Chrisantha Perera warns of dangers in hasty implementation of chemical fertilizer ban

Ceylon Tea Brokers PLC. (CTBP), a company accounting for 14.77% of tea marketed by the country in volume terms and 15.28 percent in value terms has titled its annual report for 2020/2021 “Defying challenges, achieving growth.”

It says: “Our hard work has borne fruit, as we record a year of growth, inching up the numbers amid challenges, and much like tea in hot water, we will continue to grow stronger with time.”

In his chairman’s review for the year, Mr. Chrisantha Perera who has over 50 year experience in the tea industry, retiring as Chairman/CEO of Forbes and Walker after 44 years with that company, has said CTBP had done ‘exceptionally well’ in the year under review compared to the previous year amid the many challenges the country as a whole had to face.

He noted that the company achieving a much higher bottom line than in the previous year and growing its market share were special highlights for the period under review. Its after-tax profit was up to Rs. 107.53 million from Rs. 21.54 million a year earlier and it paid shareholders a dividend of 35 cents a share against eight cents the previous year.

Perera reported that tea production continued to be disappointing with a 21.6 million kilo (7.2%) decline from the previous year to 278.48 million kilos – the worst since 1997 – with low grown teas accounting for the largest deficit of 20 million kilos.

“Last year’s output was the lowest since 276.86 million kilos (produced) in in 1997,” he said. “The absence of fertilizer application for the greater part of 2019, the extremely hot weather during the first quarter of 2020 and more importantly, the disruption caused by the Covid 19 pandemic brought about the significantly low production in 2020,” he said.

Perera noted that over the last seven years, Sri Lanka’s tea production has been steadily declining and with total production almost 60 million kilos behind 2014. The low grown segment was the biggest loser with a 40 million kilo loss in this period.

The smallholder dominated low grown teas – accounting for nearly 75% of the green leaf harvest – is the most productive elevationally, strongly outpacing both high and mid-grown teas. With the country’s share of the global tea market now below five percent, Perera warned that this declining trend, if not arrested, will seriously affect the sustainability of producers, particularly smallholders.

“Adding to this, the continuously declining availability of ‘Ceylon Tea’ will negatively impact the marketing front, particularly in Middle Eastern countries and Russia, who between them account for over 60% of Sri Lanka’s exports, being compelled to look for alternate suppliers,” he said.

“However, at the time of compiling this report, a welcome recovery is evident with crop figures released for January to May 2021 recording a 134.7 million kilo gain, up 31.6 million kilos (30.66%) over the corresponding period last year. This includes a 34% improvement for the low grown segment, with the high and medium growns increasing 25% in each category.”

But Perera went on to say: “Be that as it may, the government’s recent proposal to switch from the use of chemical fertilizer to organic for all agriculture including tea with immediate effect will hamper plans to increase production.”

He warned that the proposed initiative could result in a short to medium term drop in quality of green leaf harvested and consequently the quality of manufactured tea.

Describing the proposed initiative as “laudable,” in the context of increasing global awareness towards a sustainable economy based on a triple bottom line of “People, Planet and Profits,’ a well thought out implementation plan over a 5-10 year period against an overnight change would have been prudent, he said.

Saying such a step can result in irreparable damage to the tea industry, and consequently the economy, Perera strongly recommended a scientific approach devised by experts in the subject and all associated stakeholder organizations in the plantation industry tasked to formulate the correct strategy.

He also said there appeared to be a mistaken notion relating to the increased Maximum Residue Levels (MRLs) occurring through use of chemical fertilizer. Their understanding was that increased MRLs in the final product occur predominantly from incorrect use of pesticides and weedicides.

The top shareholder of CTBP is Ashthi Holdings (Private) Ltd., a company related to Mr. WAT Fernando (30.4%) followed by Mr. WAT Fernando (26.8%), Jetwing Travels (Pvt) Ltd. (18.7%). Ms. NTMS Cooray (6%) Chrisantha Perera and his wife (1.9%) and related companies are among the largest shareholders.

The directors of the company are: Messrs. CPR Perera (chairman), RJN De Mel (deputy chairman), WAT Fernando (MD), DGW De Silva (Director/CEO), KHS Devapriya (former Director/COO), KAD Fernando (Director/COO), Ms. NTMS Cooray, Ms. HMS Perera, BRL Fernando, DH Madawala, HTD Nonis and Z. Mohamed.