Bad publicity affects the marketability of Ceylon Tea : Niraj De Mel

Ceylon Tea is one product that has continued to place Sri Lanka on the world map. In positioning Ceylon Tea as a global product, the sustainability of the industry from responsible sourcing to worker welfare to product quality becomes critical for global audiences. International Tea Day 2023 placed special emphasis on smallholder tea growers who make up to 70% of the Sri Lankan tea industry.   Speaking to the Daily Mirror, Sri Lanka Tea Board Chairman Niraj De Mel spoke about how Sri Lanka’s tea crop is now reviving following the organic fertilizer policy, issues regarding the daily wages of tea pickers, the new direct planting initiative and what more needs to be done to ensure the sustainability of Sri Lanka’s tea industry.  
Excerpts :   

Q How did the organic fertilizer policy affect the crop yield?

As a result of that decision Sri Lanka’s tea production suffered last year. We lost about 48 million kilos which is about one-fifth of Sri Lanka’s usual production in the

recent 5-10 years. This is from a 290 million kilos. Your exports are affected when production drops. When production comes down, to that proportion, exports also suffer. When exports suffer, incomewise you may increase, because the supply situation is smaller and everybody wants to get some kind of Ceylon tea and the prices go up.But it works against you. Then there are articles to say Sri Lanka is unreliable and that we are losing markets. But we don’t lose any market as long as we have the right quantity of tea to go around. Production has to increase for exports to increase. When production increases there’s a larger supply and the price levels will come down. There’s a drastic drop in tea prices compared to this time last year. Since April we see the effects of chemical fertilizer coming back, agriculture inputs taking place. On the other hand, glyphosate was brought in January. All these are having positive impacts which we are seeing only now. In the first three months also we didn’t see any progress because we were minus compared to last year’s first quarter. Even in April though we gained a one and a half million kilos it’s not a fantastic count but it shows that the fertilizer effect is taking place now. But still the first four months is almost 3% less than last year but we will catch-up from May-June, given that the prices will come down. But the weather has always been our blessing, that has seen us through COVID and last year and I would always call last year a kind of sabbatical that Sri Lankan tea soil had. There was no organic fertilizer available in the right quantities to go in, neither were chemicals allowed to be sold. This allowed the soil to rejuvenate on its own. In Israel there’s a once in every seven year cycle where they won’t plant anything or harvest anything during this period. Plant life also needs a break. This is what happened as a result of this ‘mistaken’ decision.  

Q Let’s talk about the export earnings made by the tea industry over the past year

We only fell short by about USD 65 million compared to 2021. This was because high prices were paid for Ceylon tea because the availability was small. This year it may be the increased quantity and increased exports that will keep us at the same level if not better it. The unit prices are coming down and auction level prices are coming down and therefore the front end price will also drop. But the only issue at the moment is that the strengthening of the rupee is not helping the exporter to quote a fourth price. Trading is affected at the moment but we have to fall in line with the financial regulations put in place. It’s a hard call for the exporter but there was a 76% depreciation of the rupee last year.   

Q There has been a special emphasis on smallholder tea growers. What is the status of the replanting subsidy? Is it still being given to smallholder tea growers?

Right now no. They have moved away from replanting and new planting is fine wherever it can be done. More than new planting it’s more about filling up vacancies. If you go to tea estates today, there are a lot of vacancies and in a way it’s ugly. This is where you’re losing on production. Not only is there a dwindling of tea pickers as a result of which areas are remaining without being plucked which is also contributing towards a production fault plus the vacancies that need to be filled. These are ongoing things but have not been happening to my heart’s content.   

Q Could you explain about the direct planting initiative?

