Tea Biz traveled to Badulla, Sri Lanka, in early May to participate in the annual Fresh Tea Festival. Hundreds of local tea growers each carried an offering of intricately arranged tea leaves on a ceremonial plate or a small sack of processed tea. Accompanied by Geta Bera drummers and Wadiga Patuna dancers, they paraded through the city streets to the ancient Muthiyangana Raja Maha Vihara Temple courtyard, where a Buddhist monk blessed the season’s first harvest.
Caption: The Ven. Wachissara Hamuduruvo, a Buddhist Monk and senior lecturer in the Department of Public Administration, Faculty of Management at Uva Wellassa University, presides over the first harvest blessing at the temple in Badulla.
Tea Planters and Pluckers Present First Harvest Offerings
By Dan Bolton
Badulla is an ancient city of 50,000 located in the remote central mountains of Sri Lanka. It is the capital of Uva Province, where tea is grown on steep hillsides alternately exposed to the northeast and the southwest monsoon winds.Plantations are located between 3000 and 5000 feet above sea level. Here, Thomas Lipton cultivated the world’s most popular tea blend. The district’s distinctive, aromatic high-grown broken orange pekoe (BOP) grades have earned a top price at auctions for over 150 years.
The city is a picturesque tourist location with guest inns, small hotels, resorts, and bungalows. The rail station is the remote terminus of the upcountry railway built by the British in 1924 to transport tea to Colombo.
Tea is the major employer with a mix of plantations and smallholders. Once a year, the tea community gathers for the annual First Tea Festival.
Entering the temple gates
Geta Bera drummers
Kandyan dancers in traditional garb perform a ritual dance initiated centuries ago.
Kandyan (upcountry) dancers
Badulla Tea Community Celebrates First Harvest
Temple guardians. Sri Lanka is one of the three island nations where the Asian Elephant breeds in the wild.
Offering the first leaves of the harvest
On Saturday, May 6, I joined Sri Lanka Tea Board Director of Promotions Pavithri Peiris and staff members for the annual First Tea Festival Parade. The Tea Board’s Regional Office in Bandarawela organized this year’s festival.
Parallel lines of pluckers and tea planters formed ranks at the Badulla administration building with tea offerings in hand. Masked dancers costumed in bright yellow skirts readied themselves to perform the Wadiga Patuna, along with Kandyan men wearing Ves Netuma chain vests adorned with silver ornaments. On a large flatbed truck, workers readied a silk-covered platform that supported a huge brass urn to receive offerings of finished tea. Musicians took their places, and the parade began to the beat of Geta Bera drummers.
A Buddhist monk in bright saffron robes motioned for me to walk with him along streets lined with onlookers. He explained to the curious that I had traveled 12,000 kilometers to convey the gratitude of tea drinkers in the West.
The parade route was less than a kilometer.
Barefoot we approached the temple grounds guarded by four Asian elephants. The sacred site honors Siddhartha Gautama (who lived from 563 to 483 BC). Known as the Buddha, he was a prince born in what is now Nepal who traveled to Sri Lanka 2500 years ago during the eighth year after his enlightenment.
On Station Road, near the temple entrance, a small herd of goats grazed at a roundabout near the clock tower as the drummers and dancers in bearded masks performed in the town square. Vendors sold lotus flowers to the crowd. Stands with fruit and fresh coconut lined the temple walls within sight of a brilliant white dome-shaped stupa built to preserve the Buddha’s relics.
The sand-covered courtyard was peaceful and cool, shaded by palms and bodhi trees of massive girth. The largest tree, surrounded by a gilded enclosure, its limbs braced by ornate support brackets, was planted by an early Ceylon King, Dewanampiathissa, who converted to Buddhism during his 40-year reign from 247 to 207 BC.
On arrival, celebrants carried the brass urn to a long marble altar and unveiled it. Planters then began tearing open small bags of tea and pouring the tea into the urn. Pluckers brought fresh leaves, forming a large pile near a statue of the Buddha. The crowd was devoted, joyous, and eager to present their teas before sitting cross-legged in the sand to join a meditation led by the monk.
