interim budget made early this year, the government paid small holders an extra supplement during the months of May to July, but it is not continuing and also it did not make up to LKR 80 per kg as promised. Also, not every factory purchasing green leaf paid this money to smallholders. There has been much public concern about this matter and groups of tea smallholders, particularly in the low country, have been staging public protests, demanding government intervention as reported in electronic media recently.

The declining tea prices have affected the tea factory owners as well. According to the 2012 Annual Report of Sri Lanka Tea Board (SLTB), out of 831 tea factories in the country, only 700 were in operation in 2012 due to various reasons, and the drop in tea prices has made the situation worse. There have been press releases by regional plantation companies (RPC) that under the prevailing prices and productivity of workers, they are unable to operate the factories without incurring losses. They have said that each worker should pluck at least two kilos or more of green leaf a day for the operations to be viable. The Treasury is reported to have given one LKR 1 bn grant to the Sri Lanka Tea Board (SLTB) to provide relief to small holders and factories.

Production of tea in Sri Lanka

Sri Lanka produced 336.6 kt of made-tea in 2014, out of which 317.9 kt (94.4%) was exported. Mostly black tea was manufactured by orthodox process comprising 93%, while about 6% was manufactured by more recent crush-tear-curl (CTC) process and about 1% comprising green tea. Tea manufactured using CTC process is considered to be ideally suited for tea bags and with the use of tea bags getting popular in the West, tea exporting countries in Asia and Africa adopted CTC as their main process. For instance, India manufactures 80% of tea using CTC process (Wikipedia).

Ziad Mohamed, former Director of TRI has said, "Sri Lanka government in the mid-1990s encouraged CTC production by providing subsidies up to 85% of the cost for machinery purchase and installation. In spite of the attractive subsidies offered, there are not many takers, simply because of the heavy demand for Sri Lankan orthodox tea" (Twentieth Century Tea Research in Sri Lanka, TRI, 2003). While tea producing countries are manufacturing CTC tea to meet the markets in the West, the Sri Lankan industry is contended in manufacturing orthodox tea to cater for markets in Russia and ME countries. It may be that characteristic flavour and aroma of Sri Lankan tea, particularly with distinct regional characteristics could be lost in CTC tea.

Prices paid for green leaf and made-tea

Currently, factories pay smallholders for the green leaf they supply at rates based on a formula agreed by all stake holders where 32% the proceeds from auctions is retained by the factory and 68% paid to leaf suppliers. The formula also assumes that 100 kilos of green leaf produces only 21.5 kilos of made tea, which means that 4.65 kilos of green leaf are required to manufacture 1 kilo of made-tea. During the first 10 months of 2015, made-tea amounting to 270,626 t have been sold at the auctions at an average price of LKR 400.72 per kilo (SLTB website). Tea purchased at the auction is exported after blending to suit the destination, contained in small packs of different sizes including tea bags and in bulk packs.

The average export prices earned for black tea, the prices fetched at the auctions and the money paid by factories for purchase of green leaf scaled up by a factor of 4.65 are shown in Fig. 1, for the 9-month period from January to September 2015. The last set of values are based on purchases made by 4 factories from a small holding of the writer at Gilimale in Ratnapura District. The average export price for the first 9 months in 2015 has been LKR 578 per kg, while the average purchase price by factories has been LKR 61.72 per kg of green leaf or 287 per kg of made-tea. The LKR 113 per kg price difference between what a factory receives and disburses covers its overhead and operational expenditure as well as its mark up. It is noteworthy that the export price has increased during September relative to August prices while the auction price and price paid to small holders have declined.

On the other hand, there is a price difference of LKR 178 per kg between the auction price and the export price. The total amount of black tea exported during the first nine months has been 217 kt and extrapolated linearly to 12 months, it will be 288.5 kt. With a unit price difference of LKR 178, the total profit earned by exporters will be LKR 51 billion annually, and this is shared, I believe among a few exporters and brokers only, after paying whatever taxes due to the government.

Short term measure

Currently, the government levies a cess on tea exports computed at 2.5% of the average auction price or LKR 10 per kg whichever is higher (Ministry of Finance website). In 2013, the cess levy collected from tea exports was LKR 700 million which was 1.36% of the exporters’ profit of LKR 51 billion. As a short term measure, if this could be raised to say 20%, an additional amount of LKR 9,570 million could be generated, and this could be made available to pay higher rates to leaf suppliers and factories.