If it’s replanting you have to uproot all tea bushes, rejuvenate the soil and allow it to be grown with something like Glyricidia or Mana grass and get the nourishments back into the soil. If it’s low grown elevation it will take about 18-24 months and in upcountry it will take around 5 years. But in direct planting you don’t have to rejuvenate the soil and latest research shows that you can straightaway plant new plants. This has been started with this year’s International Tea Day. The Minister led a campaign in Kahaduwa, Elpitiya and was done with Assistant Tea Commisioner ranges of the Tea Board including Bandarawela, Ratnapura and Kandy and other areas around the country. I sincerely hope this would see the light of day and it will help the tea smallholder. Because the smallholder is key today since almost a decade they have accounted to around 75% of the green leaf harvest.When you convert 4.65 kilos of green leaf for a kilo of black tea it means almost 70-75% of Sri Lanka’s tea production comes from that fraternity. Even though we have 20 plantation companies inside which each of these companies have 15-17 estates, some of which are 100% tea, some are rubber and tea their performance is below compared to smallholder performance. This is because the overheads the plantation companies have to bear is overwhelming. This is an agriculture commodity. There are good years and bad years. With overheads and the workforce they are doing maximum they can amidst backlash from NGOs and foreign media.   

Q There are various opinions regarding the wages given to tea pickers. What are your thoughts regarding this issue?

The wage to the tea pickers was a collective agreement. Last time the agreement was thrown out of the window but then the labour minister has intervened and determined a fee and now they are in courts. Now they are paying the Rs. 1000 under protest because there’s a court case pending. But it has been misreported to say that they are not paying the Rs. 1000. Either one of us have to re-look at the plantation model. This area talks about the economic sustainability. If you take the Sustainable Development Goals, one of them is economy, which is whether the tea pickers and estate staff are paid adequately and it is the most contentious issue at the moment. When the plantation companies came about there were many agreements. Initially there were 5-6 companies that were given the par value with the government retaining the golden share. Few others came about later and there was a share bidding process going on. But we don’t know what contained in these agreements. People can find fault from outside but what is in the agreement is key.   

Q There is also a claim that the number of tea plant nurseries is reducing due to the soaring cost of plants. Many people now tend to sell plants at higher rates. What are your observations?

There are different issues the smallholder maybe facing specifically. The Tea Board together with the Tea Smallholder Development Authority started the 25 million plant nursery project and tripled it to 75 million plants. The first 25 million project is ongoing but there have been several setbacks due to COVID and the crisis and there was a huge disruption and it affected the success. It hasn’t come up to the level that we desired but around 25-30% plant capacity has been reached. Those are healthier plants and the Tea Board also did a 1.3 million plant project and it has been successful. But before that, private people had their nurseries with what is called the battery plant and it was unhealthy and it is an unsustainable type of plant. Quite a number of nurseries are now doing well. I agree that there is not enough to go round at the moment.   

Q Why was the cost of a tea plant increased from Rs. 20 to Rs. 50? 

I know that it has gone a little above Rs. 20. This is because the boring of holes etc. has to be costed. I don’t know if it has gone directly up to Rs. 50.  

Q Is there a possibility of the cost coming down sooner or later?

Certainly not sooner. I can’t see a drastic reduction but still it’s affordable. It’s like the fertilizer subsidy. The tea smallholder was so used to getting a fertilizer at Rs. 1500 a bag and suddenly it came up to Rs. 43,000. The existing suppliers have factored in what has not been paid to them, the exchange rate that was depreciating etc. The private sector tea exporters were trying to bring down fertilizer through their contacts. Then they radically brought down the prices. Even at Rs. 15,000 which was during the third quarter last year, it’s 10 times the cost the farmer was used to. Today it’s below Rs. 9000 but still it’s 5-6 times more than what the farmer used to pay. The smallholder interest to fertilize was far slower than the RPCs, even despite the soft loan scheme which we introduced from July last year which was at 8% to be repaid in three months. The take from private factory owners, which was the channel through which we were getting the fertilizer to the smallholder, was very slow. During the last six months of last year, I don’t think around 40-45% smallholders would have fertilized as it was too costly for them. RPCs could have done that but they waited for the glyphosate to come in, but it was brought down only in January. This is why we see a production increase. Anyway Sri Lankan tea production is high during April, May, June and I think we are now going to the cropping period. There’s good weather, the fertilizer has been coming in and the plants are well nourished but there is the impact of climate change. The rains are too hard and the sun is too hot.   

