CTTA wants affordable rates of interest, special line of credit | Daily News


 

CTTA wants affordable rates of interest, special line of credit

The focus of authorities and decision makers on the issues of the Tea Industry has not been very positive, said Anselm Perera President Colombo Tea Traders’ Association (CTTA).

“Our compelling pleas for vital decisions have not been considered of sufficient importance and, hence, neglected,” he said.

Perera expressed these views at the 122nd Annual General Meeting held in Colombo on Friday.

The CTTA Chairman appealed from Minister of Plantation industries Navin Dissanayake who was the Chief Guest to intervene and direct banks to accommodate all affected parties with affordable rates of interest and a special line of credit for a reasonable period of time for pay back, until they revert to regular production and servicing of their customers. “Spare parts for machinery damaged and retrievable must be allowed free of NBT and AWPLR at time of import, ” he said.

“Just a few weeks ago, we experienced some of the worst flooding that the outskirts of Colombo has ever experienced. Numerous warehouses of our exporters were submerged. The damage to stocks, machinery, equipment and property was unprecedented and delays in settlement of insurance claims will add interest to the already strained cash flows of our exporters,” Perera said.

In circumstances where already the auction prices are lower than cost of production and with yields and labour related productivity being most uneconomical, RPCs and all other producers are compelled to seek loans at high interest rates from financial institutions, he opined.

“The withdrawal of the fertilizer subsidy and the inability to afford procurement of fertilizers at the effective time of application, contribute partly to the production of a fair weight of inferior quality teas, which depress auction prices even further, ” the chairman said.

He also recalled that the Tea Hub concept has been discussed many-a-time, ending up without any resolution, for many reasons.

Perera said with the auction prices declining sharply since mid 2014, throughout 2015 and still continuing, the annual income from tea exports has recorded a declining trend. The very disappointing auction prices have adversely affected the income of the entire producer community. This has had a domino effect on the income of their Broker Community.

“Since achieving the highest crop of 240 million kgs. recorded in 2013, the tea industry have recorded successive declines in crop of 2 million and 9 million kilos respectively in the two following years of 2014 and 2015. Internal conflicts, geo-political issues have very negatively impacted the exports to the entire Middle Eastern and Eastern European regions and most importantly, Sri Lanka’s single largest market, Russia.”

The chairman said exporters, on the other hand, have had a twofold negative impact. “Incomes dropped with lower selling prices for both Bulk and Branded Value added products. The very slow settlement of credit by our overseas customers, who had currency issues, affected exporters’ liquidity positions.”

“However, notwithstanding this crisis situation, the accounts in respect of auction purchases were settled in strict accord with the by-laws, with prompt payments, as stipulated, being made unfailingly on the 6th day,” he said.

Overall, the cost of cash for the entire Tea Trade, in all three sectors, were at the highest ever during the last 2 1/2 plus years. Profit, consequently, has become an unfamiliar word in their vocabulary.

Despite all these negatives they still continued to meet their obligations to the country, Perera said. “This includes up front to the state in regard to duty, cesses and the promotional levy, (a total of Rs.13/50 for bulk) teas and, Rs.7/50 for value added teas, (on every kilo that exported,) thereby burdening our cash flows further, “ he said.

Perera said producers on the other hand, suffered multiple negatives. Agitation for wage increases by workers, followed by trade union action, has affected production. Linking productivity to labor wages in plantations is a critical aspect that has to be addressed without delay. The failure to address the sensitive issue of granting the plantation workers greater dignity in social recognition, through more respectable designations, is causing serious migration of labour from plantations to other occupations. This should be given high priority.

The Chairman said an excessive number of tea manufacturing factories have placed undue pressure on supplies of green leaf, which has led to the harvesting of extremely poor quality green leaf, which factories absorb purely to feed their capacities.

“This, in turn, has resulted in poor quality production, resulting in poor auction prices,” he said.

Sri Lanka, with around 715 factories, has an annual production of 320 to 340 million kgs., whilst Kenya, with only 150 factories, produces in excess of 400 million kgs.

Perera also highlighted that the last census of tea land was conducted way back in 2005 and current data available is inaccurate and appealed from the stakeholders of the industry not to encourage back door operators.


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