Tea travails

Since 2010, the tea industry has been collecting a levy to be used for promotional activities. Over the past eight years, the fund has gathered an estimated Rs. 5 billion that was to be used to promote Ceylon Tea around the world, and attract a better market for the fourth largest foreign exchange earner to Sri Lanka. 

However, there is now an effort to use the funds to pay the Rs. 50 allowance promised by the Government to plantation workers. Tea exporters have made it clear they are not against plantation workers getting Rs. 50 more but have appealed not to use their promotional funds for that purpose. Exporters worry that with elections around the corner, politics will take precedence over much-needed promotions, as the parliamentarians representing the hill country battle to win votes. 

The move to use the promotional fund for wage payments comes at a time when national average tea prices in June totalled Rs. 494.48 and were the lowest since August 2016. Tea brokers have pointed out the prices in June were lower by Rs. 45.07 vis-à-vis Rs. 539.55 of May 2019, whilst in comparison to June 2018 average of Rs. 543.85, shows a decrease of Rs. 49.37. 

Struggling with the lowest prices in three years, drought conditions, and labour disputes, the tea industry went on record after the Easter Sunday attacks, suggesting it would be beneficial for the Government to extend a moratorium on the lease payments Regional Plantation Companies (RPCs) have with the State. While this may be beyond the fiscal capacity of the Government, it is also problematic to use funds from the industry, which are already earmarked for a vital task, to pay allowances.  

The Tea Exporters Association (TEA) has already made representations to the Plantations Ministry and appealed for the planned promotional activities to be taken forward. Tea promotional activities have been delayed due to administrative issues related to launching the marketing campaign. The Tea Board earlier said that the Rs. 4.5 billion marketing campaign targeting 12 countries, which has been in the works for over two years, will kick off in August this year. However, final dates are yet to be announced. 

Due to the delay in kicking off promotional activities TEA has asked the Government to terminate collection of the levy. Despite the Minister in charge and the Tea Board giving assurances to do so, the levy is still being charged. The fund at present has accumulated over Rs. 5 billion, with Minister Navin Dissanayake having to battle with former Finance Minister Ravi Karunanayake from it being taken over by the Consolidated Fund.

The TEA claims that the Sri Lanka Tea Board (SLTB) promised to work on reducing the levy by 50% in January this year and to completely doing away with the collection by August. However the full amount is still being charged with the industry having limited say over how the funds will be used. 

Plantation workers deserve better wages and one way to provide them with higher salaries in a sustainable manner is to promote Ceylon Tea, increase value additions and improve industry earnings. Regulations can then be negotiated to increase the potion given as salaries to workers. Even if the promotional funds are used to give the Rs. 50 allowance there are no plans as to how it will be continued after the money runs out. The Government should not be making industry policies based on political aims and should work with stakeholders for a sustainable solution.