The Performance Report of the Ministry of Plantations for 2012 has reported that a decision has been taken "to establish a Fund of Rs. 5 billion for a period of 5 years as Rs. 1 billion per annum through charging the exporters a duty of LKR 3.50 per kg of tea exported. In this context, necessary actions are being taken to launch a broad global and local marketing and promotional campaign". However, the Annual Report of the Ministry of Finance for 2014 does not make reference to such an export duty on tea exports. According to this report, the export duty collected from all exports in 2014 has been only LKR 24 million. If the proposal has not been implemented, it should be revived on a priority basis. Many good proposals get left out when high officials in ministries change whenever the ministers chang. This is something unique to Sri Lanka!

It is important to ensure that this additional levy or the duty is not passed on to the importer, but should be taken off the exporters’ profits. The additional revenue is nearly 10 times the special grant the Treasury has agreed to give the plantation sector to tide over the crisis period. The exporters will naturally object but it is the government duty to be fair by the growers and factories as the industry runs solely on their efforts.

Export prices of tea

In 2014, Sri Lanka exported 327.3 Kt of made-tea earning LKR 212.6 billion (Central Bank Annual Report for 2014). Out of this amount comprising 98% black tea, about 50% was exported in small packets below 10 kg, having a unit price of LKR 600 per kg on an average. About 39% was exported in bulk packs having a unit price of LKR 578, while about 9% was exported as tea bags having a unit price of LKR 1,084. About 1.6% is exported as green tea having a unit price of LKR 1,210 for small packets (comprising 0.6%) and LKR 1953 for tea bags (comprising 0.6%). The balance (comprising 0.7%) comprises instant tea having a unit price of LKR 1,102.

The SLTB website gives the export quantities and unit prices for these categories. Fig. 2 shows the variation of the unit prices of black bulk, black packets, black bags, green packets and green bags over the 9 month period from January to September 2015 (SLTB website).

It is noteworthy that export unit price of green tea bags is more than double that of black tea bags reaching over LKR 2500 in September, while there is little difference between prices of the two varieties in bulk and packets. The other interesting factor is that unit prices of both varieties in bags have increased during the last few months while that of bulk tea has declined.

Mid-term measures

The strategy to be adopted to increase the revenue from tea exports becomes obvious if one examines the above Figure. The highest unit export price is in respect of green tea bags which has reached LKR 2500 per kg. The next highest prices are for black tea bags and green tea packets, which are in the range LKR 1100 – 1300 per kg. On the other hand, black tea in bulk and in packets which comprise nearly 90% of all tea exported fetch prices of only around LKR 500 per kg on an average, varying between LKR 400 and 600 per kg during the 9 month period. Hence, the strategy for enhancing the revenue from tea exports is to increase the share of tea-bags and green tea in the tea that is exported and explore new markets for these items.

For example, if the share of black tea bags is increased to 50% and the green tea share is increased by 5 times while eliminating the bulk exports altogether, the total revenue from export of the same amount of tea that was exported in 2014 could be enhanced to almost LKR 300 billion instead of LKR 212.6 billion earned in 2014.The government has to set a mid-term target to increase the share of black tea bags as well as green tea and provide whatever assistance to the industry to achieve these targets. The additional revenue earned could be then used to pay the workers increased wages enabling them to move away from poverty they are in now. However, the implementation of such a strategy needs the co-operation of all concerned – factory owners, policy makers, brokers, exporters and researchers – to achieve the set targets.

If the policy makers accept this strategy, the industry has to first draw up plans for the manufacture of products which are in demand in new markets. The industry and the government jointly will then have to explore the markets. Once the markets are found, their manufacture could commence. Sending ministerial delegations will not help in capturing markets. It should be left to the professionals in the field.

(Part II will appear tomorrow)

Effective use of science and technology

November 9, 2015, 5:39 pm 

By Dr. C.S. Weeraratna

csweera@sltnet.lk

The World Science Day falls on 10th Nov. 2015. This article highlights the importance in effective utilization of Science and Technology to solve the critical issues the country is facing,

During the last two decades, effective use of Science and Technology (S&T) enabled most of the South and South East Asian countries to develop substantially.. However, in Sri Lanka, in spite of a large number of scientific organizations such as the National Science Foundation (NSF), the Council for Agricultural Research Policy (CARP), etc. which use a considerable amount of scarce financial resources, S&T has been used to a relatively very little extent to the benefit of the people.

The challenges we Sri Lakans face have increased considerably during the last decade. Among the critical issues the people of the country facing are

• Land Slides mainly in Badulla, Kandy, Matale, Nuwara Eliya districts ,

• Water shortage mainly in the dry zone ,

• Chronic Kidney disease of unknown etiology reported in 9 districts

• High Cost of Production in the plantation and non-plantation (domestic) sector

• High expenditure on fuel

• .Stagnation of the Small and Medium enterprises

• Poverty mainly in the rural and estate sector

• Effective disposal of solid waste etc.

