By Dilina Kulathunga
Sri Lanka would have the capacity to increase its annual global market share in tea exports from the current 15% share to at least 20% through the adoption of the tea hub concept, which has been a debated topic in recent times, says a top industry official. According to Rohan Fernando, a member of the Tea Exporters Association of SL (TEA), the tea hub concept which allows importation of tea from other tea producing countries and blend, pack and re-export from Sri Lanka is likely to position the country as a dominant player in the world map and will have no deterrent impact on the long-term sustainability of the tea industry.
“The reality that we all have to realize is that Sri Lanka is only exporting about 300 million kilograms of tea out of the total world exports of 1.8 billion kilograms but using a tea hub concept, we would be able to substantially improve revenues from tea exports,” Fernando said refuting allegations leveled against the concept that Sri Lanka would open way for ‘cheap tea’ to dominate the market.
When the issue was recently taken up for discussion with the Minister of Plantation Industries, Mahinda Samarasinghe, some exporters voiced concern that allowing a tea hub would allow ‘cheap tea’ to be blended with Pure Ceylon Tea which affects the premium quality synonymous with Sri Lanka.
“There is nothing called ‘cheap tea’, either there is good tea or bad tea. We have a clear strategy to position the ‘Pure Ceylon Tea’ to a niche as a premium product which is more expensive but unique in taste while the ‘blended multi-origin tea’ will be positioned separately with a clear distinction,” Fernando said denying that this is an effort to sell cheap tea to the world.
He says that tea blending and packaging is not a new phenomenon and if the tea hub concept is not allowed in Sri Lanka, local exporters may think of even expanding their present blending facilities in other countries.
“Sri Lanka might run the risk of becoming isolated or somebody else would come and set up similar facilities unless we become proactive. After all, how many kilograms of Pure Ceylon Tea are we exporting under our own brands?” he asked pointing out that only around 12% out of our total tea exports consist of our own brands.
Meanwhile, a director of MJF Group and an established tea exporter under Dilmah brand, Malik J Fernando said: “we are totally against this proposal on the grounds that, this proposal is intended to facilitate packing of multi-origin foreign brands and ‘trading’ local brands and not to develop the premium, Sri Lankan brands”.
“It is my well-considered opinion that the quality of Ceylon tea and its image as the world’s finest tea will be irreparably tarnished if free importation of black tea is permitted. At the present time, CTC manufactured tea, green tea and speciality teas not grown here can be imported, subject to certain regulations,” he said concluding that with the current exchange rate policy of the government resulting from the balance of payments problem, the request by TEA makes even less sense.
“All exporters, including packaged tea exporters, are getting windfall rupee profits as a result of the progressive devaluation of the rupee,” he further pointed out.
Sri Lanka would have the capacity to increase its annual global market share in tea exports from the current 15% share to at least 20% through the adoption of the tea hub concept, which has been a debated topic in recent times, says a top industry official. According to Rohan Fernando, a member of the Tea Exporters Association of SL (TEA), the tea hub concept which allows importation of tea from other tea producing countries and blend, pack and re-export from Sri Lanka is likely to position the country as a dominant player in the world map and will have no deterrent impact on the long-term sustainability of the tea industry.
“The reality that we all have to realize is that Sri Lanka is only exporting about 300 million kilograms of tea out of the total world exports of 1.8 billion kilograms but using a tea hub concept, we would be able to substantially improve revenues from tea exports,” Fernando said refuting allegations leveled against the concept that Sri Lanka would open way for ‘cheap tea’ to dominate the market.
When the issue was recently taken up for discussion with the Minister of Plantation Industries, Mahinda Samarasinghe, some exporters voiced concern that allowing a tea hub would allow ‘cheap tea’ to be blended with Pure Ceylon Tea which affects the premium quality synonymous with Sri Lanka.
“There is nothing called ‘cheap tea’, either there is good tea or bad tea. We have a clear strategy to position the ‘Pure Ceylon Tea’ to a niche as a premium product which is more expensive but unique in taste while the ‘blended multi-origin tea’ will be positioned separately with a clear distinction,” Fernando said denying that this is an effort to sell cheap tea to the world.
He says that tea blending and packaging is not a new phenomenon and if the tea hub concept is not allowed in Sri Lanka, local exporters may think of even expanding their present blending facilities in other countries.
“Sri Lanka might run the risk of becoming isolated or somebody else would come and set up similar facilities unless we become proactive. After all, how many kilograms of Pure Ceylon Tea are we exporting under our own brands?” he asked pointing out that only around 12% out of our total tea exports consist of our own brands.
Meanwhile, a director of MJF Group and an established tea exporter under Dilmah brand, Malik J Fernando said: “we are totally against this proposal on the grounds that, this proposal is intended to facilitate packing of multi-origin foreign brands and ‘trading’ local brands and not to develop the premium, Sri Lankan brands”.
“It is my well-considered opinion that the quality of Ceylon tea and its image as the world’s finest tea will be irreparably tarnished if free importation of black tea is permitted. At the present time, CTC manufactured tea, green tea and speciality teas not grown here can be imported, subject to certain regulations,” he said concluding that with the current exchange rate policy of the government resulting from the balance of payments problem, the request by TEA makes even less sense.
“All exporters, including packaged tea exporters, are getting windfall rupee profits as a result of the progressive devaluation of the rupee,” he further pointed out.
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