TEA brews up fresh debate on imported tea value added for re-export

Friday, 16 August 2013 06:45 - - {{hitsCtrl.values.hits}}

The Tea Exporters’ Association (TEA) of Sri Lanka in a statement said yesterday it viewed with concern and surprise the comments made by the founder of Dilmah Teas and Chairman of Ceylon Tea Services PLC (CTS), Mr. Merrill J. Fernando, at the recent Annual General Meeting of the shareholders of CTS, with regard to the obstacles faced in importing specialty teas for re-export as value added branded products. Following is the full text of the TEA statement. Firstly we fully endorse the statement made by the Chairman of CTS underlining the importance of using teas of other origins for expanding the range and scope of local brands in the global marketplace. The TEA as a responsible organisation representing the majority of tea exporters of Sri Lanka have been impressing upon the

Government authorities and industry stakeholders of the need to create a specialised export zone or a tea hub for import of other origin teas for value addition and re-export. On this well thought-out proposal, the TEA experienced a barrage of objections from none other than the Chairman of CTS on the premise that importation of ‘cheap’ teas will diminish the value of pure Ceylon tea in the international market place. The term ‘cheap’ tea which was brandished to malign the objectives of the TEA was probably based on teas available internationally at prices below the average prices realised at the Colombo Tea Auction which is around Rs. 400. However, we are happy to note that Dilmah now considers specialty teas of other origins (even at a price of Rs. 200) to be determined by quality differentiation and not by its cost with the focus being on the need to create a segment under a quality promise of an established brand. However whilst we agree with Mr. Fernando on the need to allow imports to come into the country for the specific purpose of value addition and thereby expanding the market reach of Sri Lankan tea brands, we wish to defer on his requirements for removing all controls for such imports. We also refute the claim made by Mr. Merill Fernando that other tea exporters have done hardly any or nothing at all for the tea industry. It must be understood that other than Dilmah, several tea export companies have built up their brands using their own funds spending billions of rupees. This is the reason that the tea export industry unified under the Tea Exporters’ Association laid before the decision makers, a strategy to go beyond the one billion US dollar export target which was comfortably achieved several years ago. It must also be noted that the TEA is confident of the tea export industry’s potential to cross the $ 5 billion export earning mark in the not too distant future. This has come about only because the tea exporters undertook vast expansion of their facilities spending large sums of money for the greater good of the industry. We do not wish any of our exporters specialising in locally registered brands to move out of Sri Lanka to other tea producing countries such as China, Indonesia or India but we sincerely hope that the authorities who were misled by wrong connotations on the need for the importation of other origin teas for value addition and re-export will now realise the need for establishing a tea hub in the form of a specialised export zone for value addition under locally registered tea brands using other origin teas under strict control of quality and statutory regulations. The need to import other origin teas, as correctly stated by Mr. Fernando must be determined by the importer himself but with justification of such imports. A set of controls and guidelines for operations in this manner will never undermine the value of Pure Ceylon Tea but will complement the export revenue from the Tea Industry and the establishment of Sri Lanka as a reliable source for the Tea needs of the world effectively transforming the island as the “Tea nation of the world”.