Sri Lanka brews strong cuppa in 2021; but productivity snags persist

  • Export earnings and production up from 2020
  • Productivity of tea estates drags down high potential sector
  • Tea Board chief says stakeholders need to explore new avenues to cut cost of production
  • Lack of replanting and infilling efforts hampers production
  • Inability to address climate change impacts adds to industry woes
  • Fresh emphasis on front end of value chain
  • Must push brand story of Ceylon Tea being cleanest in world
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The local tea sector braved through the challenges stemming from the pandemic to record an “excellent performance” in 2021; however, more focused efforts are required to sustain the momentum in 2022, as regional competition gets aggressive, the
Tea Board stressed.

The tea industry exported a total of 228 MnKgs of tea in 2021, fetching for the national economy a revenue of about US $ 1,320 million. In terms of production, Sri Lanka managed to record a figure of 300 MnKgs last year, which was achieved despite the fertiliser issue hampering the plantation activities.

The export and production figures are a significant improvement from what was achieved in 2020, where the export revenue from Ceylon Tea was of US $ 1,213 million and the production was 279 MnKgs.

Although the overall performance in 2021 is praiseworthy, the productivity levels of the tea estates remain grim, as they continue to be on a declining trend, Sri Lanka Tea Board Chairman Jayampathy Molligoda pointed out.
According to him, the tea estates continuing to move forward without addressing the low productivity issue places Sri Lanka’s tea industry under threat, since the competitors such as Kenya have gathered steam and witness an increased global market share.

“The cost of production of tea producers has been increasing due to many factors, which include low productivity, both land and labour, high overheads and adverse impact of climate change and COVID-19.

It is worth mentioning that Kenyan tea production, the main competitor for Sri Lankan teas, has been increasing rapidly and Sri Lankan tea production has been declining during the last 10-15 years,” shared Molligoda in a statement to the media.

When compared to the other tea producing nations, Sri Lanka performs poorly in production, due to lack of tea replanting and infilling efforts. Molligoda pointed out that adding to the industry woes is also the inability of the producers to address the climate change effects and other factors, as there has been a gradual erosion of soil and land degradation, despite the application of fertiliser.

In the year 2000, Sri Lanka tea production was about 305 MnKgs, which gradually improved to 328 MnKgs in 2010. Production reached the highest in 2013, with 338 MnKgs but the levels went on to contract – a 2.6 percent decline based on CAGR, according to the Sri Lanka Tea Board.

The need of the hour is to go forward with an ‘integrated productivity and quality strategy’. Molligoda said it is one of the key focus areas for the producers to reduce the costs per kilo of made tea to enable the exporters and marketing teams to capitalise on the Ceylon Tea ‘brand equity’.

“In the circumstances, it is important that the producers adopt an integrated balanced nutrient management system with more and more mineral and organic inputs to be applied in order to improve the soil quality to achieve environmental and economic sustainability,” said Molligoda.

He added that needed is also an improved focus on the social well-being of the workers and smallholders/growers rather than looking for short-term gains.

Molligoda went on to stress that the industry needs to focus more on the front end of the value chain by implementing the already approved promotional activities under the ‘Ceylon Tea Global Campaign’. This he said should be coupled with an aggressive marketing strategy formulated with the support of all industry stakeholders.
“The brand story that the cleanest tea in the world has to be reinforced through maintaining a minimal level of chemical residues and demonstrating sustainable credentials, including purity and wellness factor of Ceylon Tea,” stated Molligoda.