Sri Lanka’s fertiliser policy has caused a stir among tea buyers eager to find out if stocks will continue to pour in while exporters believe it’s only a matter of time before Sri Lanka could lose markets that generates a total of US$1.2 billion in annual revenue.
Exporters hope there might be a change of policy to introduce organic farming in a gradual process, Ceylon Tea Traders Association (CTTA) Chairman Jayantha Karunaratne told the Business Times. He explained that companies involved with marketing brand names are capable of scaling down their operations in Sri Lanka or completely moving out of the country.
Mr. Karunaratne pointed out that one of their buyers from West Asia had queried about the government position on the new fertiliser policy and had been worried if the quantity and quality of his stocks would drop. If this happens then they will be compelled to change their purchases to India, Kenya, Vietnam or China, he said.
At present Sri Lanka’s tea production constitutes only 5 per cent of the total global tea production while tea exports is just 16 per cent of total global exports. In this respect, the TEA Chairman pointed out that this is such a small impact if their produce is not made available in the markets.
On the contrary Sri Lanka will stand to lose its key markets to which it has been exporting to for the past 30 years like Russia and the CIS countries, West Asia that have not been requesting for organic teas. He noted that exporters in Sri Lanka comprise about 200 companies generating about US$1.2 billion per annum and losing this amount of foreign exchange at a time like this is a cause for concern when the country needs money.
While exporters will be compelled to change their business strategy it is the growers that will be severely impacted by this new fertiliser policy. While most of the companies will have fertiliser for another six months after this period the industry expects a crop loss of about 30 per cent or more that would at the same time have a ripple effect on the incomes of the people living off these tea estates.
He noted that the authorities needed to adhere to professional advice obtained from those engaged in the agriculture growing business. Moreover, the organic tea market in the world is very small and it is mainly bought by developed countries and if Sri Lanka should shift to this product category then that would mean entering a totally new market.
At present only one or two per cent of the total global produce comprises organic teas, Mr. Karunaratne said adding that today’s markets trends are shifting towards more economical products and opting for refreshing tea at better prices.
Today the buyers are asking about this issue but in time they will not talk about it and then subsequently move out, Asia Siyaka Commodities MD/CEO Anil Cooke said.
He noted that the critical thing is to have the right amount of fertiliser when it is required and explained that they would be moving into a dry spell from mid- December to mid- March on the western side. He hoped a more strategic approach would be adopted by the authorities in adopting the policy on fertiliser.
Source: The Sunday Times