Guaranteed price recipe for poor quality, Sri Lanka tea trade warns

COLOMBO (EconomyNext) – Sri Lanka’s tea trade has come out against a government guaranteed price scheme for tea leaves to help growers cope with the slump in prices, saying it would only encourage poor quality tea.

Anselm Perera, chairman of the Colombo Tea Traders Association, said cultivators and black tea manufacturers should strive to improve quality at a time of lower prices globally to attract more buyers to the island.

Producers must fine tune their production processes and improve quality so that better prices can be fetched at the Colombo auctions,  he told the CTTA’s 121st Annual General Meeting.

“The 80 rupee guaranteed price scheme will only encourage production of poor quality tea,” Perera said, noting that the availability of more inferior quality teas will only foster corruption.

The government needs to review the scheme and replace it with a business model that’s more commercially viable, he said.

The government introduced the floor price scheme after the steep fall in tea prices in recent months, part of a global slump in commodity prices.

Sri Lanka’s tea industry has also been hit hard by troubles in key markets like Russia and the Middle East which has caused demand to slacken.