“The cry of every individual in this nation, every citizen, is to solve the economic downturn,” said the Chairman of the Sri Lanka Tea Board Niraj de Mel, observing that in the current state of affairs there is a scramble for resources, which demonstrates how tight the supply situation is.
He was of the view that “the debt restructuring that has already begun should be hastened post the presidential election,” and there must be a focus on securing funds from the IMF and elsewhere. But he warned: “This may not happen overnight; it will take a little time.”
Commenting on the ban on chemical fertilisers, he said that this has had a significant impact primarily on the quantity of tea produced and its effect wasn’t apparent until the last two months of 2021.
He explained: “Despite a very dismal production year in 2020, which was due to bad weather and COVID-19 … we managed to end the year by getting back to what Sri Lanka has been producing in the last five or six years.”
“The last two months in effect began to reveal the true outcome of the non-application of fertiliser,” he continued, lamenting that “the decline that began in November last year has come on to this year.”
De Mel elaborated: “In 2022, we are 18 percent behind the same period last year in terms of the volume of production. It’s almost a 29 billion kilo crop loss, which is predominantly due to the non-application of fertiliser resulting from that ban.”
Discussing the impact of the Russia-Ukraine war on Sri Lanka’s tea exports, de Mel observed: “Ukraine commands around four percent of our exports but even though that may sound like a little, it makes quite a sizeable impact on Sri Lanka’s tea market. Their participation in the Colombo auction is critical since Russia and Ukraine are devoted to Ceylon Tea, and have been importing masses of it.”
“The winter buying period could be promising for the nation,” the tea board chairman conjectured, saying that “we should see intense buying by Russia starting from August and September. The turnover would tell us how we will conclude the year in terms of tea intake from Sri Lanka.”
Furthermore, he expressed concern about the manner in which the flow of information is being managed, which has led to disruptions in the delivery of tea. He said that fuel stations seemed to be unaware that the tea industry has been declared an essential service.
“With the fuel shortage, the tea board is inundated with calls from growers and manufacturers asking about the situation. We’ve been talking to the appropriate ministries to ensure that fuel is made available to them,” de Mel revealed, shedding light on efforts made to assist parties involved in the industry.
De Mel also said that they were addressing the issue of the provision of fertiliser, and explained: “Depending on manufacturers’ fertiliser requirements, funds are transferred through the tea brokers so that the recovery can be made from auction proceeds of the manufacturers and estates, and paid to the tea board… We’ve come forward to help them at a very, very low interest rate loan.”
“Our industry has faced many challenges from other producing countries unlike before when there were fewer competitors… Many countries have now joined the bandwagon… particularly the African countries,” he cautioned, referring to the high production and lower cost of others in the global market.
But considering the global position of the tea industry, he reassuringly reiterated that Sri Lanka exports about 90 percent of its national production to 150 countries and that the country’s internal consumption would account for the balance.
Concluding his interview with LMDtv, de Mel said with conviction that with the appropriate marketing methods, Sri Lanka has the potential to break into the Chinese market as it has with Japan, which has been one of the most influential buyers of Sri Lanka’s black tea since the 1960s.