Civic unrest, workerprotests and an unprecedented grab for executive power that riled Sri Lankalast fall had quieted in recent weeks.
On Easter Sunday every semblanceof stability was shattered.
Three hundred and twenty-one people died that day with more than 500 injured in a series of suicide bombings that targeted Christian churches and three up-scale hotels: the Shangri-La, Kingsbury and Cinnamon Grand. The coordinated attacks were unprecedented in scale. Thirty-nine foreigners perished in nine blasts, including four Americans. Britain, France, India, China, Saudi Arabia, Turkey, Australia, Bangladesh, Portugal, the Netherlands, Japan and Portugal said they, too, lost citizens. Today is a national day of mourning with mass burials in Negombo, a predominately Catholic town housing 150,000 along the western coast of Sri Lanka. A suicide bomber killed more than 150 there in Sunday’s attack. Negombo is known as a fishing village, not for its tea.
Reports are unconfirmed, butit is feared the toll may include some in the tea industry. Social mediaremained blocked on Tuesday after officials said they needed to curtail thespread of false information and ease tension, according to the NationalPost. A curfew remains in place. Security forces patrolling thestreets of Colombo on Monday discovered three more bombs that were detonatedwithout incident.
Beginning Sunday WorldTea News sent queries to more than 40 tea executives, brokers, factorymanagers and government officials to gain a more complete understanding of thesituation. Only two responded and neither wished to be quoted.
Tea is the main source offoreign exchange earnings on this island of 21 million, a pearl in the IndianOcean that is the second largest exporter of tea in the world. The tea industryemploys more than 1 million workers with approximately 900,000 people, or about4.5 percent of the population living on plantations and estates, primarily tea.It is an industry troubled in recent months by declining exports; thecontroversial lifting of a ban on the herbicide glyphosate and deep-rooted concernsabout wages.
Currentsituation
Hasitha de Alwis, director of promotions at the Sri Lanka Tea Board,reporting before the Sunday incident, noted that “volatile market conditions inthe Gulf/Middle East/North Africa and the payment delays (export proceeds) arecontributory factors to the lesser demand at the Colombo Tea auctions, pushingprices down.”
The January to March 2019 national average at the Colombo Tea Auction is$3.35 (LKRs585.30) per kilogram compared to $3.61 (LKRs 629.77) per kilogramduring the same period of 2018 reflecting a value decline of LKRs44.47 per kilogram. “Thedrop in real value terms (USD) therefore, will be far greater,” he noted.
De Alwis said tea exports for January/February 2019 totaled 47.2 millionkilograms “showing growth of 4.5 million kilograms (10 percent) against 42.7million kilograms registered for January/February 2018.”
Iraq, Turkey, Syria and Iran thrive on cross-border trading, heexplained, “The internal country situations and closing/opening of porousborders contribute significantly to the Ceylon Tea export performance as thesenations are all within the first ten largest buyers.”
Sri Lanka earned LKRs39.9 billion during January/February 2019 asagainst LKRs35.5 billion during the corresponding months of 2018 which reflectsan income growth of LKRs. 4.4 billion. Accordingly, the Free On Board(FOB) value in 2019 has improved marginally to LKRs.845.94 per kilogram incomparison to LKRs830.40 per kilogram in 2018, said de Alwis.
“In real value terms, the earnings declined from $230 million inJanuary/February 2018 to $222 million during the same period of2019. Thus, the FOB Dollar value is 16 percent lower in 2019 at $4.70 perkilo vis-à-vis $5.44 per kilogram in 2018,” writes de Alwis.
To increase exports five countries have been identified to commence theadvertising and publicity programs during the current year, he said. The CeylonTea Global Campaign is scheduled to take-off the ground from the RussianFederation in September. Thereafter, in Ukraine and Germany in Octoberfollowed by Japan and China during November, according to de Alwis.
Fluctuatingproduction
Production declined from an average 330-340 million kilogramsduring the five years ending in 2015 to a 2018 low of 303 million kilograms afterSri Lanka first banned glyphosate. The weedicide, used in Monsanto’s Roundup, wasbanned in October 2015 over concerns that the chemical causes kidney disease. SriLanka growers then turned to hexaconazole, diuron and MCPA (2-methyl-4-chlorophenoxyaceticacid) to kill weeds. Application of the alternatechemicals was not tightly controlled leading Japan, which imported 7.8 millionkilogramss of Sri Lankan tea in 2017, to rejectconsignments due to unacceptably high levels of residue. An importban on MCPA followed. After studies failed to link the chemical to chronickidney disease of undetermined causes, the import ban on glyphosate was liftedin July 2018 but its use is restricted to tea and rubber plantations.
Glyphosate remains controversial. In March a San Franciscojury found that Monsanto had been negligent in warning of cancer risks associatedwith Roundup and awarded a cancer victim $75 million in punitive damages plus$5.8 million compensation. The European Union considers glyphosate safe althoughFrance pledged to ban most uses by 2021.
To increase tea production Sri Lanka will plant 13 million teabushes on 1,000 hectares in 2019. Two million of these new plants are in theground with four million more seedlings to be planted by October.
Sri Lanka predictsa 2019 harvest of 307 million kilograms.
Workers press for wage increase
Agitation for a wageincrease to a minimum of LKRs1000 ($5.72 USD) per day led to street protestsand extended negotiations; the wage was previously set below $4. Wages arere-negotiated every two years with the last increase of LKRs50 in 2016. The“Thousand Movement” to increase daily wages gained momentum after a seven-daytea strike by tea workers in December. In January an interim wage hike toLKRs700 ($4 per day) was authorized. Protestors cited a study by the state-runUniversity of Peradeniya that found workers need $160 (LKRs27,707) per month onaverage to meet their basic needs. The current average is $45 per month (SLRs8000).
“It is true that tea workers in the up country ofSri Lanka went on strike demanding higher wages,” writes De Alwis. “This led toa drop in the production of the high-grown elevation which is only 23percent of the total production. It may have a marginal impact onthe total production for the year,” he wrote.
“The situation is brought under control andhopefully, the plucking in the plantation companies will be back to normalcyduring the new year. The bright side of the equation is in Sri Lanka, theindustry has injected democracy to all the stakeholder segments. If theworkers are not happy, they have the liberty of protesting—which they did. Wehave multiple trade unions in the plantation sector to safeguard the rights ofthe workers. There is no chance to manipulate the labor force in the teaplantations,” he writes.
De Alwis predicted the “political front is expectedto come back to normal very fast with the re-appointment of the cabinet ofministers. Hon. Navin Dissanayake re-assumed duties immediately atthe Ministry of Plantation Industries.”
Political uncertainties
PrimeMinister Ranil Wickremesinghe said he feared the Sunday massacre could triggerinstability in Sri Lanka, and he vowed to “vest all necessary powers with thedefense forces” to take action against those responsible. The prime minister onTuesday said there are “still people on the run with explosives.” Thegovernment has arrested 40 suspects, all native Sri Lankans and believed to bemembers of the 150-member Islamic National Tawheed Jamath (NTJ) a grouppreviously scorned for defacing Buddhists monuments.
TheSinhalese majority is largely Buddhist, comprising 70 percent of the population.The Tamils, native to India, are Hindu, Muslim and Christian. Muslims had beenpreviously targeted in violent clashes, but Christians had not.
Source: SundayObserver, NationalPost, TheSunday Times