Private Sector Perspective

Experience in the tea sector in Sri lanka.

ContentsPart 1 – Export Competitiveness

• Preamble

• History

• Current Status

Part 2 – Environmental Sustainability

• Plantation Level

•Processing Level

• Worker Level

• Export Packaging Level

Part 3 – Stumbling Blocks

Sri Lanka an island with an area of 65,525 sq km in the Indian Ocean is today one of the largest tea exporters in the world.

SRI LANKA, AN ISLAND IN THE INDIAN OCEAN

The success story of the country’s tea industry is attributed to:

• The country’s location in the east and west trade routes,

• Its extraordinary geophysical features, coastal lowlands and central mountains,

• The tropical climate,• The skilled labour force,• The expertise gained during the past one and half

centuries.• Lastly and most importantly – The Diverstea in

Specialitea

TEA AS AN EXPORT COMMODITY

• Tea is the country’s main agricultural export commodity and accounts for approx. 13% of the total export income.

James Taylor

• James Taylor, a Scottish planter introduced commercial tea planting in Sri Lanka in 1867.

• The first plantation of 19 acres developed into the major agricultural industry of tea in Sri Lanka today.

CEYLON TEA - TRANSITION• Ceylon Tea was traditionally sold as a primary

product mainly in bulk form.

• The first segmentation

- in 1959 when a consignment

of packeted teas was sent to Libya.

• The second stage of product diversification:

- in the early 1970’s with the introduction of tea bags to cater to up-market segments of developing countries.

IMPORTANCE OF TEA

• Sri Lanka is the fourth largest tea producer in the world behind India and China.

• It produces over 300 million kg of tea and has a share of nearly 10% of the global tea crop.

• Currently Sri Lanka exports almost 290 million kg. of tea per year to more than 100 different countries.

• Sri Lanka is the second largest exporter of tea to the world with a share of 19%.

Good Cuppa is the product of two leaves and a bud

The main Concept of Ceylon tea which captured the world tea market.

Ceylon Tea – Taste the Difference

• There are six agro-climatic districts in which Ceylon tea is grown from which Sri Lanka offer to the tea connoisseurs of the world teas of different characteristics to suit their satisfaction

Nuwara Eliya – Delicately fragrant

The fragrance of cypress trees and the menthol of wild mint and eucalyptus floating through the air contribute to the fine flavour of Nuwara Eliya teas.

Brewed light it makes for a very smooth cup of tea that can also be iced for a refreshing difference.

Dimbulla – Refreshingly mellow

Dimbulla Plantations cover the western slopes of the planting districts.

The monsoon rains and the cold dry weather produce a range of teas from full bodied to light and delicate .

Enjoy with or without milk

MODERN TRENDS IN CEYLON TEA

• Today Ceylon Tea is exported in a wide range of packets i.e. foil packs, box board cartons, soft wooden boxes , poly bags packaging, sachets, etc.

Export of pre-packed teas account for almost 33 % of total tea exports from Sri Lanka.

TEA BAGS• The local industry turns out a complete range

of tea bags.• They are single or double chambers, heat or

non heat sealed, with or without tags and with or without the envelop etc.

• Today Sri Lanka exports about 15,000 MT of tea bags, which accounts for about 5% of the total tea exports.

• There are 120 tea bag shippers currently active in Sri Lanka.

VALUE ADDED TEAS• Sri Lanka is a major producer and exporter of value

added teas to the global market.• Tea exporters in Sri Lanka have identified niche

markets in developed countries for instant, flavoured and gift tea segments.

FLAVORED TEAS • The product range of flavored teas

include more than 150 different types.

• They are Earl Gray, Lemon, Apple, Peach, Mango, Strawberry,Mint etc.

• Recently spice flavors such as cardamom, cinnamon and clove were introduced.

• Sri Lankan exporters have penetrated into a number of sophisticated markets with flavored and spiced teas.

Global Overview

• Globally tea is growing at around 2.5% annually in volume, as a consequence of strong competition from New Age beverages, Mineral Water and Carbonated drinks.

• Rate of growth in Tea has slowed significantly since the 1980s.

• Per capita consumption of tea globally is approx. o.40kg, showing steady growth in Asia, but stagnation or decline in key markets like Australasia and North America.

The tea category needs a different approach.

Your quality cup of tea comes from these beautiful hills

Environmental Sustainability

Plantation LevelMeasures adopted during Cultivation and Processing to

Sustain the Environment(i)Cultivation;

Soil Rehabilitation prior to replanting of tea

Improves fertility and physical characteristics of the soil.Break the cycle of mono culture. Helps in pest control eg Control of nematodes by planting Gautamala (IPM approach)Prevents soil erosion and leaching

Measures to prevent Soil Erosion

Creation of storm drainsPlanting of cover cropsThatching of soilMinimise soil disturbances with the use of scrapers etc.

