Ministry requests Rs 1 bn to buy tea from auctions

The Plantation Industries Ministry has requested the Treasury to release Rs. one billion towards the purchase of tea from the auctions. Plantation Industries Minister Navin Dissanayake told Daily News Business that the tea production cost is high and due to political and several other global issues prices are declining. He said at present the cost of production of a kilogram of tea is Rs 430 and the world market price is Rs 380 for a kilogram.

“The manufacturer cannot absorb this and hence the government has decided to intervene and purchase tea direct from the auctions.” The Minister said in India electricity is provided at concessionary rates to industrialists. “We wanted to introduce a similar system so that stakeholders could benefit. However this system is difficult to be implemented in Sri Lanka due to various issues and practical problems.” He said that he was unhappy in the manner in which Sri Lankan tea is promoted globally. “We need a better marketing campaign.” He said that the CESS fund is heavily underutilized and he will forward a Cabinet Paper to obtain US $ 50 million released from the government for global tea promotions. Dissanayake said that they will look at new markets like Turkey as the current international tea buyers like Russia, and the Gulf states are undergoing economic issues and their buying power has lowered.

Commenting on labour issues he said that he is talking to plantation companies and he also personally likes wage increments based on performance. Asked to comment on the housing issue, he said they are working with the Indian government in this regard and land is being allocated for the project from Sri Lanka. Sri Lanka’s tea exports continued to decline in July 2015 for the twelfth consecutive month, due to lower demand from main tea buyers such as Russia and the Middle East, reflecting declines in both export volume and export prices. Sri Lanka exported 126.5 million US dollar worth tea in July 2015 compared to the 147.2 million US dollar tea exports in the same month last year. Tea exports recorded a drop of 14.0 percent in July this year.

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