‘Teanomics’ reveals the way forward strategy at TEA AGM
11 Sep 2015 - {{hitsCtrl.values.hits}}
The Tea Exporters’ Association (TEA) held its 16th Annual General Meeting (AGM) at Cinnamon Grand hotel recently, amidst a great number of distinguished guests and fellow members of the tea trade. The event was graced by Dr. Harsha de Silva, the chief guest of the event, while the guest of honour was Calamander Group Singapore Chairman Roman Scott.
The AGM, held under the theme of ‘Teanomics’, focused mainly on all potential and positive opportunities in the global tea industry.
Having successfully achieved its expectations of being one of the most valued economic contributors to the country in terms of its export earnings, the following were re-elected as office bearers for the next financial year: Rohan Fernando - Chairman, Jayantha Karunaratne - Vice Chairman, Jaliya Devendra - Vice Chairman and Sanjaya Herath - Treasure.
Speaking at the event, Dr. de Silva pointed out that the present government has recognized the problem in the industry and has taken into serious consideration the fact that human capital should be valued and given top priority. He also added that they have a plan based on competitiveness, efficiency and productivity in order to make Sri Lanka the most challenging economy in the global market place.
Addressing the gathering at the AGM, Scott said, “Sri Lanka should focus more on product innovation and the current global trends instead of the dying out value-addition model to get out of the current tea crisis. Most exporters are focused on this model and are blinded by the success of some of the local tea brands have had in the past through their presence in the international market. If companies do want to pursue this feat, the best method is to sell it to large retailers prior to launching a product of their own. At the same time Sri Lanka should move away from traditional markets in the Middle East and Russia and cater to the rich Western markets, which have sophisticated consumers with the buying power.”
In his address, Fernando said, “The opportunities for tea in the global market come in many forms. I believe that the way forward is by expanding our product and reach. While we cannot ignore that most of the top global tea brands have had their origins in Ceylon and therefore our tea exporters should take on the world by diversifying into other segments of tea and secure the business on branding and service excellence.”
At present, the industry has been able to achieve an export revenue of US $ 1.6 billion with an export volume of 320 million kilogrammes last year. Although the government’s effort to increase the export revenue of tea towards US $ 5 billion by the year 2020 is a challenging target under the current global tea market situation, the association has already developed strategies to reach a year-on-year growth of 25 percent in order to achieve this target.
Even though the tea exporters have empowered themselves to stand firm in the industry, they have tackled many obstacles to avoid all internal and external issues. The cost of tea production in Sri Lanka has been recorded as the highest in the world while the productivity of the workforce has remained low. This is an area that deserves much focus as it directly impacts the country’s competitiveness in the international market which will inevitably lower Sri Lanka’s export revenue. They also believe that all producers should consider replanting as several of the existing plants are old.
The international market value for tea currently stands at US$ 90 billion (US $ 40 billion - Hot Tea, US $ 50 billion - Iced Tea). Fifty two percent of Sri Lanka’s tea is exported to the Middle East while 25 percent is exported to Russia and the Commonwealth of Independent States combined but as Russia is under sanction and several of the Middle Eastern countries are also under international sanctions with armed conflicts in the region, it has affected the market’s buying power at large.
Further compounding this issue, the Russian ruble has depreciated by 100 percent and while oil prices saw a 50 percent dip. Nevertheless, the association’s marketing strategies to promote value addition globally remains strong. Markets such as China and Turkey have a very high demand for Ceylon tea but has an unattainable tax imposed on them. For example, Turkey has a 145 percent duty imposed on tea, therefore Sri Lanka should consider signing a free trade agreement (FTA) with Turkey just as the FTA with China, which is currently under negotiation, and show more concern to exploit such markets.
Having recognized the potential for the industry, the TEA has proposed a set of strategies that could be applied in order to increase production and quality while reducing cost. Market diversification of tea-based products such as tea based cosmetics, antioxidants, iced tea segments; improving the quality of tea, comply with food safety standards along with research and development together with the government have been identified as a few them. Developing Sri Lanka as a tea hub is on the top of this year’s agenda as it is a strategic move taken by the association in order to expand the production volume and control imports at a duty free zone, etc.
With much hope of taking Sri Lanka to the top of the global tea market as the number one supplier of branded products, the tea exporters have requested support from the Tea Board and government in order to achieve this vision
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