The monk’s harmonic chants calmed the crowd, who joined in. He then spoke of the harvest before blessing the tea on the altar.
He explained to the crowd that Buddhist blessings rely on energetic cultivation, not simply prayer. Buddhists earn merit through mindfulness, meditation, chanting, and performing rituals. To be blessed requires practical actions to accumulate merits and good deeds.
Everyone then socialized over tea with snacks and fruit near the museum on the temple grounds and were on their way back to the fields by noon.
Harvest blessings originated centuries ago. Tea was first cultivated in Ceylon in 1867 and has since become one of the nation’s most important agricultural products. Sri Lanka is only 500 miles from the equator, so the harvests are not categorized as flushes. The harvest begins in May and peaks from June through September at this altitude. Production of high-grown tea in five provinces totaled 65 million kilos in 2021. Auction prices for these teas averaged $3.90 per kilo in May. Badulla’s rural economy is dominated by tea, making the blessing of the first harvest one of the more important observances on the calendar.
On this 10–day visit to Sri Lanka, I traveled more than 1,500 kilometers into the central mountains. My travels were sponsored by the Sri Lanka Tea Board, chaired by Naraj de Mel, with accommodations at the Tea Research Institute courtesy of Dr. K.M. Mohotti. “I’m deeply grateful for the joyful days spent with Pavithri Peiris, the tea board’s Director of Promotion, Gayan Samaraweera, Market Promotion Officer, and Chathura Fernando, Market Analyst. Gayan and Chathura photographed the scenes above.
Sri Lanka is facing its worst economic crisis since gaining independence. Following the pandemic, many industries on the island ceased to exist due to political and financial difficulties. However, the island’s tea industry continues to battle on. Tea Biz correspondent and PMD Tea MD Dananjaya Silva discusses with Dr. Roshan Rajadurai, the Managing Director of Hayleys’ plantationshow Hayleys’ plantations have adapted and continue to produce tea, given the economic hardships.
Caption: Dr. Roshan Rajadurai, the Managing Director of Hayleys Plantations, left, discusses with Tea Biz correspondent and PMD Tea MD Dananjaya Silva how organizational discipline and adaptations enabled tea production to continue during the pandemic and recent economic hardships.
Listen to the Interview
How Sri Lanka’s Tea Industry is Coping with Continual Crisis
Production is down and export volume declined compared to last year but auction prices are at a high mark and Ceylon tea remains in demand. I traveled to Sri Lanka to assess the condition of a resilient tea industry following an unsettling spring marred by high unemployment in the aftermath of the COVID pandemic. For several months tens of thousands protested the inflation-driven cost of food and shortages of basics, including fuel, cooking gas, and electrical power. The upheaval led to the resignations of both the prime minister in May and the nation’s president, who fled the country in July.
Dananjaya Silva – How did the COVID pandemic restrictions show Sri Lanka’s plantation sector to be resilient and adaptive?
RoshanRajadurai – The plantation sector has a legacy of 150 years of very well-organized, centralized management structure, so when this pandemic situation suddenly came up the government imposed a three-day curfew which we had to abide by. But on the fourth day onwards, we quickly got on board, and made things as normal as normal could be.
The moment we caught wind of this pandemic situation, we put in place a series of measures at our 60 tea and rubber plantations. First, of course, we made our people aware of what this is all about.
There was an influx of people from Colombo and outstations, flowing back to the estates. So, we made sure their names were recorded, and if they showed signs of infection, we had isolation quarters. We isolated them for 14 days, and kept the medical and other authorities informed when they returned to the community. The organized sector has one million people living in a village-style setups in close confines. The measure we took were effective. Up to about the end of last year, we didn’t have a single casualty arising out of COVID. That is because we identified and limited exposure to the people who were coming from outside.
In addition, we did fumigating and provided simple medicines. And most importantly, we ensured that people didn’t have to congregate and that they didn’t have to go to bazaars and townships.
We organized distribution with the large food suppliers, like the government warehouse system, and brought in food in lorries. And we had stocks for two or three months. We delivered food packets practically to their doorstep. What is important is that we ensure that the workers did not spread this COVID.