Q Another part of sustainability is the welfare of the pickers. What is being done to ensure that they are being looked after?

We have been getting bad publicity. Some media have been depending on the Planters’ Association who represent all RPCs, and I’m not happy with the statements that have been given as they are too long and they don’t address the point. When the bad publicity came last year our promotion marketing council went into a public relations campaign that included sustainability. They went down the line of not reacting but acting. They said overall the Sri Lankan tea industry is sustainable. It was a good action rather than reaction. On the one hand a journalist can creep into a very bad property run by a badly run plantation company. They may not be looking after their workers well. But we also know the picker mindset. Once a white-skinned person comes they will make a mountain out of a molehill. They will show a salary slip and say they are not being paid. But they don’t mention about the loans that they have taken. The plantation company has to deduct those from the salary. There was one salary slip and the picker claimed that he went home with a zero pay sheet. The pickers are also so indisciplined and they booze and bust up their money. A guy gets Rs. 1000, on the way they booze, gamble and by the time they come home they don’t even have Rs. 150 in hand. But these are being addressed by plantation companies. There is an alcoholics programme, there are awareness programmes on financial management etc. Having said that, bad things also maybe happening. There are some companies that provide a lot of privileges to the workers and they do a lot of welfare work for the pickers. Plantation companies who are responsible ensure that pickers get a living wage. But whether it is adequate or not is another thing. They are given housing, there’s a small plot of land in front of their houses where they can plant vegetables and that harvest is theirs. They can milk a cow and earn more. It’s just that their financial planning is bad.  

Q But some people are not provided housing at all. 

That is true. There are pluses and minuses. But what the foreign journalists are doing is that they are taking the minuses only and blowing it up to say these are the conditions these people are living in and questioning foreign companies as to why they are buying our tea.   

Q Does the government have a plan to provide housing for these tea pickers in future?

I’m not aware of this and it is being handled by the Plantation Human Development Trust. They have done a lot of work and there has been good interaction with people over the past 15 years.   

Q What else is being done to ensure the sustainability of the tea industry?

The biodiversity is being looked at. There is a lot of work we’re doing in forestry. The tea industry uses a lot of fuel wood. The country needs to have a proper fuel-wood policy. Our colonial masters taught that there were lands within estates which were forested. When trees were felled they were taken for firewood and there were replacements planted. When those trees come up the tall trees were felled and they were used for firewood and it operated well. But over the years with climate change etc., people fly on top and see trees being felled and they don’t know that the plantations are doing what’s right and proper. As a result they give instructions to the divisional officers. These people get excited and they don’t understand the mechanism as to how it works. Therefore, respective government officers should know how the tea industry, tea estates and other industries work. The tea industry needs fuel wood and to that the effect the RPCs have been doing the forestry projects but they have to be taken to the next level. Then the introduction of solar panels. The Tea Board also gives a subsidy to the interest paid on top of purchasing panels for plantation companies or any factory for that matter. They are being offered the same facility where they can take a loan, buy their panels, when they are paying that with interest 50% is paid by the Tea Board. 

 
We have to do the product diversification. We have to be ready to counter the bad publicity as it affects marketability. You can’t shy away from the fact that a large amount of Ceylon tea is being purchased by globally branded packers. For the past 20-25 years we have been having the highest priced tea auctions as we have diversity in our liqueurs. We have the seven regions from Nuwara Eliya to Dimbula to Uva, Sabaragamuwa and there’s a difference in those waters, brewing-wise. It’s not a one-size fits all tea. We are also the largest orthodox tea producer in the world. Our orthodox tea is much liked by the Middle East and Russia. Therefore, we have to definitely look at returning to the standard of tea taste or quality levels of Ceylon tea to continue to survive in the global market to make a difference.