TEA INDUSTRY
Compiled by Savithri Rodrigo
PERCHED ON A CLIFF EDGE
Jayantha Karunaratne stresses the need to innovate to sustain Ceylon Tea
Q: Is the global tea industry ready to face the future?
A: Presently it’s grappling with challenges and is in need of changes to sustain itself. Ceylon Tea is renowned in global markets but its image is diminishing rapidly as competitors offer better value and due to the lack of promotion over the years.
Q: How would you describe the local industry?
A: It’s dealing with issues related to business structure. The tea value chain comprises many segments including smallholders, leaf transporters or dealers, factory owners, plantation companies, brokers and exporters that are subdivided. So it has to become more efficient to add value to the final product.
Stakeholders find themselves in a catch-22 situation due to the need to replant but being unable to uproot and wait four years to harvest. Local transporters or dealers must purchase substantial volumes from smallholders to reduce operational costs and increase profitability. And the number of factories exceeds requirements compared to other tea producing nations.
Q: What are the future challenges that need to be addressed?
A: It is challenging to produce high quality tea and maintain crops at present levels. Gaining the required funding for replanting is another challenge.
Global consumer markets are transforming so we must create innovative products, and invest in brand and generic promotion of Ceylon Tea to spread awareness. A cost-effective mechanism is vital to sustain Sri Lanka’s market share. And the industry must invest in R&D. Consumer demand has changed drastically but Sri Lanka’s product portfolio is stagnant.
Q: So how must Sri Lanka change its game plan to compete globally?
A: There has to be a major change in approach to compete in the global market. Product innovation, cost-efficiency and quality are priorities. Customers no longer look for product origins; they seek value and quality products. Market segments for premium and medium teas for example, must be approached with varied products, packaging and pricing.
Q: Is Sri Lanka innovating to meet future requirements, in your view?
A: Locally, we’re not motivated to meet future requirements. All segments are burdened by higher taxation whereas other countries are extending tax relief and rebates. The industry has not focussed on sufficient innovation in terms of quality, product, cost and speed.
We continue to pluck tea manually and on average, about 70 percent of the cost of tea is attributable to labour. This must change and costs reduced drastically. Sri Lanka’s engineering and IT strengths aren’t being optimised to automate the tea industry.
Q: Have we trained human resources (HR) sufficiently?
A: No. Our HR functions are not properly implemented, people aren’t motivated and the unions are politicised. The culture, approach and labour laws must change to boost productivity.
Q: What is Sri Lanka’s role in the context of terms of single origin tea compared to multi-origin?
A: Although many exporters have lobbied for tea imports to cater to diverse segments of the global consumer market, there’s been no solution due to various pressures and political reasons.
We lose competitiveness and the international trade is moving away from Sri Lanka. Our game plan should be to permit exclusive teas to be brought in for value addition – and cut, tear and curl required for blends – as well as orthodox teas that are imported sans taxation or other barriers.
Sri Lanka should be promoted as a blending and packing hub in addition to supplying Ceylon Tea.
Q: Would you say that tea is a sustainable industry?
A: Unless we change systems, the industry will die a natural death. It’s up to stakeholders to decide the path to take. Environmental concerns are equally important.
Climate change has altered weather patterns and agricultural production must be planned on the basis of this reality. To meet the growing demand, more land has been deforested and converted into tea plantations. Land clearance alters the natural flow of water and increases soil erosion, leading to the loss of wetland habitats and pollution of waterways.
Q: As for transformation, what is needed for the tea industry?
A: Stakeholders – i.e. exporters, packers, brokers, smallholders, and private land and factory owners, as well as the corporate sector – must work towards a common goal to make headway and retain our position in the global arena.
But this appears to be a virtually impossible task without strong leadership and political backing to make the right decisions.
