Commercial plantations urge immediate govt. action to prevent industry’s demise

• RPCs allege discrimination by authorities on allocation of fuel for leaf and latex transport and power generation
• Calls for radical and bold reforms to resuscitate industry including allowing hybrid dollar auctions
• Calls for additional assistance to increase production to enhance dollar earnings and measures to reduce high COP

The plantation sector yesterday said its activities are coming to a standstill due to the government failing to take the necessary action to allow industry to function with minimal impacts amidst the ongoing turmoil.

The government’s failure to allocate fuel quotas to the Regional Plantation Companies (RPCs), together with continuous power disruptions and uninformed policymaking, is bringing Sri Lanka’s commercial plantations to a standstill, the Planters’ Association of Ceylon (PA) said.

Due to the lack of fuel, all leaf and latex transport operations have been severely impacted and there is insufficient fuel to operate standby generators.

Accordingly, the PA demanded that authorities take immediate action to prioritise Sri Lanka’s plantation industry, which contributes over US $ 1.5 billion to Sri Lanka’s export revenue.

Commenting on the dire situation, PA media spokesperson Dr. Roshan Rajadurai cautioned that the government’s continuing failure to give any priority whatsoever to the needs of RPCs and the broader industry, together with a series of catastrophic policy blunders had resulted in severe disruptions to production and transport and rapid escalation of production cost of tea by around 30 percent from the beginning of 2022.

“RPCs will no longer be able to continue operations as usual if real and meaningful solutions are not provided immediately,” emphasised Dr. Rajadurai.

“Despite our critical contribution to the industry and the Sri Lankan economy, the authorities have failed to understand our value. Instead, they have continuously discriminated the RPCs even in the past, as compared with other export industry stakeholders and the rest of the plantation sector.”

He stressed that the sector was severely disrupted even before the current domestic economic crisis by uninformed policymaking decisions, including the completely irrational ban on import of essential agriculture inputs.
The issues witnessed at present across the economy are directly connected to this unplanned, unscientific and short-sighted approach to policy, Rajadurai added.

“The government has publicly accepted the failure of this policy, the once vocal proponents of such unsound claims are nowhere to be seen although the industry continues to pay the price, despite our repeated warnings and admonitions about the ill effects of such a policy,” he said.

Although the government retracted its decision to ban imports of agricultural inputs such as fertiliser, recommended weedicides, fungicides and pesticides, these have not been available since April 2021. The bureaucratic processes required for the bans to be lifted takes time and have obstructed imports, creating severe shortages. Compounding these challenges, the depreciation of the rupee and the global increase in commodity prices have resulted in the price of these essential inputs skyrocketing.

As a result, the cost of production of 1kg of tea has now risen to nearly Rs.800. However, at the Colombo Tea Auction, the Net Sale Average (NSA) of high-grown tea was only around Rs.717, up to end-March 2022.
For the plantation sector to continue operations, uninterrupted power and fuel – including for internal transport – need to be provided as priority. Since suppliers are also now demanding payments in foreign currency, Rajadurai said the RPCs are also strongly urging the authorities to allow tea producers participating at the Colombo Tea Auction to obtain their payments from tea exporters in foreign currency.

Given the sharp increase in the cost of vital agri inputs, the RPCs also urge the government to include the commercial plantation sector in any beneficial scheme through which such inputs are made available to producers, using funds from multilateral agencies. The RPCs provide a range of services and care for a population of over one million residing in the estates and also support the smallholders by processing their tea leaves and rubber latex, serving as a vital cog in the industry’s supply chain.   
In the medium to long term, the RPCs see stable policymaking made in consultation with industry practitioners as essential for the growth and economic sustainability of the plantation industry.