Marketing cess on tea finally to be utilized

17 October 2013 07:19 am Views - 4070

The Sri Lanka Tea Board will be releasing part of its Rs.3.5 billion marketing cess fund in order to launch an aggressive promotional campaign for Ceylon tea in key markets, according to Plantations Minister Mahinda Samarasinghe.

Addressing the Annual General Meeting (AGM) of the Tea Exporters’ Association (TEA), Samarasinghe stated that proposals for the promotional campaign are currently being formulated.

“While Ceylon tea has been gaining in some markets, we have also lost some market share in our traditional markets.

This is a formidable challenge which we have to overcome and we are now i n the process of identifying a dynamic, aggressive marketing promotional campaign to penetrate back into these markets,” he noted.

Samarasinghe added that the proposals were now before a Cabinet-appointed negotiating committee, which in collaboration with a technical evaluation committee would submit proposals to him in the near future.

“I am not involved directly in the process and so I am also waiting for these proposals to be submitted to me after which I will take it to the Cabinet for approval. There are questions being asked as to why we still haven’t used this fund but there has to be transparency and accountability and it is extremely important that no shortcuts are taken,” he emphasized.

The marketing and promotions levy of Rs.3.50 per kilogram of tea exports was commenced from November 1, 2010, in addition to an existing export cess of Rs.6 per kilogram.

Deemed by Samarasinghe as “a voluntary undertaking by the TEA”, the marketing and promotions levy met with stiff resistance at the outset with many industry stakeholders questioning the need for a second cess when the industry was not reaping any benefits from the first export cess since its takeover by the Treasury.

Following the takeover, it is reported that the Sri Lanka Tea Board currently does not receive any funding for promotional activities.

Commenting on Ceylon tea’s recent endorsement of the Sri Lanka cricket team, Samarasinghe reiterated that the first two years of the sponsorship agreement had been paid for entirely through the interest gathered from the total fund.

The total sponsorship commitment stands at approximately Rs.615 million for the next two years.

“We are in an enviable position with this fund; in that we have such a large sum of money at our disposal. We will use this fund to put Sri Lanka back on the world map and underscore the point that Ceylon tea is above all other teas produced in the world,” he asserted.

Notably, Samarasinghe went on to state that President Mahinda Rajapaksa had initiated dialogue with the governments of Russia, Belarus and Ukraine with a view to extending economic cooperation on Ceylon tea.

Similar negotiations had also been entered into with China, with Ceylon tea expected to gain a place in the proposed bilateral free-trade-agreement, which is expected to be signed next month.

Meanwhile, commenting on the potential for value addition in Sri Lanka’s tea industry, Samarasinghe noted that Sri Lanka had reached approximately 46 percent value addition on total production, against India’s 11 percent and Kenya’s 7 percent.

While expressing satisfaction with the current efforts, he stated that further value addition must also be promoted in future and hinted at concessions for local producers engaged in value addition through Budget 2014.