Integrated Pest Management

Helps to minimize the use of pesticides (perhaps the leaders in the world) eg. Macrocentrus for the control of tea tortrixs.

Shade TreesImprove soil fertility and structure. (droppings/loppings)Prevent soil from drying out Provide shelter for birds who are predators of tea pests - IPMAct as diversionary hosts for tea pests – IPM

Wind BeltsMinimises environmental degradation including housing facilities of labour.

PruningPrunings are re-cycled to increase the soil nutrient status.Woody parts are used by workers as fuel for cooking

Processing Level

Implementation of certifications such as ISO 9000, ISO 14000, HACCP & ISO 22000 ensure

• potable water supply to the factory and to the workers.• Addresses improved hygienic aspects of the produce and the labour.

Trade and Environment Dimensions in the Tea Industry

Tea now a Food Product Quality & product safety witnesses a paradigm shift in requirements.

• GMP/ GHP and SAP Key to assure customers of the cleanliness of the process of manufacture.• HACCP – now fast becoming a pre-requisite for import in developed markets and certification widely used as a Marketing tool by many exporters.•ISO 22000 another facet by which the above requirements and other country requirements /Food safety standards have been harmonised into this standard by which right practices during various stages of the supply chain, storage, processing and packaging and warehousing and transport, and also pinpoint the specifications which need to be adhered to in order to promote quality and safety of the end product.

• EU and WTO countries have set deadlines for conformance to standards for import.• Another Key Quality requirement which is closely related to HACCP requirements and adherence is Positive Assurance in terms of Agrochemical usage – where customers often request declarations which state conformance to existing Country guidelines for Chemical usage.• Further requirements in terms of dosages and applicationsPeriodic testing/ monitoring of the imported product fort the same, conducted.• Thereby the Tea Industry, particularly the Research bodies need to have detailed studies, research to have been conducted to back up the limits/ MRL’s set for the Chemicals which are being used/ approved for the country.

How have the tea factories geared to face these challenges ?

20 Factories – HACCP certified

75 Factories – In the process of being certified

15 – 25 Factories obtain ISO 9000/ 2 Certification

18 Factories receive CQC award

32 obtain 5s

4 Secure TASL – SGS product Certificate

This is out of approx. 616 tea factories

Worker Level

• Fair Trade Labeling Organization (FLO)

• Ethical Tea Partnership (ETP)

• Plantation Housing Dev. Trust (PHDT)

• Donor Funding – ADB

• Strong Trade Unions

Export Packaging Level

Packaging RequirementAll packing must conform to regulatory requirements of the country/

International not only in terms of its dimensions and tensile strength, but also in terms of its Food safety parameters which

must be clearly captured in the HACCP studies, where applicable.Care must be taken about:

Re-cycled material/ re-used paper should not to be part of the packaging

The stencil ink/ glue/ gum used must be of Food grade material.

Consumer AwarenessIt is fast becoming a necessity that Corporate Social Responsibility and Transparency and Environmental Awareness become a key

factor in any Industry to survive and excel and to be able to provide all its stakeholders confidence in its viability.

Occupational Health and Safety/Employee welfare – Wages, medical, sanitation, recreation, Education and development; Skills

development training etc.ETP being one such body which grades and certifies these

standards. CSR – The consumers have now started to seek out companies who act in a responsible manner showing accountability and the

projects that are undertaken in its direction will hold companies in good stead over their competitors.

Environment – The degree of attention we pay to the environment and its sustainability too will be measured through company

Environmental management systems and will hold prominence even in marketing ones products.

Unilever RequirementsHACCP Principles Need to be in place. – Therefore pre-requisites

such as Good Hygienic practice etc need to be followed.Unilever Good Manufacturing Practices (GMP) to be adhered to.

Unilever Sustainable Agricultural Practices to be in place.COBP – Code of Business Principles; awareness to the same and

adherence to the like.Agrochemical usage has to be inline with country requirements and

declarations are sort from all suppliers.Adherence to country laws and guidelines for packaging/

warehousing.Occupational Health and Safety Management of employees of both, co-packers and suppliers need to be in line with Unilever

requirements for 3P (covered to an extent in GMP)Environmental Management System needs to be in place for all 3P

operations.

Fair number of tea export companies have obtained

ISO 9002

ISO 14000

HACCP

Certification for their processing / packaging factories

………and ready to face rapidly changing

consumer requirements

Stumbling Blocks

Laws

Funding

System

Niraj de Mel