There was also a group of people who had no other means of earning more income. Although last year was not a good year financially, we ensured that their wages were paid. And as a means of helping the people in this situation, we opened our industry to those who arrived from Colombo and elsewhere, and gave them work in areas that we could not manage with our regular workforce. So, their family unit had more opportunities to earn more when sons and daughters returned.
We already had in place a revenue share model, so we expanded it. There were a lot of people who didn’t want to be registered workers but they still got into the earning pool for their family and were able to enhance their family income.
So we had a very, very tough and a very well disciplined control system and to the credit of workers, I must say they cooperated fully.
They listen to the management; they follow the advice of health departments. So that’s an example of success and how after long years of practice the plantation sector was able to manage a crisis like this.
Dananjaya Silva – How did adaptations forced by the pandemic help Hayleys prepare for the political turmoil of 2022?
Roshan – After COVID came the financial crisis. There was no work to go back to in the construction industry as it had crashed, and also the eateries and small hotels. So, all the people came back to the estates and we made available opportunities for employment. One example is paying workers to remove weeds. We said we will pay you by the kilo and that was a very good intervention as people who don’t want to return to sort of plucking or harvesting work, they go to the field, remove the weeds and we pay them. This was essential because of the limitations on fertilizer. We convert the weeds to compost. Soil augers were given to each division and placement of holes tracked. Once the compost is made, we filled the holes and incorporated the bulk material and the compost into the soil so that it enhances the soil fertility.
Dananjaya – What you’re saying is that this 150-year-old industry, that has been the backbone of the Sri Lanka economy, continues to be that because workers who are from plantation backgrounds who’ve worked in hotels, construction, they once again come back to live on the estate.
Roshan – Actually, Dananjaya employment is only part of the solution that we provided, because there was an influx of workers. And it’s actually stretched our services. But we made sure that we accommodated them, that we looked after them in terms of food supply, because there was no food because the COVID curfew and restrictions. So our managers went out and bought curfew passes, they really did a great job on the ground. I mean, they volunteered – they could have waited and said, look, we don’t want to expose ourselves. But every company, every manager, every planter, took it upon himself to look after his community on the discharge of food, medicine or the wherewithal. Everything was provided and absolutely no breakdown. And ours is the only industry right now maintaining the industry as it was before a lot of challenges, a lot of stress, a lot of issues, but we still maintained the industry as it was.
Dananjaya Silva – Fertilizer was banned last year then the government subsequently reversed the policy. How is this affected Hayleys estates?
Roshan – Well, on the whole, banning of fertilizer was a shock and surprise to all of us due to the ill effect and the consequences of this hasty, unscientific and illogical strategy. We made significant protests, voicing opposition in media and TV talk shows and whatever but to no avail.
We are a large organization and we stock sufficient fertilizer for one or two applications ahead. Last year I did not plan for the banning, but I thought that we learned some lessons on logistical problems, with fewer ships coming, curfews on crews and the slowed movement of goods. So we gave instructions to our managers to store fertilizer for six months, anticipating a breakdown of logistics. Then, in the meantime, they banned the fertilizer, and therefore we had some stocks. Uncertain supply and high prices completely changed the way we apply fertilizer now because we know that for a year or two, we might not get cost effective fertilizer.
In the past we used to broadcast fertilizer but we quickly reverted to a system called placement where we dig a hole and put in a measured 24 grams of fertilizer per bush. In this way, you’re reducing the wastage from volatilization, and leaching while improving efficiency by a significant level. We are also stretching the fertilizer as one application done in this manner means we can sit out two or three future applications. Fortunately for Haley’s group, although we didn’t plan for the ban, we had planned for something else. It also gave us sufficient fertilizer and for food crops raised by workers, so they could infuse some so that they are not going to go without food.
Dananjaya – When you talk about ensuring food for workers, that’s a stark contrast to the situation for someone living in an urban area, isn’t it? People there don’t have the opportunity to stock food, and are relying on retail supply. There is no guarantee for them, as they might find themselves standing in a queue for days, and not be guaranteed any food at the end of it.
