Tea industry calls for suspension of promotion levy

• Says such move would support cash flow position of tea exporters
• Levy imposed in 2010 to collect funds to be used to promote Ceylon Tea

By Shabiya Ali Ahlam
The tea industry has once again called on the authorities to suspend the Tea Promotion Levy; however, this time the request was put forward so that the sector receives the necessary relief from the current challenges faced due to the coronavirus (COVID-19) pandemic.

The request was made so that the cash flow position of the exporters is supported, said Tea Exporters’ Association Chairman (TEA) Sanjaya Herath in a statement to the media released this week.

The promotion levy was imposed by the government in 2010 with the intention of collecting funds to be used by the Sri Lanka Tea Board (SLTB) exclusively for promoting Ceylon Tea within and outside Sri Lanka. 

The industry stakeholders and the relevant government authorities have been at loggerheads with regard to the manner in which the fund is being utilised, largely due to the latter opting to disburse the moneys for purposes other than what it is intended for, which is for promotion and marketing activities.

While proposals have been made in the recent years to entirely abolish the promotion levy, the TEA chief stressed that it is imperative the government heeds to the call this time round at least, as the exporters are currently faced with a number of challenges and are striving to move forward.

According to Herath, the exporters require enhanced working capital as the tea prices have gone up significantly while export remittances coming at a slow pace. 

The stakeholders are also said to be witnessing an increase in finance cost as getting payments on time from Europe, the USA and Middle East is an issue, given that these markets are under partial lockdown.

Furthermore, while the exporters are operating with 25 percent capacity, due to the unavailability of adequate manpower, the sector players are faced with additional costs for having to provide transport, meals and adhering to health and safety measures imposed by the Health Ministry during the imposed curfew.

Herath stated that as the industry is keen on moving ahead and is taking proactive measures, such as the online auction, it is important that the government looks at reducing the woes faced by the stakeholders.

Previously, the TEA called for suspension of the promotion levy when the implementation of the Global Tea Campaign was dragged for many years. The delay was attributed to the strict government tender procedures and regulations.

Last year, the Plantations Industry Ministry attempted to use 50 percent of the promotions levy fund for replanting efforts.