Commercial plantations urge immediate Government action to prevent industry’s demise

  • RPCs allege discrimination by authorities on allocation of fuel for leaf and latex transport and power generation
  • Calls for radical and bold reforms to resuscitate industry including allowing hybrid $ auctions
  • Calls for additional assistance to increase production to enhance Dollar earnings and measures to reduce high COP

The Government’s failure to allocate fuel quotas to the Regional Plantation Companies
(RPCs), together with continuous power disruptions and uninformed policymaking, is bringing Sri
Lanka’s commercial plantations to a standstill. Due to the lack of fuel, all leaf and latex transport
operations have been severely impacted and there is insufficient fuel to operate standby generators.
Accordingly, the Planters’ Association of Ceylon (PA), demanded that authorities take immediate action
to prioritize Sri Lanka’s plantation industry which contributes over USD 1.5 billion to Sri Lanka’s export
Commenting on the dire situation, PA media spokesperson, Dr. Roshan Rajadurai cautioned that the
Government’s continuing failure to give any priority whatsoever to the needs of RPCs and the broader
industry, together with a series of catastrophic policy blunders had resulted in severe disruptions to
production and transport and rapid escalation of production cost of tea by around 30% from the
beginning of 2022.
“RPCs will no longer be able to continue operations as usual if real and meaningful solutions are not
provided immediately,” emphasised Dr. Rajadurai. “Despite our critical contribution to the industry and
the Sri Lankan economy, the authorities have failed to understand our value. Instead they have
continuously discriminated the RPCs even in the past, as compared with other export industry
stakeholders and the rest of the plantation sector.”
“Our sector was severely disrupted even before the current domestic economic crisis by uninformed
policy making decisions, including the completely irrational ban on import of essential agriculture inputs.
The issues we are seeing now across the economy are directly connected to this unplanned,
unscientific, and short-sighted approach to policy,” Rajadurai added. “While at long last, the
Government has publicly accepted the failure of this policy, the once vocal proponents of such unsound
claims are nowhere to be seen although the industry continues to pay the price, despite our repeated
warnings and admonitions about the ill effects of such policy.”
While the Government retracted its decision to ban imports of agricultural inputs such as fertiliser,
recommended weedicides, fungicides and pesticides, these have not been available since April 2021.
The bureaucratic processes required for the bans to be lifted takes a long time, and have obstructed
imports, creating severe shortages. Compounding these challenges, the depreciation of the Rupee and
the global increase in commodity prices have resulted in the price of these essential inputs skyrocketing.
For instance, the price of fertiliser used for tea has increased 25-fold from before the ban; from
approximately Rs. 30,000 per metric tonne (MT) of urea to Rs. 750,000 per MT and prices are still

As a result, the cost of production of 1kg of tea has now risen to nearly Rs. 800. However, at the
Colombo Tea Auction, the Net Sale Average (NSA) of high-grown tea was only around Rs. 717, up to
end March 2022.
In addition, the unavailability of inputs will reduce yields and quality in the long run. Despite better
weather compared to last year, the industry has seen a decline in tea and rubber crops this year,
compared with the corresponding period of last year, as the lack of agricultural inputs such as fertilizer,
weedicides and fungicides begin to take effect. With tea and rubber being perennial/long-term crops,
such adverse effects on yield could be felt throughout the productive life of the plant. Rubber
cultivations too have been impacted by fast-spreading diseases such as pesta. In the absence of necessary
inputs to arrest their spread the disease has already resulted in a 30% – 40% crop loss.
Tea estates operate throughout the 24 hours of the day and require uninterrupted electricity to do so.
If, for instance, the withering operation is disrupted/interrupted for a few hours, bacterial contamination
takes place, drastically reducing the quality of the tea produced. Acknowledging this, the authorities
have allocated fuel quotas to the rest of the industry value chain for them to continue operations by
running their generators during power cuts, but the RPCs have been inexplicably ignored.
Transporting inputs and raw materials such as green leaf and latex to and between large land areas in
commercial estates and transporting produce to Colombo have also become extremely difficult due to
the lack of fuel. This will lead to the complete breakdown of estate operations and consequently the
RPCs will not be able to operate the estates leading to severe and serious social unrest under these
present volatile situations in the country. Over 1 million people reside within the country’s large
commercial estate sector and their livelihood is totally dependent on the plantation economy.
For the plantation sector to continue operations, uninterrupted power and fuel – including for internal
transport – need to be provided as priority. Since suppliers are also now demanding for payments in
foreign currency, the RPCs are also strongly urging the authorities to allow tea producers participating
at the Colombo Tea Auction to obtain their payments from tea exporters in foreign currency.
A hybrid system, which allows exporters to pay tea producers in foreign currency and local buyers of
tea to pay in Rupees is prudent and fair, considering how other export industries are allowed to obtain
payments in foreign currency. Notably, 95% of Ceylon Tea is exported and the industry is a major
generator of valuable foreign exchange for the country.
Given the sharp increase in the cost of vital agri inputs, the RPCs also urge the Government to include
the commercial plantation sector in any beneficial scheme through which such inputs are made available
to producers, using funds from multilateral agencies. The RPCs provide a range of services and care for
a population of over 1 million residing in the estates and also support the smallholders by processing
their tea leaves and rubber latex, serving as a vital cog in the industry’s supply chain.
In the medium to long-term, the RPCs see stable policymaking made in consultation with industry
practitioners as essential for the growth and economic sustainability of the plantation industry.

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