Roshan – The plantations you know, care for not only the direct workers, but all dependent family members. So if someone has got COVID, we say, don’t worry, we have given the family food over the year in some cases, we can recover it. So by that action, people have confidence in the management that we have looked after them in a very, very critical time. And when they were sick, we made sure that the government medical authorities or personal care management were involved. We offer a holistic total system of care for our people.
In towns, as you said, we all have to stand in queues, and those who do are not sure there’s stocks, but in our case, we bagged provisions and dry rations and brought it to their home so that they don’t have to come and interact or mix with people and spread COVID. So that way, I think we got a huge boost in terms of human resources. When we gave very tough guidelines and instructions, they followed the advice like keeping a distance while working whereas traditionally they were together in a row. We said you have to separate immediately and without any protest they showed wholehearted obedience and support for us.
Dananjaya Silva – Fuel shortages have crippled and decimated many sectors of the country what provisions and adaptations Hayleys have made to ensure the smooth running of operations.
Roshan – After the crisis came on, definitely we have taken radical measures to reduce the running of unnecessary trips and vehicles. We have mapped out all the roads in each division and compared distances and identified the shortest routes to make transport more efficient.
We also introduced some innovations like ziplines. These were built before the crisis, but came in handy. We can save about 90 kilometers a day on trips to the factory because the tea otherwise has to be driven along a circuitous route. It’s eco-friendly and does not use fossil fuel. We have instituted several eco-friendly practices. Now our managers and assistant managers are provided with good Push bicycles, and they have resorted to more walking,
Dananjaya – One area that you touched on was moving tea from estates down to Colombo, there has been some disruption. How are you working through that situation because because the logistics are provided from from outside of the estate.
Roshan – Normally, we manufactured and made arrangements to send our produce to Colombo, and to ship it out. What we do is provide measured fuel to take the tea down to Colombo and even for firewood suppliers because we need firewood to run our dryers. So we assist them in some form. Because of the fuel shortage we are trying to harvest wood that is already grown on the estate for this purpose and adding branches cut to reduce some excessive shade.
All those initiatives and energy efficient measures add up. We are relying more on hydropower and we are trying to put almost 60 to 70% of our roofs in solar. So all those things can happen after the crisis. These are interventions that happened before COVID and the financial crisis, which have a beneficial use for us right at this moment.
Dananjaya Silva is the managing director of London-based PMD Tea and a third-generation tea man whose family business, P.M. David Silva & Sons, dates to 1945 during the Plantation Raj in Ceylon’s Maskeliya Valley.
Episode 77: Bypassing Sanctions is Benefitting India’s Tea Industry
Tea News for the week ending July 22
| Indian Tea Exports to the Russian Federation in April were up 19% | Reinvention is Routine at Starbucks | South Africa Rooibos Industry Makes First Payout to Indigenous Communities | PLUSNiraj de Mel, Sri Lanka’s newly appointed tea board chair, is rallying tea stakeholders in the face of formidable challenges.
Sri Lanka is in turmoil politically and financially; the country of 22 million is struggling as widespread demonstrations continue. Unrest is tied to food inflation exceeding 50%, with critical shortages of cooking gas, fuel, and reliable electricity. The country has defaulted on its foreign debt, and its currency devalues with a credit rating that discourages outside investment. Government bankers are at an impasse in negotiating a bailout from the International Monetary Fund that will depend on difficult reforms, including higher taxes and governance changes. Tea producers are confronting all the above challenges, yet the Ceylon tea brand remains resilient. Last year, the industry generated $1.32 billion in US foreign currency, exporting 300 million tons of tea, of which 270 million was high-value orthodox tea.
Export earnings increased 6.72% during the 2021 calendar year compared to 2020. Every subcategory reported growth, with exports of tea bags growing 84%, tea packets up 10%, sales of bulk tea up 2.5%, instant tea sales of 19.5%, and green tea up 22.8% through December, according to the Export Development Board.
Industry veteran Niraj De Mel was named Chairman of the Sri Lankan Tea Board in June 2022, his second appointment to a position that he previously held in 2004. In this discussion with correspondent Dananjaya Silva, Managing Director at PMD Tea, de Mel explains the challenges and solutions facing Sri Lanka’s tea industry.