As a result of these issues, thousands of people are affected to a great extent..

A primary objective of use of S&T in a developing country such as Sri Lanka must be to conduct appropriate studies on the critical issues and advice the authorities on relevant action to be taken.. Science and Technology need to be used to utilize locally available resources. Eppawela Apatite (EA) , which was discovered a few decades ago still remains partly underutilized. EA can be used to manufacture phosphate fertilizers.. But, still we grind the rock and use the ground apatite as a P fertilizer while spending millions to import Single Superphosphate and Triple Super Phosphate which can be manufactured from EA.

The research efforts need to be directed more towards those aspects, which have a direct impact on the economy of the country, and to solve those problems, which affect the lives of the people. The causal factor/s of Chronic Kidney Disease of unknown Etiology (CKDu) which was reported in 1990s and which has affected nearly 200,000 people in many parts of the country economically and psychologically in a number of districts is yet to be identified.

Conducting research alone will not lead to economic development unless the technologies developed by research are made use or commercialized. Organizations such as the Industrial Development Board, the Board of Investments etc. need to coordinate with the relevant scientific organizations to attract investments on commercialization of proven technologies. Vidatha Centers have been established in many DS Divisions to commercialize S&T. Perhaps the Ministry of Technology and Research may indicate to what extent these Vidatha Centers have been effective in commercializing S&T.

In Sri Lanka, during the last two decades, perhaps a few thousands of research studies, involving billions of rupees worth of scarce resources, have been conducted. Findings of these research projects were presented at numerous conferences, seminars etc. The scientific organizations such as SLAAS, Dept. of Agriculture, various universities etc. hold annual scientific meetings at which the findings of research are presented. It is important that we utilize these research findings to find solutions to the pressing problems of the country. But, there appears to be no effective system to achieve this. Instead, the authorities are concerned in conducting more and more seminars and symposia without any plan to effectively utilize the findings/conclusions. As indicated at the beginning of this article, while our neighboring countries are showing rapid development, we lag behind for lack of systematic use of S&T.

It is also important that the scientists express their candid opinion on numerous issues which tend to have an undesirable effect on the socio-economic development of the country. The issue of Chronic Kidney Disease of unknown etiology is a case in point. Authorities banned the use of glyphosate although there is no scientific evidence that this herbicide has any effect on CKDu. Scientific organizations and scientists, although some wrote to news papers, appear to have not made any serious attempt to make the authorities aware of the actual facts on this issue. A Task Force on CKDu has been established but the general public is not aware of what actions they have taken to control/prevent CKDu. Some argue against use of pesticides. If we do not use these when necessary how are we going to control pest and disease attacks?. It is the responsibility of scientific organizations to make the authorities and the public knowledgeable on the actual facts related to these and other critical issues.

It is also important that the relevant authorities have a dialogue with the appropriate scientist/organizations and get their views/recommendation before taking any action on critical issues. There are ministers who are expected to address these issue and they need to collaborate with the relevant institutions to find practical solutions to these issues. Land slides causing death to a large number of people and destruction to property is evident in many parts of the country. Rainfall of high intensity and erosivity, and inappropriate land management practices are the main factors attributable to land slides causing enormous damage to life and property. It is necessary that preventive action is taken . There is an expert committee on under the Ministry of Environment to advice the Ministry on issues related to soil degradation. But, this ministry has not called a meeting of this committee for two years to discuss and decide what actions need to be taken to control land slides.

One of the main issues in the agriculture sector is high cost of production. This is partly attributed to cost of fertilizers and pesticides on which we spend around Rs. 40 billions annually to import. However, not much attention appears to have been paid on using bio- fertilizers and bio- pesticides which can be manufactured locally and which are less expensive. A number of compounds such as nicotine, pyrethrin and azadirachtin of plant origin have insecticidal properties, and can be effectively used to control some insect pests. These organic compounds are present in locally grown plants. Development of pesticides from those local plants and promoting their use in controlling pests, would reduce costs and also provide employment in the rural areas. But the relevant authorities appear to have not taken action to get the experts involved in implementing appropriate action perhaps due to their limited knowledge on these issues.

It is also important that the ministers get the service of scientists in managing the scientific organizations under them. During the last few weeks Chairmen to important scientific research institutions handling tea, rubber, coconut and sugarcane have been appointed. They all do not have any experience in the areas which they are expected to manage. For example, according to the web site of Coconut Research Institute, an expert on elephants has been appointed as its Chairman. The new Chairman of Tea Board is an expert on tourism and sports. Such appointments surely will not enable the respective institutions to contribute positively to the areas which they are expected to develop.

The Ministry of Technology and Research has an important role to play in initiating appropriate programmes to effectively use science and technology for socio-economic development of the country.