Tea sector stakeholders need to be mindful of their cost competitiveness in relation to global costs, especially due to the emergence of new producer countries with lower costs posing a threat to local teas, a leading plantation company official stated.
“This becomes critical with the impending wage negotiations for plantation sector workers expected in 2013,” Talawakelle Tea Estates PLC (TPL) Chairman, Mohan Pandithage said adding that the company was concerned with the outcome of these impending wage negotiations.
He further stated that the challenge in FY13 is to maintain and build on the momentum the company had gained during the previous FY and ensure a satisfactory return on investment in the wake of increasing cost of inputs including this expected wage revision.
The chairman was referring to the turnaround in profitability the company witnessed during the year ended December 31, 2012.
TPL posted a net profit of Rs. 223.3 million during the year under review as against a net loss of Rs. 51.4 million during the previous year.
Pandithage also cited the recently imposed cess on bulk tea exports, which led to much controversy, as another challenge the industry had to take up in terms of managing costs.
The revised levy which was thrust upon the tea export sector in late January was Rs. 10 per kg or 5 percent on the preceding week’s Colombo auction elevational average for the particular grade of tea being shipped.
However the Sri Lankan government, facing a barrage of complaints from the tea industry stakeholders in early February, did an about-turn on the controversial decision to increase the tea export cess and resolved to reduce the amount of cess.
The Sri Lanka Tea Board export cess fund is said to be presently close to Rs.3 billion.
“We urge expeditious use of these monies intended for the promotion of Ceylon Teas in the international markets before our teas fade away from the minds of consumers,” the chairman stressed.