During his 45 years in tea, Niraj de Mel has worked as a taster, broker, exporter, and educator. He is past chairman of the Tea Exporter’s Association and the Colombo Brokers Association and served as vice chairman of the Colombo Tea Traders Association. He is the founder and director of The Mel’s Tea Academy in Colombo.
Dananjaya Silva – Tea professionals globally say they are happy to see a safe and steady hand on the tiller as you return to steer the Sri Lanka Tea Board. Given the current political situation, how secure is your position?
Niraj de Mel – Well, to start, let me tell you a bit about the developments before my appointment [on June 20]. Come the middle of May, the industry got together, and because they thought it was time, we told the authorities what we knew best and what was best for the industry.
So, arising from that, they also decided on the people best suited best-suited for the positions at the TRI [Tea Research Institute] and the Sri Lanka Tea Board. I was asked to step back into my previous role as chair for obvious reasons. The immediate past chairman went along with this delegation and met the minister [Minister of Plantation Industries, the Hon. (Dr.) Ramesh Pathirana] to discuss these things and told him that after the debacle as a result of a wrong decision on fertilizer, it’s time that we get the feedback from the experts. Plus, the industry will tell them exactly how things should be run. We have been doing this for the last 155 years, and it’s arising from that conversation that I’m in this seat today.
Dananjaya – Now that a new president has been named, will changes in the cabinet likely means a new appointee to the Minister of Plantation Industries post?
Niraj – I sincerely hope that he [Dr. Pathirana] will be reappointed to the position. Of course, there is no issue whatsoever because he and I will get on.
He’s a minister who sizes up things quite well. He’s a learned man being a medical doctor himself. If there is going to be a change in ministers, the Associations will take up with whoever who’s appointed to the position of Minister plantations that you know that I should remain. Be that as it may, I’m here to do the job.
First and foremost, we need to steady the ship.
Dananjaya –The ban on importing chemical inputs, including most fertilizers, was halted in October, but the effects of the setback linger.
Niraj – Mistakes were made, but circumstances that led to that decision have changed. The big development is a result of the Russian-Ukrainian war, a conflict between some of the world’s largest fertilizer suppliers. Fertilizer has since become scarce and prices went sky high, impacting Sri Lanka at a time when our currency itself also depreciated, compounding matters for the average tea farmer. It’s now virtually impossible for him to afford this kind of price.
To address that, the Sri Lanka Tea Board considered an initiative that has been knocking on the door since January. I see from the minutes a request for funds from the promotion levy to be used to facilitate a loan scheme so that farmers get fertilizer to start feeding these bushes, which have been starved for nutrients.
The board has since delivered fertilizer to nearly 100 factories to offer to smallholders and regional plantation companies. They are working to ensure that the estates will have sufficient fertilizer within about one and a half months.
Editors Note: The Hindu reports that India, on July 17, delivered 44,000 metric tons of urea under a credit line extended to Sri Lanka, as part of New Delhi’s ongoing efforts to support the island nation’s farmers and help bolster bilateral cooperation for food security, the Indian High Commission in Colombo said.
Dananjaya – It seems we’ve returned to the days of old during the colonial period when the Planter’s Association essentially told the Governor of Sri Lanka what was good for the country. Because what was good for the planters’ community was good for the country.
Niraj – Absolutely. Absolutely. It’s time actually that all the private sector did that, not only tea. The private sector has long been the engine of growth in this country, be that planting, manufacturing, exports or brokering. All that is well handled by the private sector and the government sector, such as the Tea Research Institute of Sri Lanka, does the research.
Dananjaya – The crisis not only impacts the rural tea sector. Service providers report difficulties obtaining financing, fuel, and reliable electrical power in Colombo, Sri Lanka’s hub for blending, packaging, and shipping. Will you describe how the tea board is addressing these concerns?
Niraj – I think there needs to be some clarification on this. The private sector basically handles it, but we are trying as far as possible to assist. I have tried to instill into the minds of the officials that we have to be an enabling outfit.
