Despite the reduction of fertiliser price by 50%, the hard blow of VAT has accelerated the costs of inputs to tea production such as fuel, machinery, energy, chemicals, materials The Daily Morning Business learnt.
Speaking to The Daily Morning Business, Hayleys Group Managing Director, Planters’ Association (PA) of Ceylon Spokesperson, Dr. Roshan Rajadurai said: “Currently, the main challenge is the high cost of tea production because tea has very wafer thin margins in the best of years. Due to the taxes and the spur of other input costs will have a direct impact on the total cost of production.
He added that any industry needs to have a surplus income over expenditure to continue the process. However, when that is threatened, people will look for alternate forms of employment. For instance a plucker who plucks 30kg of tea leaves for a day is paid Rs. 1,200.
At the same time, when there is no sufficient crop to offer 30 kg for a day. The pluckers look for other employment that will earn a similar amount of money.
Moreover, due to the over production of tea in countries from the African continent such as Kenya offer different tea products at a much lower price.
According to the Central Bank of Sri Lanka (CBSL) monthly report of November (2023), in 2023, from January to October, the revenue income for tea was $ 1,085.9 million and in 2022, from January to October, it is $ 1,045.8 million with a difference of 3.8%.
According to the PA, despite the prevalent challenges, there are also opportunities such as India anticipates increasing its domestic consumption while taking markets away from the traditional Western and Russian countries. Therefore, Sri Lanka will get the opportunity to sell tea for a higher price than earlier which is a positive factor.
President Ranil Wickremesinghe stated that going forward the plantation sector must go for a revolution, a model law, a gate-sharing model and already there is a subcommittee appointed by the Labour Minister to look at it, during the 200 years celebration of the Ceylon plantation community.
Currently, the competitiveness in the global market is on a cluster of dimensions due to the relatively smaller quantity of production of 150 million kilos, the artisanal manufacture such as with hand selective hand plucking.
Moreover, the fluctuations in climate and weather conditions, soil and the mode and method of manufacture of Ceylon tea is different. Its unique calling card is differentiation in terms of season in terms of geography in terms of product offering, quality, flavour, Dr. Rajadurai elaborated.
He also shared his thoughts on the Thai Free Trade agreement saying that it would give more opportunities for the flavoured tea exporters.