Sri Lanka’s tea industry opposes state interference to use levy

Aug 29, 2016 (LBO) – Sri Lanka’s tea industry players have opposed the Finance Ministry’s move to appropriate the funds accumulated by Tea Board, collected from the industry, for global tea promotion.

Releasing a statement, six associations in the tea industry appealed to the Government to reconsider what they called an ‘unfair’ action in deference to the pledge made to the tea industry.

In 2010, a tea promotion and marketing levy was introduced by the Tea Board and charged three rupees and fifty cents on every kilogram of tea exported from Sri Lanka.

“On the guarantee provided by a gazette 1677/14 dated October 27, 2010, restricting the use of these funds for tea promotion, exporters co-operated in this initiative,” the statement said.

Accordingly, a Promotion and Marketing Committee was established, with wide industry representation.

“Despite the successive changes in the Government, the autonomy of the Fund, which now stands at 6 billion rupees, was consistently respected.”

The statement however says even though there were some delays to implement promotion and marketing plan due to various reasons, it is now ready to be implemented.

Full text of the statement is reproduced below.

MEDIA RELEASE

29TH August, 2016

TEA INDUSTRY VEHEMENTLY OPPOSES GOVERNMENT’S INTERFERENCE IN GLOBAL TEA PROMOTION FUND

All stakeholders of the Tea Industry express their unmitigated and resolute opposition to the intention, as reported in the media, of the Ministry of Finance to appropriate the funds accumulated by the Sri Lanka Tea Board, which had been collected from the Industry, for Global Tea Promotion.

In October 2010, a Tea Promotion and Marketing Levy was introduced by the Sri Lanka Tea Board, whereby a sum of Rupees Three and Cents Fifty [Rs.3.50] was charged on every kilogram of tea exported from Sri Lanka, to be used exclusively for the worldwide promotion of Ceylon Tea. On the guarantee provided by the Gazette of the Democratic Socialist Republic of Sri Lanka – Extraordinary No 1677/14 dated Wednesday, October 27, 2010, restricting the use of these funds for Tea Promotion, Exporters readily co-operated in this initiative.

At the outset, the Sri Lanka Tea Board clearly affirmed that, whilst the funds collected by the imposition of this levy would be administered by the Tea Board, the application of the funds would be regulated by representatives of the Industry. Accordingly, a Promotion and Marketing Committee was established, with wide industry representation. Since then, despite the successive changes in the Government and Ministers, the autonomy of the Fund, which now stands at Rs.6 billion, was consistently respected and the members of the Promotion & Marketing Committee remain unchanged. Due to various reasons there were some delays to implement promotion and marketing plan, but it is now ready to be implemented.

The objective in establishing this fund was to conduct promotional activities in order to retain existing markets against strong competition from other origins, regain markets lost to competition and penetrate new markets. Subverting these initiatives would spell disaster for the Tea Industry, which contributes significantly to the country’s economy. It would also diminish the vitality of the potent brand “CEYLON TEA”, which had been developed through the concerted efforts of the Tea Promotion Bureau and its successor the Sri Lanka Tea Board and the Industry at-large, over several decades.

Unquestionably, the ownership of these funds, contributed by the Industry for a very specific purpose declared at the inception, belongs to the Industry. An analogy could be drawn to the Sri Lanka Tea Board’s role of administering these funds on behalf of the Industry, as a Bank administers the funds of its account holders. Notwithstanding the protests of the Industry, if the Government intends proceeding with this act, the Industry will demand the immediate suspension of the Tea Promotion & Marketing Levy, as it will serve no further purpose.

The Tea Industry of the country is in an extremely precarious position currently, on account of the decline in world commodity prices and volatile circumstances in many of its key export markets. This will only serve to exacerbate this crisis further. It will also surely imperil the livelihood of the over two million persons directly and indirectly employed by the tea industry, as well as their families/dependents.

We, therefore, appeal to the Government to reconsider this unfair action in deference to the pledge made to the Tea Industry that the Global Tea Promotion Fund will be utilized exclusively for enhancing market opportunities for Ceylon Tea worldwide, under the stewardship of the Promotion and Marketing Committee of the Sri Lanka Tea Board.

The Colombo Tea Traders’ Association
The Tea Exporters’ Association
Sri Lanka Tea Factory Owners’ Association
The Planters’ Association of Ceylon
Sri Lanka Federation of Tea Smallholding Development Societies
The Colombo Brokers’ Association