Going back to your question No. 2, there’s one item that was missed: the fuel factor. Actually, that has taken precedence over fertilizer now because the collection of leaves as well as bringing the manufactured tea out is essential to run your factories. Exporter functions, particularly the tea bagging sector, where the machines have to be run continuously, all require an uninterrupted power supply. Power cuts that have been prevailing in this country for the last 4-5 months are an encumbrance to the people, as a result of that, now compounded by the fact that there’s fuel scarcity, particularly diesel. So given the availability of fuel we are trying our best to contact all concerned with the right message to ensure that the producers get their fuel quota.
They cannot have it the way they used to have, because the country itself is, you know, is importing fuel ship by ship. The private sector importers, in particular, have stepped in, which is very magnanimous on their part. To fast-track this process, the government has said, well, if you can produce the foreign exchange, you can certainly get the fuel across. So, the private sector exporters banded together to give off whatever they could.
Dananjaya –As new problems have arisen over the course of this year, from power cuts to rationing fuel, the tea industry has drawn on a battle-hardened core of tea professionals who are able to react quickly and make provisions to see that the industry continues to operate.
Niraj – That’s right. That’s right, reaffirming that Sri Lanka tea has for 155 years been one of the most resilient industries in this country.
There will be little disruptions here and there, but the fact of the matter is we are managing, though it’s challenging. There is great unity among the stakeholders, particularly now with these current issues which they had to face together. We started at the beginning of the pandemic back in 2020. Everybody came together in two and a half weeks to quickly convert to an electronic platform to conduct the auctions, which was great. That carries on to this day. The Colombo traders are very, very confident that there will not be a return to the old outcry system. I started life as a broker and enjoyed the outcry system, but the fact-of-the-matter is we have to move with the times. The platform has enabled us to quicken the process, giving buyers, producers, and brokers time to spend on other things.
Cricket is an apt metaphor… Cricket is the only game that stops for Tea, the country might be 74/8, with a bumping pitch and blinding light, but the Tea sector continues to bat on at the crease.
Dananjaya Silva is the managing director of London-based PMD Tea and a fourth-generation tea man whose family business, P.M. David Silva & Sons, dates to 1945 during the Plantation Raj in Ceylon’s Dimbula Valley.
In 2021, Sri Lanka launched a ?4.5 billion global promotion to increase the export volume and value of Ceylon tea, a billion dollar brand. The campaign targets 12 markets, including the UK, EU, Asia, and North America. In parallel, the board is pursuing a Protected Geographical Indication by the European Union. GI status affords global trade protection under the World Trade Organization and officially recognizes the authenticity of the Ceylon brand.
Caption: Jayampathy Molligoda, Chairman of the Tea Board of Sri Lanka
Why Sri Lanka is Seeking GI Status for its Ceylon Brand
A Protected Geographical Indication (GI) is a seal of authenticity awarded products that have a specific geographical origin and possess qualities or reputations that are due to that origin. Correspondent Dananjaya Silva sat down with Sri Lanka Tea Board Chairman Jayampathy Molligoda to discuss why the tea board is pursuing GI status and what this means for prices for producers, exporters, and for the nation’s tea.
Dananjaya Silva: Will you explain how geographical indication protects Sri Lanka’s multi million dollar investment in promoting Ceylon tea in foreign markets?
Jayampathy Molligoda: The World Trade Organization [WTO] TRIPS* agreement is the trade related aspects of intellectual property rights. So, the law relating to geographical indications originally emerged from the TRIPS agreement under WTO. Everything stems from that.
Geographical indications are exclusively for unique offerings like Ceylon tea, or Ceylon cinnamon which identify the product as originating in a Sri Lankan region: quality, reputation, or any other characteristics of Ceylon tea are essentially attributable to its geographical origin.
Ceylon tea is a registered trademark owned by Sri Lanka Tea Board in Sri Lanka. But what is important is that globally 95% of our tea is being marketed in 140 countries. At least 50 to 60 countries take about 90% of our tea. So, it’s a reputed name globally. Unfortunately, over a period of time we have lost some of the markets Pakistan, Egypt even Russia, their market size has come down drastically for the tea. As a result, we have been selling around 28 million kilos out of our 280 million kilos.
