Can you give us some background information, of the Tea Small Holdings Authority, its historical background, main activities and the structure of?
In Sri Lanka the Tea sector is divided into two groups. One is for the management company sector and the other the Smallholder sector. Anything over 20 perches of land and going up to
50 acres is considered a tea smallholding. Anything above 50 acres is considered a large plantation; unlimited acres are called Management Company estates. Out of the total area under Tea there are 21 companies, which are giants in the Sri Lankan Tea industry. In various diversified fields they have taken up plantations on a long leases from the Government and they fall under the Management Company category. They cover 60% of the total area under tea in Sri Lanka Therefore Tea Small holders are left with only 40% area under tea. The total extent covered by the Small holders is 88 000 hectares. The total number of families in the tea smallholder sector is 239 000, covering a total population of 1.9 million. The most significant factor is that 85% of them own either one hectare or less! It is only 1% that owns 50 acres. Therefore we are really talking about the small farmer when it comes to Smallholdings. The duty of this authority is divided into two. Recently we organized the small holders into a society system and now we have 1240 societies with a membership of 198 000 people. This is the largest farmer organization in Sri Lanka and when it comes to Asia too, we are one of the largest farmer organizations. My staff consists of 200 agriculture diploma holders who are trained to give the extension message to these people, that is how we have been functioning up to a year ago. Then suddenly we were called upon to face the globalization, privatization and the free economy. Therefore at that time we thought we would convert them into entrepreneurs. Thus, we told them to save money with us and then formed a thing called 'tea Shakthi' (Tea Power.) This came as an act of parliament as it belonged to the people by the name of 'Tea Shakthi fund'. Then within a period of one year, the total savings came to Rs.200 million by these small farmers. We really wanted to take part in the globalization and the free economy and what an individual could not do, we got a crowd to do it by investing their money. We have been having farmers selling green leaf as a raw material. We wanted to take part in all aspects of the business. Therefore we went into a share issue restricted to smallholders, and we managed to raise Rs. 1000 million in one month, thereby forming the largest public quoted company in Sri Lanka, with 140 000 shareholders. This is the 'Tea Shakthi fund.' Talking about our achievements although we have only 40% of land under tea, our total production according to the year 2000 Central Bank's report is that we contributed 61% of the national production. We also account for 74% of the income generated from the sale of tea. This is mainly because of the quality of our product. Kenya achieved the highest yield levels in the world, that is 2250 kilos per hectare. The tea small holders in Sri Lanka have just come up to 2220 kilos per hectare per year. Therefore we are just behind Kenya but our national growth level is very low since large plantations are still at the one thousand levels. Therefore our productivity is almost double. So after achieving our objectives in yield productivity, we ventured into having our own transportation fleet. We got the societies to participate and we used the two state banks (Bank of Ceylon and Peoples Bank) on a guarantee given by the Tea Shakthi fund they will handle the banking aspect and the leasing. Today we have 250 leaf transportation vehicles belonging to the Society. Then we embarked on having our own tea factories and we are now developing 21 tea factories and out of the 21, 12 are in operation already today. We are proud to mention that all 12 are the district leaders from over 600 tea factories. We pay the premium prize and thereby we have introduced a new tea culture. When you bring in your leaf you keep on looking for faults and keep deducting for water or mature leaves. What we do is say no to bad leaf and only accept the good leafs. Prize reduction will not help the tea industry. Then we got into tea export and today we export to Russia on packed form and to Netherlands Israel and Iran. Now we are negotiation with Japan and we keep looking for fresh markets like Korea and Taiwan. We are not trying to grab a share of somebody. We simply look for new markets. Our advantage is our own production, which is 12% of the global consumption. We are confident that we could market through tough competition. I must emphasize that the tea Shakthi foundation is an independent body and is not a government body. Tea smallholders through their societies elect directors of Tea Shakthi and they manage it on their own. This is only the second year we monitor them and give them guidelines. The tea Shakthi foundation has stared assembling leaf transport vehicles through Chinese collaboration. You need specially designed tractors to transport tea without damaging them, thus transport is very important. The tractor is called Tea Shakthi. In addition we have just started the tea Shakthi fertilizer. Our share in the market is 1 25 000 metric tons per year. Our products will be made available next July as it is still in the process of being manufactured at the moment. We are looking forward to becoming suppliers of Yuria to the world because the quantum is very large. We hope and plan to cover the Rubber sector and other sectors as well and we hope to be able to offer 300 to 500 thousand metric tons of urea to the world per year. We are privileged to have commenced on the first extension radio in Asia. We have got the frequencies, our studios are ready and we feel this is very important since we do not have a farmer-oriented radio in Sri Lanka. For this we have studied the Japanese system and we have found out that the newspapers, radio and television have no time for the farmers. Therefore we are going to fill that gap and tell the frames what is available and were it is available. We can give them the correct market information. People do not have time to come for extension classes, they much rather sit at home and listen to the radio and hear the messages. All the Chemical and fertilizer companies have agreed to advertise through our radio. Though we manage it, this radio is not only for tea but we will extended it to the rubber, coconut paddy, vegetable fruits and so on. We are looking at a target crowd of around 7 to 8 million tea smallholders in all sectors. This is the group we are targeting to assist
How do you raise funds for all these projects?
This is all money invested by the Smallholders in our share issue. Not a single cent from the government or the public finance. This is the first year of the trust operation and our capital is already cash one thousand million belonging to the people.
Sri Lanka is a major tea exporting country; how do you plan to cope with future demands and specially prizes in other markets?
