The perennial and one-time lucrative tea industry is optimistic of achieving close to last year’s export income this year with yield touching the 300 million kg mark despite the odds of the global pandemic which the world is yet grappling with since late last year.
“The plantation industry had a turbulent past with prices plummeting drastically owing to the turmoil in key markets and the global economic slowdown during the past decade. However, we are confident the market would bounce back with prices stabilising following recovery from the pandemic,” Planters’ Association of Ceylon Past Chairman and Haleys Plantations Managing Director Dr. Roshan Rajadurai said.
The tea export income this year according to Rajadurai, could reach around US$ 1.3 billion with a 300 million kg yield, provided there is favourable weather and an early recovery from the global crisis.
Sri Lanka Tea Board Chief Jayampathy Molligoda said last month that the tea export revenue target this year would not be revised despite the current global crisis and that it expects to achieve around US$ 1.3 billion in income by the end of the year.
Planters said operations in Regional Plantation Company (RPC) managed estates are back to normal and that steps have been taken to maintain the momentum and market share in the global erena.
“We are back to 100 percent operations in all RPC estates and hope to see global prices picking up to the previous level of over Rs. 600 per kg. The price per kg went up to Rs. 700 for only a week due to the dip in production. If prices could be sustained at that level, the benefits will trickle down to the industry,” Rajadurai said.
However, getting back to the former level of performance in the industry seems an uphill task given the host of issues that the industry is faced with locally and the rising tensions in key export markets.
The persisting wage hike demanded by worker unions which have been clamouring for a Rs. 1,000 daily wage has stifled productivity and growth in the sector for years.
RPCs have been reiterating the need to move away from the age-old attendance based wage model to a productivity based, self-managed wage model which will enable workers to earn more while enhancing production.
However, discussions with the authorities in the past have failed to yield results with the status quo remaining.
“A worker earned around Rs. 40,000 in May. If a worker is keen to work he or she could earn a higher salary a day,” Rajadurai said, adding that RPCs are continuing to incur losses due to the sharp dip in world tea prices and the high cost of production which has made the industry less competitive in the global market.
Sri Lanka’s daily average of plucking is yet around 18-20 kg per person compared to 40 kg in India and 60 in Kenya and still exports a large quantity in bulk form.
Experts said that unless Sri Lanka focuses on value added tea exports it will continue to lose its market share to competitors who have increased production and value addition to its range of teas enabling them to fetch a higher price.