One important point I will explain in detail the Ceylon tea is associated with the Lion logo. To qualify for the Lion logo, one has to pack in Sri Lanka 100% pure Ceylon tea so that’s the problem. Ceylon tea, although is a registered certification, it’s not registered legally in other than a few countries.
As a result, there had been some misusers of the name. We were unable to take legal action on some of the infringements, so depriving our genuine exporters’ ability to service and increase their market share in Ceylon tea products.
Ceylon tea is unique, we all know Ceylon tea is unique. Our tea masters know how to prove that through the testing methods, but that is not acceptable to European Union countries. We have to scientifically prove that this Ceylon tea originating from Sri Lanka has unique characteristics because of its geographical origin and reputation. So that is why we are trying to get this GI registration under intellectual property rights.
Dananjaya: In addition to the legal protection it affords, will you discuss how Protected Geographical Indication status also speaks to the unique qualities of Sri Lanka’s tea-growing regions. GI status establishes a strong, distinguishable, and marketable reputation.
Jayampathy: The GI status is a marketable reputation for producers because the producers follow farming traditions. It’s the cleanest tea in the world so that is the brand story for Ceylon tea. If you go back to the TRIPS arrangement under WTO, the original purpose behind geographical indication was to give recognition to the producer, the farmer.
Dananjaya: Will obtaining GI status help stabilize prices?
Jayampathy: Our objective is not only to stabilize but to obtain even better prices in terms of U.S. dollars and to get more market share.
If you carve off our 300 million kilo per annum production, basically 285 million of that is what is known as Orthodox Ceylon tea. So that orthodox type of Ceylon tea is not ideally suited for tea bags and that may be one of the reasons why we have lost share in the mass market.
Since CTC is different than Orthodox, we have to find a niche market. Our brand marketing strategy rests on three pillars. First, Ceylon tea is an authentic product, as we explain. Next we demonstrate our sustainability credentials compared to other competing countries and products citing, for instance, the fact that our farmers, our regional plantation companies practice environmental sustainability and attend to the social wellbeing of the people under the Tea Control Act. Finally, there is the wellness factor. Because of these three pillars we are getting a premium price for our tea.
As a matter of fact, at the auction level and the wholesale level, we command $3.50 per kilo converted to U.S. dollars at the Colombo auction. The Mombasa Auctions and Calcutta they get less than $2, roughly say $2, according to information provided by ITC [International Tea Committee] as well as FAO, the Food and Agriculture Organization’s Intergovernmental Group findings.
Recently domestic prices have gone up. In order to get more dollars, the authorities have taken the right course by allowing the rupee to fluctuate, but it has to be carefully managed float in my personal view.
There is a tipping point our exporters must address to sell tea at a very high price. The tea board then works to ensure those FOB prices are trickled down through the factories to the farmers. It is more important getting this money to the farmer, not to give benefit to the exporters or the big time players to earn more money.
So we pitch our Ceylon tea in that particular niche as a differentiated product. So how do we differentiate? It’s only through certifications and indications. Once we have obtained GI logo, it can be combined with other quality standards and the traceability can be assured so they know where the tea comes from.
That’s the game plan. We just use the global tea promotion to explain the benefits of differentiated tea.
London-based Dananjaya Silva is managing director of PMD Tea and a fourth generation tea man whose family business, P.M. David Silva & Sons dates to 1945 during the Plantation Raj in Ceylon’s Dimbula Valley. The company was founded on Brunswick Estate in the fertile Maskeliya Valley as a small independent Tea shop for tea plantation workers to gather, relax and enjoy a quality cup of tea.
The Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement is the most comprehensive multilateral framework for protecting intellectual property. It was enacted in January 1995 to establish a public register of rights that is accessible globally. It bolsters protection afforded by the issuance of CTMs (certification trade marks). The advantages of a Protected Geographical Indication include additional protection when a CTM is not accepted in a jurisdiction; the ability for GI holders to obtain reciprocal protection of a mark mandate under EU Regulation 2081/92; and the fact that GIs describe with legal precision the product’s direct links with origin.