Sri Lanka™s tea industry under pressure due to high costs

Oct 30, 2014 (LBO) – Sri Lanka™s Ceylon Tea is in its death spiral due to higher cost of production and wages and, needs more value addition, marketing and branding to uplift the industry to its former glory, an industry official said. Ceylon tea still has its position for quality but it is under severe stress, said Malik Fernando, who is a director of MJF group, founded by his father, Merrill J Fernando. The firm started as an export marketer but it now also involved in farming.

Cost of tea production in Sri Lanka is double that of competing countries and our wages are double that of other tea growing countries and next year another round of wage negotiations would take place. Wages would then probably rise another 11% or so,

We are producing tea at a higher cost,
Yield has been half compare to other tea growing counties, because there has been no investment in tea industry due to nationalization in 1970,

It™s highly unpopular to grow tea in Sri Lanka,

Wages are going up, costs keep increasing, margins are shrinking,

“In international markets, our sale prices was on average 20 percent higher than other countries, which also made us vulnerable,”

Fernando was speakin