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Mega tea ventures can stimulate Lanka's economy, says expert

Tea drinkers all over the world swear by hand-plucked leaves from the fabled tea plantations of Sri Lanka, the world's biggest tea exporter.

A variety of Sri Lankan tea leaves and tea bags -- from mild to strong brews -- are available on supermarket shelves and in speciality stores in many parts of the world, particularly in Europe, the Middle East and North America.

Now the tea industry thinks this Indian Ocean island should cash in on its reputation and set up the biggest shop, stocking every kind of tea produced in the world.

Government tea promotion officials say Colombo is being aggressively promoted as the world's biggest international tea trading centre with backing from brokers and the export community.

According to Hasitha de Alwis, director of the state-run Sri Lanka Tea Promotion Bureau, the move has been galvanised by the demise last month of the historic London tea auction, which opened in 1750. It was British colonialists who brought tea to Sri Lanka, clearing thick jungles in the island's central hills to plant the low bushes.

Alwis believes the setting up of an international tea trading centre would create employment opportunities for Sri Lankans, lead to a boom in new blending and packing companies and swell the country's foreign exchange coffers.

At present, Colombo dominates the tea auctions of the world, but it deals largely with produce from the island's carefully tended plantations. The tea trade and tea promotion authorities have been trying to persuade the government to allow more tea imports, but the idea still has not found official support.

Only a small quantity of tea is imported -- some ten million kilograms of CTC teas and speciality teas like Darjeeling, Assam and green tea -- and chiefly for blending with local varieties.

More than 50 per cent of Sri Lankan tea exports are in value- added form -- packeted and blended tea. Its annual production of roughly 270 million kilograms of tea is small compared to big tea growers like India and China. But Colombo dominates the export market.

Trying to build up the island's reputation as a major blending and packing centre for teas, the Tea Promotion Bureau last year asked the government to reduce tea exports to ten per cent for a period of six months. But the ministry of plantations refused permission when Sri Lankan producers raised objections, saying an influx of imported tea would hurt prices and cut profits.

Trade sources said it was unlikely that prices would fall. ''The fact is that imports have so far had no impact on local prices,'' they argued.

The proposal was reactivated after the winding up of the London auction, and the Tea Promotion Bureau submitted fresh suggestions to the government last month. Reports that Dubai, in the United Arab Emirates, and Pakistan are planning to open new tea trading centres have added a sense of urgency.

Alwis strongly believes that if now Colombo does not seize the opportunity, it would lose out to newcomers to the tea business like Dubai and Pakistan.

According to reports reaching Colombo, authorities in Dubai are actively pursuing a plan to set up an international auction centre and delegations are scheduled to visit Sri Lanka, India and Kenya to study the way auctions are conducted.

Trade sources said that Dubai, a major trans-shipment centre in the Middle East with its own tea blending and packing firms, realises the potential of the business. The UAE has most favoured nation status in the Commonwealth of Independent States, formerly part of the Soviet empire, which is Colombo's biggest tea buyer.

Similarly, Pakistan is keen to take a plunge in view of its growing domestic market for tea. Pakistan is now the third largest tea consumer in the world and is set to be the world's biggest consumer in the first quarter of the new millennium.

However, Sri Lanka is indisputably best placed to host an international tea trading shop. ''Colombo has all the advantages,'' says Alwis. ''It is the biggest tea exporter, it has the largest number of foreign buyers and it produces the best tea in the world.''

The ministry can't ignore the huge gains to the economy in terms of foreign exchange and employment, he adds.

But he urged simultaneously for the need for caution. The modalities, he said, must be properly worked out to ensure that only good teas are imported, so as to not ruin Sri Lanka's reputation as dealers of some of the world's best teas.

UNI