Sri Lanka kicks off 20th session of FAO/IGG

By Cheranka Mendis

To be on top of the world tea trade as a producer, countries must learn and understand the criteria for being developed continuously in the main trading countries and innovatively come up with new marketing strategies to promote their products.

These must be backed by new product variation and differentiations in terms of marketing, research and development according to Plantation Minister Mahinda Samarasinghe.

Samarasinghe attending the inauguration of the 20th session of the Food and Agriculture Organisation’s (FAO) Inter Governmental Group (IGG) on Tea, made the above remarks noting that for Ceylon Tea to have made its round among the world tea consuming community, such strategies were adopted over time which blended with the special features of the local tea and has resulted in a premium price for the tea.

The two day FAO/IGG on tea will be followed by the Colombo International Tea Convention, scheduled to be held on 2 and 3 February at the Cinnamon Grand.

He expressed that 2012 is an important year for the country as it marks the 145th anniversary since the establishment of the first commercial tea plantation in the country. With the country now moving forward with ‘relative stability’ and reaping benefits as a result of eliminating terrorism and consolidating peace, the industry in 2011 achieved US$ 1.5 million in revenue, the highest ever achieved in the industry. This amounts to 15% of the global foreign exchange revenue to the country and 69% of the total agri exports to the country while marking a 2% contribution to the country’s GDP. The industry today provides employment to10% of the population, nearly two million people in total.

Having identified strategies that have worked well for the industry, the country will now look at pumping in more investment in the research and development field, he said. Resources that were previously utilised for protecting the territorial integrity of the country will now be diverted to the development of the country across sectors and the tea industry will get a share proportion as well.

“In last year’s budget and this year’s budget, a large amount of resources have been earmarked by the President towards the development of tea. Small holders who contributes 76% of the tea production since only 24% is produced by regional plantation companies of which two are operated by government, small holders will received resources to support their efforts,” Samarasinghe said.

Addressing the foreign and local delegates at the event, the Minister expressed that Sri Lanka is ready to share various policies that have been implemented to face industry challenges. He also articulated that the country is ready to learn best practices of other countries. “We are ready to listen to you, learn from the experiences and if there is anything that is needed from our side we are willing to take the relevant steps.”

Samarasinghe admitted that there are several challenges that are hindering the progress of the tea market.

“Since June 2011, we along with other tea producing countries were affected as a result of instability in the international economy. Japan, which is the biggest market for Sri Lanka where we hold post as the market leader in the black tea category, was affected by A Tsunami.” The unfortunate events in the Middle East, which is an important market for Sri Lanka, was acknowledged as another key issue.

“Due to the political instability, there has been a great disadvantage caused for exporters. Fortunately some of these issues have been sorted out but others have been carried forward to 2012,” he said.

The Euro zone crisis, which has resulted in a number of countries revising their growth rates, is another thorn on the side of producer countries, who must work together to implement necessary safeguards to prevent the industry from suffering, he asserted.

“The need for producer countries to come together and discuss challenges we as exporters face, is important. This could lead to establishing synergies to ensure a mutually beneficial plan of action on the part of the producer.”

The Minister requested the FAO to consider the possibility of convening a producer forum, where issues faced by the particular party can be ironed out.

“Yet another challenge is bringing down the cost of production while increase productivity.” Sustainability of the industry is also an issue that needs to be discussed, he said. Tea Board Chairperson Janaki Kuruppu also at the event, stated that sustainability must come from all aspects including people working in the industry at the lowest level. “It is then we will be able to face the challenges of the world and stay sustainable in the production and marketing.”

She also admitted that Sri Lanka is very serious about its tea industry. “It is a huge operation for us. If there is any country that takes tea seriously, it is us.” Kuruppu comparing Sri Lanka with the country’s biggest competitors such as India, China and Kenya, mentioned that even though Sri Lanka is smaller in size, it stands tall with the giants due to its far reaching insight. “Economy wise we recorded an 8.3% growth last year, which is seen as the fourth highest growing country in the world and we aim at being the second highest this year. Our unemployment is less than 5%, inflation less than 8% and interest rates have significantly come down.” Kuruppu said, “This is a beverage that is growing in demand and is in line with consumer trends of healthy beverages, consumers are asking for it and now it is about giving it in the form they want. Be bold. We have this magical beverage in our hands; what are we scared of?”

FAO Country Representative Patrick Evans who has been working in Sri Lanka for the past three years on agriculture, fisheries and lifestyle commending the country’s growth and development divulged that the country is now forming a country program framework prioritising FAO activities. He also noted that the industry has strong private sector backing which works well for the growth of the tea market in the country.

 Pix by Upul Abayasekara