Tea thirsts for blitz

Thursday, 20 October 2011 00:59 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

As the tea industry prepares for a tough fourth quarter, exporters are calling on the Government to release Rs. 1 billion in cess earnings for global publicity campaigns to boost the Ceylon Tea profile.

However, even though the Tea Board has appealed to the Plantations Ministry to release the funding, the Cabinet of Ministers is yet to grant approval.

Top tea exporters have called on the Government to release around Rs. 1 billion of funds that are needed for massive publicity campaigns to boost the image of Ceylon Tea in key markets. Unless action is taken soon, tea industry experts fear that the target of US$ 1.5 billion in earnings will not be met.

“We are in grave need of increasing the profile of Ceylon Tea,” a top exporter told Daily FT on grounds of anonymity, pointing out that Sri Lanka’s reputation had been flagging due to substandard tea being exported under the national brand.

“We are currently riding on the reputation that we won several decades ago. If the truth is acknowledged, then Sri Lankan tea quality has been steadily dropping over the past years.

We don’t understand why the Government does not release the money for better publicity, especially since it is money that the industry earned itself without depending on the Government,” he stressed.

Tea Board Director General H.D. Hemaratne noted that his organisation had forwarded the request to the Plantations Ministry and that it had been put before Cabinet, but approval had not been given yet.

“According to the 2009 Budget, the cess funds are sent to the Treasury, which disseminates the funds to stakeholder organisations such as the Tea Board, Tea Small Holdings Development Authority and Tea Research arms. Other than this there is the Ceylon Tea worldwide promotional campaign that is owed around Rs. 1 billion from the Treasury,” he said.

The Plantations Ministry is reported to have forwarded the Cabinet paper, but the Secretary was not available for comment.

Tea exporters have warned that the Sri Lankan tea exports are heading for a slide as drought conditions and unrest in the Middle East reduces global demand for tea. Hot weather conditions have reduced production while the Middle East, which accounts for 55 per cent of tea exports, has reduced its buying due to civil unrest.

The Colombo Tea Brokers’ Association had earlier stated that due to adverse weather patterns, production would amount to around 227 million kilos this year – a significant reduction from 333 million kilos in 2010.

During the first eight months of the year in 2010, production was recorded as 222.7 million kilos. This year production during the same period was 220.9 million kilos. Tea prices at auctions too have maintained lower numbers than 2010 and the negative trend is expected to continue in the fourth quarter as well.

At the end of September average sales were at Rs. 362 per kilo (US$ 3.20) while in 2010 it was Rs. 369 per kilo (US$ 3.40) at the end of the period. In 2010 Sri Lanka produced a record amount of over 320 million kilogrammes of tea and provided employment to over one million people.