Hope for the recovery of Ceylon tea production
New individual housing units for plantation workers, Nuwara Eliya Estate. Image: Yumi Nakatsugawa
Sri Lanka, a major black tea supplier to the international market, has been facing an economic crisis with severe shortage of foreign currency reserves and a price hike triggered by the Covid-19 pandemic and the Russia-Ukraine war. The country defaulted on a debt repayment in April 2022 and replaced its president, Gotabaya Rajapaksa, that July. The current government, led by President Ranil Wickremesinghe, has been ‘reconstructing’ the nation. On 20 March 2023, the International Monetary Fund (IMF) approved a USD $3 billion loan to help the country, which immediately marked a positive move in the domestic stock market, as well as a bounce in the exchange rate of the Sri Lankan rupee (SLR) against the US dollar. It appears that Sri Lanka’s worst state may have ended with the hope of seeing signs of a recovery before long.
The country’s tea industry had also been affected by many factors, the most serious being the sharp decrease in tea production. Experts say that the main cause of the decline was the sudden ban on all agrochemicals including fertilisers from April to November 2021, decided by the then President Rajapaksa, who abruptly declared that the whole country would go organic without any preparation. Furthermore, soon after the ban was lifted, the price of imported fertilisers surged 20 to 30 times due to the Russia-Ukraine war, followed by the drastic depreciation of the SLR in the foreign exchange market. Consequently, the Sri Lanka’s annual tea production in 2022 was 251,499 metric tonnes (mt), a decrease of 16% from 299,488 mt in 2021, the lowest since 1995 when the yearly crop was 245,900 mt (Source: the Sri Lanka Tea Board).
“The year-on-year decline continued till January 2023, however, this February the crop increased to 18,715 mt from 18,163 mt last year. So, I expect from March the situation will improve, and positive growth from April onwards. Because now fertilisers are going into tea fields, as the price is coming down. Compared to conditions in early 2021, the price of fertilisers is still ten times, and the application is about 50% to 60%, but it is much better than last year. So, we predict the total tea production this year will be 270,000 to 280, 000 mt,” said Niraj De Mel, chairman of the Sri Lanka Tea Board (SLTB).
Fuel imports and supply in the country are also improving. The fuel situation is still tough but much better than the chaotic period in the first half of 2022. Similarly, electricity charges have soared three to four times, a heavy burden for not only private tea factories but also for households. However, the year-long rolling power cuts ended on 15 February this year.
“There are many challenges we face, both domestically and globally. In recent years, the Ceylon tea industry has been disrupted by the fertiliser ban, climate change, high inflation and rising input costs, as well as political issues. Internationally, the Russian-Ukrainian conflict, Iranian sanctions, global inflation, shipping and logistics problems, fluctuation in exchange rate and tea prices in the world market, have all had an impact,” explained Anil Cooke, managing director and CEO, Asia Siyaka Commodities PLC, adding that an oversupply of black tea, particularly from India and Kenya, has become a significant factor.
However, he noted that fertiliser availability has improved remarkably and costs for tea growers are falling. Furthermore, “freight rates have declined and we can ship our teas faster as more containers are available. The digital tea auction, which we switched to in April 2020, is [still] working well. So, I am optimistic that we will have a better second half in 2023”, said Cooke.
Apart from the economic turmoil in the country, De Mel expressed his concern about changes in weather patterns in tea planting districts, which might be an effect of global climate change. Tea quality seasons in this island nation are influenced by the two monsoons; the north-east monsoon from January to March which improves the quality in the western area, and the south-west monsoon from July to mid-September enhances the characteristic flavour in the Uva Province in the eastern region, especially the Uva seasonal tea, which is renowned for its exotic menthol-like flavour. However, the essential dry spell with cold nights, which is crucial for quality tea manufacture, has become unstable, and intermittent rainy days in the Uva season disturb the concentration of flavory components in the green leaf. “We cannot combat the weather or nature, but now some solutions are being sought with the latest studies and experiments at the Tea Research Institute. I’d like to see Sri Lanka coming back to what we were reputed for in the past,” De Mel said.
Despite the pandemic and economic and political difficulties, all projects to improve plantation workers’ welfare are continuing. Since 1992 when the majority of state-owned plantations were privatised with the formation of 23 Regional Plantation Companies (RPCs), the overall standard of life in plantations including housing, medical care, education, sanitation and so on, have considerably progressed. During the Covid outbreak, the estates provided face masks and hand sanitisers, measured body temperature of everyone three times a day, prepared patient wards for separation, and administered three vaccinations to 100 percent of plantation residents. “Therefore, I believe few suffered from the disease and no death was directly caused by Covid-19 in the plantation sector,” said Roshan Rajadurai, managing director of three RPCs; Talawakelle, Kelani Valley and Horana Plantations, belonging to the Hayleys Group.
Tea, rubber and coconuts plantations in the country have more than 100 years of history, and are now facing a severe shortage of workers, as younger generations tend to look for a better life in the big cities. “We cannot or shouldn’t stop the outflow of workers,” said Rajadurai. However, for a short period of time under the nation-wide lockdowns or curfews, many returned to the plantations and the RPCs offered them work and full support. For the sustainable future of plantations, the RPCs have gradually introduced the so-called ‘Revenue Share Model of Work’, in which workers can control their working hours, operations, and are paid based on their own output. In this model, workers are more independent, self-supervised, and earn nearly twice as much as in fully fixed routine work. “We have to change the 150-year-old plantation system to new models to meet the requirement of the times. The revenue share model is very efficient and the only method that can ensure the continuity of tea industry of Sri Lanka,” Rajadurai shared confidently.
- Yumi Nakatsugawa is a freelance writer specialising in food and restaurant management. While freelancing, she developed a love of black tea as well as tea-producing countries and tea people. Based in Japan, Yumi may be reached at: [email protected].
