Speech of Jayantha P. Karunaratne, Chairman, Colombo Tea Traders’ Association at the AGM


The Chairman Sri Lanka Tea Board, Secretary Ministry of Plantation Industry’s, Director General Sri Lanka Tea Board, Tea Commissioner, Director promotions Sri Lanka Tea Board, Chairman’s of all stakeholder association, Ceylon Chamber of Commerce in the Tea Trade, ladies and gentlemen.

In view of the current Lockdown imposed by the health authorities due to the Covid pandemic in the country, we have decided to have the 127th AGM of Colombo Tea Traders’ association virtually.

This is a turbulent time for the tea industry and the CTTA with its multiple tasks, and responsibilities need to face many challenges, concerning all stakeholders. During these uncertain times for Producers, Brokers and Exporters demonstrated the resilience of the Tea Industry once again.

In March 2020 with the onset of the Covid Pandemic, it was imperative that the weekly Colombo Tea Auction continued without a break. On the 4th of April 2020, after 125 years of an outcry auction system, the CTTA migrated to an e-platform. The CTTA with the assistance of the Colombo Brokers’ Association was at the forefront of this initiative.  The contribution by Mr. Anil Cooke and Mr. Zamil Mohamed towards this initiative is appreciated, where the first e-platform with CICRA Solutions commenced. The CTTA also appreciates the contribution of CICRA Solutions who made the e-platform a reality.

Mr. Huzaifa Akbarali joined the team championing the initiative towards seeking a more robust, user-friendly platform with more functionalities. The CTTA appointed a Steering Committee headed by Mr. Huzaifa Akbarali, comprising of stakeholder representatives from producers Brokers and Buyers.  The Steering Committee Comprised of Messrs. Huzaifa Akbarally, Hishantha de Mel, Anil Cooke, Ganesh Deivanayagam, Pasindu Peiris, Anand Vidthyalingam, Zamil Mohamed, Anjana de Silva, Menuka Keenavinna.

The services of Consultants STAX and IT Expert Mr. Anjana Somathilaka was also appointed to advise the Steering Committee. Legal advice was sought to prepare comprehensive agreements.

After an exhausting process of evaluation by the Steering Committee, OKLO Private Limited was appointed as the selected Vendor, and they commenced the new platform from Sale No. 37 on 20, September 2021.

I take this opportunity to thank the sellers and buyers who willingly agreed to finance the project which collection was maintained in a separate e-platform account by the CTTA to fund the activities.

CTTA Road Map 2030 commenced in 2019 during the period under the Chairmanship of Mr. Aneslem Perera. The objective of the initiative is to increase tea production to 350 Million Kilograms and export earnings to USD 3 Billion per year.

This initiative has encompassed all stakeholders towards formulating strategies, connected with sustainability initiatives, new technology applications, collaboration with research institutes, and marketing. The 2030 committee continues its engagement with national and international agencies to further, the interest of Ceylon Tea and the Sri Lanka tea industry.

Many transformational initiatives are being developed and I must congratulate Mr. Anil Cook, Chairman of the 2030 Committee together with the team for all that has been achieved despite funding limitations and restrictions. It is unfortunate, however, that the requested funding from SLTB tea promotional fund is yet to be approved and released.

A special vote of thanks should go to the ethical tea partnership of the UK for its strong support and proactive engagement.

Sri Lanka has well-established pesticides policies and it is very important for growers to follow the strict guidelines given by the Tea Institute.

Tea Exporters to Japan, Taiwan, and the EU are faced with issues concerning MRL’s. CTTA with all Stakeholders proposed to introduce a system of communication between Exporters and Producers expecting immediate corrective action. CTTA proposed to establish a mechanism for ensuring uninterrupted availability of essential Chemical’s both nutrients as well as pesticides as determined by TRI, after closer assessment of requirements while promoting, encouraging, and supporting growers towards improving the fertility of the soil.

The decision by the government to ban the use of chemical fertilizer and agrochemicals effective May 2021, is causing grave concern to the tea industry. This matter has been discussed at many forums and the CTTA has addressed a communication to H.E the President and other relevant authorities, connected with the industry.

Collectively, we are of the view that the decision to ban the use of Chemical Fertilizer and Agro Chemicals has begun to show a negative impact on the industry. The quantity offered at the weekly auction has shown signs of a decrease, whilst the quality characteristics have recorded a noticeable decline, as well.

Ceylon Tea is marketed globally on its unique characteristics in terms of its blackness and flavor profile.  Any decline in the quality of Ceylon Tea will have serious consequences, where the Sri Lanka market share in a global arena would fall. As a result, a drop in exports and foreign exchange earnings is inevitable.

High volatility of exchange rate has caused uncertainty and losses to the exporters and loss of opportunity to increase market share in International Markets. USD/LKR rate quoted by Commercial Bank does not reflect the real value.

On and off payments received by the exporters are on hold by the US intermediary banks. These payments are sometimes held up for 2 to 3 weeks without credit being given to the exporter.

Some companies ventured into new projects, with new Machinery, Factory Expansions, Market Expansions, etc., with borrowed funds. Cash flow forecasts have changed with the current circumstance as a result of the pandemic. There should be initiative and encouragement from the authorities so that such projects would continue without being abandoned.

The Exporters are currently faced with new challenges in addition to high volatility exchange rates in Sri Lanka. In the recent past, most of our main importing countries have depreciated their currencies.

The cost of Packing Materials has gone up 30- 50%, freight Rates have gone up 4-5 times more.   In addition to that, all Stakeholders’ cost of operation has gone up Due to the current pandemic situation.

The Global pandemic has adversely affected all countries and the supply and demand situation may see an improvement with the western economies accelerating their vaccination programmes.  About 10% of Global Container Shipping capacity is stuck in the outer harbor in many parts of the world including the USA, EU, and China, etc.

Due to this capacity and equipment shortage freight rates on major trade lanes have gone up by 400% to 500%, Experts expect this trend to continue for another 12 to 18 months. This is more of a Global Situation and Authorities here could offer better service in Colombo to attract more shipping companies in the long run.

The Colombo Tea Auction continues to maintain the highest average price for tea in comparision with all other global auction centres.  The Colombo tea sale average from January to August 2021 is Rs. 618.80, as against Rs. 622.67 in 2020. Tea exports total 187.6 Mn kgs against 174.1 Mn kgs in 2020 recording positive growth.

In conclusion, all of us expect turbulent times to continue with Covid uncertainty, geopolitical tensions, climate changes, etc. However, the Tea Trade has been resilient over the years and we will continue to be innovative whilst contributing to the country’s economy with increased export revenue.