Oct 172013

The Sri Lanka Tea Board will be releasing part of its Rs.3.5 billion marketing cess fund in order to launch an aggressive promotional campaign for Ceylon tea in key markets, according to Plantations Minister Mahinda Samarasinghe.

Addressing the Annual General Meeting (AGM) of the Tea Exporters’ Association (TEA), Samarasinghe stated that proposals for the promotional campaign are currently being formulated.

“While Ceylon tea has been gaining in some markets, we have also lost some market share in our traditional markets.

This is a formidable challenge which we have to overcome and we are now i n the process of identifying a dynamic, aggressive marketing promotional campaign to penetrate back into these markets,” he noted.

Samarasinghe added that the proposals were now before a Cabinet-appointed negotiating committee, which in collaboration with a technical evaluation committee would submit proposals to him in the near future.

“I am not involved directly in the process and so I am also waiting for these proposals to be submitted to me after which I will take it to the Cabinet for approval. There are questions being asked as to why we still haven’t used this fund but there has to be transparency and accountability and it is extremely important that no shortcuts are taken,” he emphasized.

The marketing and promotions levy of Rs.3.50 per kilogram of tea exports was commenced from November 1, 2010, in addition to an existing export cess of Rs.6 per kilogram.

Deemed by Samarasinghe as “a voluntary undertaking by the TEA”, the marketing and promotions levy met with stiff resistance at the outset with many industry stakeholders questioning the need for a second cess when the industry was not reaping any benefits from the first export cess since its takeover by the Treasury.

Following the takeover, it is reported that the Sri Lanka Tea Board currently does not receive any funding for promotional activities.

Commenting on Ceylon tea’s recent endorsement of the Sri Lanka cricket team, Samarasinghe reiterated that the first two years of the sponsorship agreement had been paid for entirely through the interest gathered from the total fund.

The total sponsorship commitment stands at approximately Rs.615 million for the next two years.

“We are in an enviable position with this fund; in that we have such a large sum of money at our disposal. We will use this fund to put Sri Lanka back on the world map and underscore the point that Ceylon tea is above all other teas produced in the world,” he asserted.

Notably, Samarasinghe went on to state that President Mahinda Rajapaksa had initiated dialogue with the governments of Russia, Belarus and Ukraine with a view to extending economic cooperation on Ceylon tea.

Similar negotiations had also been entered into with China, with Ceylon tea expected to gain a place in the proposed bilateral free-trade-agreement, which is expected to be signed next month.

Meanwhile, commenting on the potential for value addition in Sri Lanka’s tea industry, Samarasinghe noted that Sri Lanka had reached approximately 46 percent value addition on total production, against India’s 11 percent and Kenya’s 7 percent.

While expressing satisfaction with the current efforts, he stated that further value addition must also be promoted in future and hinted at concessions for local producers engaged in value addition through Budget 2014.

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Jun 132013
Cricket Sri Lanka: SLC sign a 3-year deal with Tea Board and Dialog Axiata

Sri Lankan Cricket (SLC) is still recovering from the massive losses that it incurred during the 2011 World Cup. Paucity of funds was rankling the board big time and they were literally struggling for survival. But thanks to the new sponsorship deal that the board inked with the Sri Lanka Tea Board and telecommunication company Dialog Axiata, the board can not only breathe easy but can also hope to promote cricket in the country with the surplus.

The board signed up for the new 3-year sponsorship deal on the “home and away” basis. While the Sri Lanka Tea Board will be the primary sponsor of Sri Lanka cricket in all their away matches, Telecommunications major Dialog Axiata will be the sponsor for all their home matches. While the Tea Borad shelled out Sri Lankan Rupees 530 million (approx. US$ 4.15 million) to close the deal, Dialog    are understood to have paid around Sri Lankan Rupees 700 million (approx. US $5.47 million).

Important point to be noted here is that both Dialog and the Tea Board had actually bid for the total rights of both home and away matches. Infact, Dialog had actually bid considerably higher than the Tea Board and logically they should have won the “total rights”. However,  SLC sought a compromise in order to accommodate greater national interests and in the process allowed the Tea Board to hold the rights for all away games. The Tea Board is a goverment owned entity that produces and promotes tea in the country which is indeed Sri Lanka’s pride alongwith its cricket.

The Tea Board’s sponsorship starts with the Tri-series in the West Indies that begins on June 28. India is the third side in the series. Plantation Industries Minister of Sri Lanka Mahinda Samarasinghe said “Sri Lankan Tea and the national cricket team has been able to bring honour and fame to the country. We are proud to sponsor Sri Lanka Cricket “.

The deal comes as a new lease of life for SLC as they will receive more than 100% of the amount that was paid by the previous team sponsor in the previous three-year cycle. Let’s HOPE this deal turns around SLC.

May 052013
March tea output up 11% YOY
Sri Lanka’s March tea production rose 11.3 percent from a year earlier due to favourable weather, pushing up output of the island nation’s top agricultural export by 8.1 percent in the first quarter of 2013, data from the state-run Tea Board showed on Thursday.

Monthly year-on-year output has gained in the past four months, helped by favourable weather. Production in 2012 edged down 0.4 percent from the year earlier due to adverse weather conditions.

Tea is one of the main foreign currency earners for the island nation’s $59 billion economy.

Jan 232013
Frost damage likely to hamper January tea output- Tea broker
Sri Lanka’s January tea production will be negatively impacted by frost damage, a scenario caused by extreme temperature fluctuations during a very short period of time, a tea broker in the country said.

According to John Keells Tea Brokers, in addition to the dry weather prevailing in tea planting districts, a cold wave is sweeping over the central hills that could cause frost damage and subsequently cut production.

“With temperatures plummeting to well below 10° Celsius in the past few days, plantations in the Kandapola, Agarapatana, Lindula and Talawakelle Districts have reported frost damage. Frost damage is brought about by high day time temperature followed by very low night temperatures,” John Keells Tea Borkers said.

They further noted that the tender leaves tend to freeze when there is a rapid change in temperatures from day to night.

“Frost could cause extensive damage to all types of crop, particularly vegetables which are grown extensively in an around Nuwara Eliya. The resulting shortages could see vegetable prices skyrocketing in the coming days. Present weather is expected to continue,” the commodity brokerage said.

It also pointed out that the dry weather that is prevailing could delay the recovery of the tea bushes further—longer than the three months—that it takes under normal circumstances.

Meanwhile, commenting on Sri Lanka’s tea industry performance in 2012, the tea broking firm said the performance is satisfactory mainly due to the strong market condition that prevailed in the second half of the year, which saw a new all-time record average of Rs.391.64 per kilogram.

“The tall prices seen at the tail end of 2012 have continued into 2013 with auction averages being higher with each passing sale. The buoyant market seen at recent sales bodes well for the first quarter, as the brighter seasonal teas from the Western Sector have yet to enter the market, which could boost prices further.”

Sri Lanka’s 2012 tea production edged down 0.4 percent to end the year with 326.3 million kilograms, from 327.6 million kilograms recorded for 2011, with officials blaming adverse weather conditions for the drop in production, according to the data released by the state-run Tea Board.

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