Tea industry gets tough over moves to tamper with Global Promotion Fund

All stakeholders of the tea industry yesterday expressed their unmitigated and resolute opposition to the intention, as reported in the media, of the Ministry of Finance to appropriate the funds accumulated by the Sri Lanka Tea Board which had been collected from the industry for global tea promotion.

A joint statement to this effect was issued by The Colombo Tea Traders’ Association, The Tea Exporters’ Association, Sri Lanka Tea Factory Owners’ Association, The Planters’ Association of Ceylon, Sri Lanka Federation of Tea Smallholding Development Societies and The Colombo Brokers’ Association.

The collective stand reinforces the seriousness of the industry over the reported moves.

“We appeal to the Government to reconsider this unfair action in deference to the pledge made to the tea industry that the Global Tea Promotion Fund will be utilised exclusively for enhancing market opportunities for Ceylon Tea worldwide, under the stewardship of the Promotion and Marketing Committee of the Sri Lanka Tea Board,” the tea industry said.

The joint statement said in October 2010, a Tea Promotion and Marketing Levy was introduced by the Sri Lanka Tea Board, whereby a sum of Rs. 3.50 was charged on every kilogram of tea exported from Sri Lanka, to be used exclusively for the worldwide promotion of Ceylon Tea. 



On the guarantee provided by the Gazette of the Democratic Socialist Republic of Sri Lanka – Extraordinary No 1677/14 dated Wednesday, 27 October 2010, restricting the use of these funds for tea promotion, exporters readily co-operated in this initiative.

At the outset, the Sri Lanka Tea Board clearly affirmed that, whilst the funds collected by the imposition of this levy would be administered by the Tea Board, the application of the funds would be regulated by representatives of the industry. Accordingly, a Promotion and Marketing Committee was established, with wide industry representation. Since then, despite the successive changes in the Government and Ministers, the autonomy of the Fund, which now stands at Rs. 6 billion, was consistently respected and the members of the Promotion and Marketing Committee remain unchanged. Due to various reasons there were some delays to implement promotion and marketing plan, but it is now ready to be implemented.

The objective in establishing this fund was to conduct promotional activities in order to retain existing markets against strong competition from other origins, regain markets lost to competition and penetrate new markets. Subverting these initiatives would spell disaster for the tea industry, which contributes significantly to the country’s economy. It would also diminish the vitality of the potent brand ‘Ceylon Tea,’ which had been developed through the concerted efforts of the Tea Promotion Bureau and its successor the Sri Lanka Tea Board and the Industry at-large, over several decades.

Unquestionably, the ownership of these funds, contributed by the industry for a very specific purpose declared at the inception, belongs to the industry. An analogy could be drawn to the Sri Lanka Tea Board’s role of administering these funds on behalf of the industry as a bank administers the funds of its account holders. Notwithstanding the protests of the industry, if the Government intends proceeding with this act, the industry will demand the immediate suspension of the Tea Promotion and Marketing Levy, as it will serve no further purpose.

The tea industry of the country is in an extremely precarious position currently, on account of the decline in world commodity prices and volatile circumstances in many of its key export markets. This will only serve to exacerbate this crisis further. It will also surely imperil the livelihood of the over two million persons directly and indirectly employed by the tea industry, as well as their families/dependents.

The stakeholders, therefore, appeal to the Government to reconsider this unfair action in deference to the pledge made to the tea industry that the Global Tea Promotion Fund will be utilised exclusively for enhancing market opportunities for Ceylon Tea worldwide, under the stewardship of the Promotion and Marketing Committee of the Sri Lanka Tea Board.