Comments /2307 Views / Thursday, 10 May 2012 00:34
The Government has made its strongest statement yet to prevent local tea exports from being contaminated by imported low quality teas to protect its highest foreign exchange earning crop, a top official said yesterday.
Speaking to over 200 foreign delegates at the biennial Dilmah Tea global distributor conference in Colombo, Treasury Secretary Dr. P.B. Jayasundera outlined the way forward for the Sri Lankan tea industry.
Emphatically rebutting arguments made by the Tea Industry Association (TEA) that the Government should allow the importation of cheap low-quality teas for blending with Sri Lankan tea, Dr. Jayasundera exclaimed, “Sri Lanka should not permit our product to be used in that manner.”
Dr. Jayasundera explained the Government’s position, noting that “one product we should uncompromisingly preserve and protect is Sri Lankan tea. Dilmah has shown that all facets can be developed locally. We believe Sri Lanka has a tremendous comparative advantage in tea and can make it a three billion dollar industry in the next 10 years.”
Echoing these sentiments, key stakeholders of the tea industry, which directly supports over 2.5 million Sri Lankans, warned against the TEA’s attempts to destroy the world-renowned ‘Pure Ceylon Tea’ brand by lobbying for the adulteration of this premium beverage.
The TEA, which is behind the effort to import cheap low-quality teas for blending and re-exporting from Sri Lanka, is comprised entirely of tea exporters and does not represent the hundreds of thousands of growers and workers who help sustain one of the country’s most important industries. For the past few years, the TEA has attempted to argue that the relatively high cost of Ceylon Tea prevents local players from competing with international brands.
The success of Dilmah, a truly global ‘Pure Ceylon Tea’ brand, and other Sri Lankan-owned brands, stands in stark contrast to this claim. After all, Dilmah’s premium single-origin pure Ceylon Tea has captured significant market share at the top end of key markets almost entirely through the use of the inimitable ‘Pure Ceylon Tea’ brand platform.
Instead of building powerful Sri Lankan-owned premium brands that can leverage the nation’s unbeatable reputation for quality tea while being marketed at a premium price, many exporters have unfortunately been content either to serve as suppliers and packers for foreign giants or to simply export bulk tea as a commodity.
Indeed, the TEA admits that only 12 per cent of exports are under Sri Lankan-owned brands. The remaining exports are under foreign brands or in bulk, raw form. These foreign brand owners constantly pressure suppliers to reduce prices, which leads, in turn, to price pressure on tea growers.
Refuting the TEA’s attempt to draw a comparison between the tea and apparel industry, which allows the duty free import of raw material, Dr. Jayasundera made it clear that the two industries are markedly different, noting that “tea is the opposite [of the apparel industry]. Everything is here” – a reference to the climatic advantages of growing various types of tea in Sri Lanka, as well as the smallholders who grow over 70 per cent of ‘Pure Ceylon Tea’.
Although he bemoaned the fact that, despite its many advantages, tea was not as large an export as apparel, Dr. Jayasundera sounded a hopeful note, pointing to a future scenario where the tea and apparel industries would be similar in size and together, fly the flag for Sri Lanka around the world – with tea being “a 100% value added, 100% locally sourced product with absolute integrity” and apparel integrating backwards to manufacture textiles locally and grow cotton in Sri Lanka.
Industry experts have repeatedly warned that the priceless image of ‘Pure Ceylon Tea,’ built up over more than a century, would be irreparably damaged if the free importation of foreign black teas was allowed.
Indeed, environmental watchdogs such as Greenpeace, along with consumer advocacy groups, have recently alerted the media that some multinational tea brands use Chinese-grown teas that contain dangerous levels of pesticides and toxins. If such teas are blended with fine Sri Lankan teas, which are considered the purest due to stringent controls on growers, the ‘Pure Ceylon Tea’ brand may be destroyed forever.
Acknowledging the importance of reforms in the tea industry, Dilmah Chairman Merrill J. Fernando pointed to the need for concessionary funding to help replanting by companies and smallholders alike, in order to reduce the cost of production and increase crop yields.
“These developments are the keys to increasing Sri Lanka’s export earnings in a sustainable manner,” Fernando contended. “The pure quality of ‘Pure Ceylon Tea’ is a unique, incredibly powerful selling point,” Fernando continued, calling for the creation of more Sri Lankan-owned tea brands that can outperform multinational giants, not on the basis of price but rather on the basis of taste, ethical production and heritage.
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