Prices for ‘organic’ tea in Sri Lanka may need to increase by 75% to offset impact of fertilizer ban
ECONOMYNEXT – Prices for ‘organic’ tea from Sri Lanka may need to increase by 75% to offset the impact of a fertilizer ban that will increase production costs and reduce yields, which could take at least three years, an industry official said.
It will take up to three years for a field used for chemical fertilizers to be converted to “organic” and the cost of production increases sharply due to more labor and lower yields.
Growing organic tea is an extremely difficult niche sector where Sri Lankan plantations already have experience. Certification is difficult and different countries have different standards, but the total volumes are low.
“The market for tea or organic products in the world is less than 1%,” Rajadurai said.
“Sri Lanka has an organic tea business that has won world awards. “
The company has been in organic tea for 20 years, but is battling extremely difficult hurdles with a variety of regulations to enter different markets.
“They have a hard time maintaining the float because countries like Germany, the Netherlands, the UK, the US and France have different parameters and levels when you give what you call organic. “, did he declare.
Sri Lanka has banned agrochemicals, saying they cost more than $ 300 million for annual imports as foreign exchange shortages hit the country due to money printing and contribute to noncommunicable diseases.
A study by the United Planters Association of South India found in 2013 that organic tea production will generate at least 30 percent lower yields.
“So, automatically, the cost of production will increase by 30 to 40 percent due to lower yields,” Roshan Rajadurai, president of Plantation Service Group, said at the Planters Association’s annual general meeting.
The study also found that a plantation needs an additional 100 to 150 men per hectare to tend the fields.
“So if you have 10 hectares, you need 1,000 more workers. Again the availability of workers and its cost, ”said Rajadurai.
“There is no need to reinvest the wheel. India has also done the research.”
Through the use of authorized weedkillers, for example, workers were reduced, productivity increased allowing them to earn higher wages.
Sri Lanka’s regional plantation businesses that started with 200,000 workers have already fallen to 120,000 as young people move into retail and other fields.
Declining yields and higher production costs will require a 75 percent price premium to make organic tea viable, Rajadurai said.
However, even if more workers are needed to tend the fields, they will not have much tea to pick, which will reduce income and result in losses for businesses.
In conventional agriculture that uses both inorganic and organic fertilizers, it takes at least 3 years to convert a field to organic due to the number of soil tests and sampling done to check for residues.
“Organic is certification,” Rajadurai said. “By simply stopping chemical fertilizers, we cannot label ourselves as organic. “
“This is a niche market with many restrictions and specifications required to achieve certification. On a commercial scale, this is not viable, ”he added.
Analysts have called for reforms to the central bank law to prevent liquidity injections in order to restore the monetary stability that prevailed in the country before the creation of a Latin American-style central bank in 1950.
According to Pliny the Elder, the Association of Doctors of the Government of Sri Lanka said that a Roman author, the ancient Sri Lankans lived for 140 years, when there were no agrochemicals.
Economists call ad hoc policy changes using the coercive power of the state, which could reduce benefits “regime uncertainty.”
Sri Lankan rulers have also raised the wages of plantation workers, effectively expropriating plantations amid another regime of uncertainty.
Sri Lanka has gradually lost the ability to engage in politics with green papers, white papers, expert and public consultations over decades. Politics is now done through manifestos that are slammed on the public claiming a mandate. (Colombo / Sep 30/2021)