The major set back is the big global players. They are looking for suppliers to market their own brands. When you market an international brand the identity of the produce is lost. The consumer may not know if the tea is from Sri Lanka or elsewhere. Therefore what we believe is promoting our own brand, which is pure Ceylon tea in upgraded form. We are looking for the consumer who is looking to taste a pure Ceylon cup of tea. We are looking for our own brand promotion. We haven't done much. We have been packing and selling tea the way we did 100 years ago and we have not thought about liquid tea or instant tea. We are looking at that angle as well. With the Tea Research Institute (TRI) we have managed to get a tea essence and hope to bottle it and get it to the market soon. We are now looking for new ventures.
| How do you promote Ceylon tea from the tea Smallholdings?
We participate in almost all global exhibitions and promotions, which is about 27 per year. In addition, since Sri Lanka tea is known in the whole world we promote our products through our own contacts and the Internet. We are very grateful to the World's Fair Trade organization o, which is operating from Netherlands where they link the producer to the consumer and through them too we have made a name. Our general theory is all about freshness.' yesterday's leaf in today's pack and tomorrows cup.'
Are you also looking for foreign assistance for all the projects you are undertaking or for future ones that might be on the pipeline?
Definitely. We have just started working with a Korean company and we need a lot of exposure. Tea industry is very large and we cover over 200 thousand hectares of land and there are over 650 tea factories. Unfortunately if one looks at the roller or machines, they have been produced over 100 years ago. We have the static bottom portion and the top portion moving. This is still the older Chinese technology, which is being used even today. I can't see why we can't produce a roller that goes up and down and which saves energy. Therefore we are at a loss when new technology and production comes into play and now we are very seriously looking to improve on that angle as we are at a loss without it. Therefore we are looking for a partner to join, who could help us modernize technology in the industry. We are also looking at a Korean Company to come out with a color sorter, which is very expensive, and in high demand. This is expected to cost around Rs. 8 million per machine. This machine is not meant for tea, but it can pick out stalks and the fiber out of the leaves to be processed. We hope to get into possible joint ventures with Korea in this regard. When it comes to packing, our machinery has not made any headway and there is a gap. If we are to get a drier or a roller done we have to wait for six months for some one to do it. But the demand is daily.
Since tea is very important product to Sri Lanka to what extent do you contribute to the overall economic development of the country?
We are the leaders in the market today. If not for the Smallholder sector 61% of the production will not be there. The purity and the symbol of quality of Ceylon tea are also there because of us. We account for 74% of the income and this shows that our teas are very good in quality. If you take the industry we are all fighting a battle for having less and less of labor in most of the Asian countries, including countries like Malaysia. There is also an eternal conflict of the worker force and the management. But all over it is the family members who work. There is a problem of dignity of labor since they do not want to be called tea pluckers any more. They also like to move along with the world. We do not have tea pluckers in our sector. But we have technical assistants. We give them three months training and a diploma and we give them uniforms starting from shoes to cap and we make it a job that provides dignity and satisfaction. When the country is losing in the management sector we are coming back with a new concept. Therefore we do not have labor disputes or shortages.
Do you hope to modernize your labor force, how do you plan to accomplish this?
Yes we have to go with the tide. We have to go in for new technology since one cannot expect tea to be plucked by hand all the time. The research is lacking all over the world and we hope to go in to this field as well. Due to the dignity that we have given plantation workers we have about 12 000 people and they all like this to a white-collar job. It all accounts to how much one makes at the end of the day and if they are looked after well, they are all happy and with us.
What are your future plans, including future out looks in promoting Sri Lanka as a country manufacturing quality tea, what new development plans do you have for the future?
If one looks at the real players in the world market they are looking for a global business, global blend and global market. We oppose to that. Let them do it. But we want to keep our identity of pure Ceylon tea flying all the time and we have no idea of doing off shore packing. We want to assure the customer that it is a pure Ceylon tea, packed in Sri Lanka and we are sole players of that game. We hope to make headway in this. The idea of importing tea is to get cheaper tea. In Sri Lanka we have unutilized land in different geographical areas and I have already started planting tea in different areas with different climates. What we can't get down from other countries could be made here. I believe that the consumer should be permitted to taste what he desires. We have the Uva's, Kandy's, Ruhuna's and Dimbulla's and so many other teas. The Uva tea, which has natural menthol in it, is found three months of the year and the prizes go up as much as ten folds during that period. It is a unique tea and we want to market it as Sri Lanka Uva tea. The other countries too can do it and we will not be able to match other blends made in special climates like 'Digerin tea' of India. That identity must remain. Therefore we are planning to fly the Sri Lanka flag very high in the tea industry.
What has been your background and what do you think has been your biggest achievement as chairman of the Tea Small Holdings?
I think my biggest achievement in life was getting the people together, focus on a common goal, sticking together and organizing 1.5 million people within a period of one year. I am doing the same thing in the rubber sector today. It is nice to work with different people, one goal and no politics, no differences as they are all tea traders and we want to be united in tea.
Any last message for our readers, what would you like to tell them?
We produce 61% tea in Sri Lanka that is in the form of green leaf and there is lot of opportunity to convert them to black tea. So they are most welcomed to come here with new technology and modern ideas to make tea differently, to keep up with the tide. We are the raw leaf suppliers and we have a couple of factories, but we are glad if some body could come in and move with the tide. Only a portion of raw materiel is converted to black tea from our factories and the balance is given to the traders in the market. The players try to play with the same old machinery and therefore there is a lot of room for new comers and new ideas.
NOTE: World Investment News Ltd cannot be made responsible for the content of unedited transcriptions.
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