The headlines indicated below, which appeared in Mirror Business during the last few weeks point to a brewing crisis in the tea sector.
Plantations want govt. help to wade through present crisis - Daily Mirror (DM) August 27, 2015
July tea exports hit - DM August 28, 2015
Innovation not value addition answer for current tea crisis - DM September 7, 2015
Tea industry in danger - DM September 8, 2015
Plantation crisis - DM September 11, 2015
At present, approximately 203,000 hectares of land, representing around 3 percent of the total land area, is cultivated with tea.
Out of the 25 districts in Sri Lanka, tea is grown in 14 districts. Almost 100 percent of the area under tea is in the wet zone. Nearly 27 percent of the tea lands are in the up- country (Nuwara Eliya District), 32 percent in the mid-country (Kandy, Matale, Badulla and Kegalle districts) and 41 percent in low-country (mostly in Galle, Matara, Ratnapura, Kaluthara Districts).
According to sources of the Plantation Ministry, out of the 203,000 ha of tea lands, 120,000 ha (60 percent of the total land under tea) are in small holdings and 83,000 ha (40 percent of the total land under tea) are in estates.
Production of tea
According to the Central Bank statistics, the total annual tea production has fluctuated around 330 million kilogrammes during the last five years.
The average tea yield (kg/ha) increased marginally from 1760 kg/ha in 2010 but decreased during the last two years. About 95 percent of the tea produced is exported. The weight of tea exported during the last five years does not show a marked change although the export earnings have increased from Rs.162 billion in 2010 to Rs.212 billion in 2014.
Issues in the sector
The crisis in the tea sector, indicated by the headlines indicated above is due to a number of issues. Among these are:
a. Increasing cost of production
b. Low yields
c. Old age of crops
d. nadequate diversification and intercropping
Increasing cost of production
The cost of production of tea (Rs/kg) has continued to rise during the last few years. This is mainly due to rising prices of all the inputs such labour, power, fertilizers pesticides and decreasing yields. The average cost of production of tea, during the period 2010-2014 has risen from Rs.390 /kg in 2010 to Rs.434 in 2014. This may be a reason for the heavy losses incurred by the Regional Plantation Companies (RPCs) during the last few years. According to the Planter’s Association of Ceylon Chairman, RPCs incurred losses of Rs.2 billion in 2013, Rs.3.2 billion in 2014 and set to make losses nearing Rs.5 billion by the end of 2015. Low-country tea factory owners are also perturbed over the losses they have to incur.
Low yields
The average tea yields are considerably lower than the potential yields. It has been reported that some of the cultivars developed by the Tea Research Institute of Sri Lanka had been yielding around 8,000 kg/ha in South India under commercial conditions. However, the average tea yield in Sri Lanka is much lower. In the smallholder tea sector the average yield is around 1800 kg/ha and in the estate sector it is about 1200 kg/ha.
Productivity of tea lands indicated by yield/ha has declined during the last few years possibly due to undesirable weather, soil erosion leading to infertile soils, pests and diseases etc.
Old age crops
A considerable part of the tea crop is old. For example, about 40 percent of the tea extent is under seedling tea and about 90 percent of the seedling teas are over 60 years old and need replanting.
Around 30 percent of the VP tea is more than 30 years old and these also need replanting. According to the Plantation Crops Ministry, during 2010-2012, the average annual replanting in the corporate tea sector was 1.1 percent, in the smallholder sector it was 0.7 percent and the national average was 0.9 percent. Ideally this should be around 2 percent. Low replanting is mainly due to high costs involved.
Diversification and intercropping
Unlike in coconut or rubber, tea lands are little used for the production of any other crop. The degree to which diversification and intercropping in the estates is considerably low.
However, in some tea lands, shade crops such as Albizzia and Gravillia are grown which ultimately yield timber. Also, crops such pepper and coconut are grown to a small extent. It has been estimated that around 28 percent of tea smallholdings have mixed cultivations.
Due to worker shortage, some estates face the problem in harvesting the entire quantity of tender shoots available for picking. An obvious solution would be to diversify the marginal lands. The unproductive tea lands may be put under pasture and have cattle.
This will reduce our expenditure on milk imports and also degradation of the lands will be reduced resulting in less silting of the reservoirs. Crops such as glricidia could be cultivated on the unproductive tea lands. Glyridia produce large amounts of biomass and could be used to generate electricity.
What needs to be done?
In view of the important role played by the tea sector on the socio-economic development of the country, it is important that the factors which limit the productivity and profitability are given serious consideration.
In this regard, cultivation of better tea cultivars and their effective management including better fertilizer and pest management practices, diversification, improved manufacturing and value addition of the produce, increased rate of replanting, reducing soil degradation and conservation practices are essential. All these activities would involve a high level of capital investment and also, effective implementation of policies. In 2005 the National Plantation Industry Policy Framework was developed and it was estimated that around Rs.83 billion is necessary during 2007-2016 for improvement of the tea sector.
It may be worthwhile to consider to reduce the extent under tea and bring the land made available under a different land use system indicated above and concentrate on the improvement of the productivity of the effective tea extent. By adopting this approach, the land productivity as well as the worker productivity could be improved while minimizing the cost of production.
In view of the recurrent losses in the tea sector, the new Plantation Crops Ministry need to examine in detail the socio-economic aspects of various issue involved in this sector with all the stakeholders and develop a holistic national plan. In this regard, an important issue that needs the attention is the present land use policy in tea lands. It is also important to realize that there is already an oversupply of teas in the world market and any over production beyond our present 310-325 million kg/annum might cause undesirable results.
Dr. C.S. Weeraratna
([email protected])
