Looking Ahead

2003 will be an eventful year says commodity brokers Asia Siyaka. A round up of the year highlights key event in the tea industry.

National Policy

The Sri Lanka Tea industry could expect a very eventful year in 2003 with many significant domestic and intentional issues likely to have an impact on the market.

The government through more than one ministry has actively sought feed back from the industry over the past six months in formulating policy. We expect changes in the Sri Lanka Tea Board, Tea Promotion activity would move to a ministry other than plantations for the first time.

A new industry body the Tea Association of Sri Lanka would become active in the first quarter.

The industry will need to create a synergy from the multiple ministry initiatives taking place.

WTO/ Trade Agreements and Key Markets National Policy

Sri Lanka is actively seeking protection for the Ceylon Tea identity under the WTO.

Success in this initiative would have far reaching consequences in curbing misrepresentation in other producer and in consumer countries.

Free Trade Agreements with Pakistan and Egypt could be an important platform to launch recovery of the troubled regional plantation companies who rely heavily on prices for BOP, BOPF and Small Leaf grades.

The Pakistan agreement is finalized and awaits that countries ministerial approval for implementation.

The Egyptian government is keen on a quick implementation of an FTA and the Minister for Economy and Foreign Trade has advanced his visit from March to February and the technocrats will be in the country next week.

Changes in the market could see a shrinking of supply in the Orthodox leaf segment if producers find a cost benefit in reverting to small leaf grade manufacture.

On the other hand a volume of Africans displaced from these markets will be looking for a home.

Russian determination to promote domestic value addition at all costs would hurt Sri Lanka and will pave the way for the entry of low cost suppliers.

Iraq and Libyan tender activity will continue to play a significant part, as they are the last two large tenders floated by governments.

Liberalization would significantly change the nature of trade. In-stability in the Middle East and North Africa could have a domino effect on other tea markets such as Russia, CIS, UK and Europe reached through the Suez Canal.

Policies of the GCEC may compel taxation of imports by markets that permitted free entry of tea for many years.

Consumer countries gradually applying most stringent food laws and business ethics standards would compel infrastructure and process improvement across the industry.

Competitiveness not just a catch phrase

Annual exports in 2002 will be very close to last years record figure and tea production should exceed the previous record of 305 MnKg.

Sri Lanka will continue as the largest tea exporter in the world, but its percentage of value added exports has dropped to the lowest level in four years.

The competitiveness initiative has heightened awareness,and provided a platform for national strategy, but policy makers and industry need to work together to proactively shape our future.