The British were ruthlessly exploiting our tea industry and its workers

Excerpted from the autobiography of Merril. J. Fernando

I was deeply distressed by the ruthless exploitation of our tea industry and its workers, which took place in London. Through my association with British friends resident in Ceylon, and my employers, many of whom were British, I had developed a great respect for them. However, all that was shaken when I realized what was being done in London to our Ceylon Tea.

The British then dominated the global tea trade, with Mincing Lane, the world’s undisputed tea centre, controlling and manipulating the distribution and marketing of tea from grower countries and, thus, holding all producers, especially those in Ceylon, to ransom. We were more vulnerable to market manipulation than any other grower as, even at that time, we were exporting around 90% of our annual national production, with a large proportion of it going to UK.

A very significant weight of our tea, I think around 60 million pounds annually, was consigned then to the London Auction, which was a terminal market. From London, tea was re-exported in both bulk and in value-added form, packaged, and branded, with the main destinations being US, Canada, Northern Europe, and Japan. Initially, most of the packaged tea contained a large component of Ceylon Tea, blended with tea from other, cheaper origins.

However, these diluted blends were always branded and identified as ‘Ceylon Tea’. The proportion of Ceylon Tea in such export blends declined progressively in view of its relatively higher price, but customers, in the belief that they were enjoying pure Ceylon Tea, continued to purchase these diluted blends at premium prices. The growing influence of large brands and the packers’ compulsion to remain competitive in the market, were adversely affecting the quality of the blend.

Apart from London, there were two other major tea blending centres in Europe, causing equal damage to the good reputation of Ceylon Tea. Export companies operating out of Rotterdam and Hamburg engaged in similar exploitation of Ceylon Tea, producing their own brands of so-called ‘Ceylon Tea’. This commercially-effective fiction was reinforced by the attachment of names of our well-known plantations to the brands, duping gullible customers in to believing that their purchases represented genuine Ceylon Tea.

Our authorities in Ceylon, responsible for the oversight of the industry, remained passive in the face of such damaging activities. Counter strategies were never contemplated. It was only later that I realized that the tea industry regulatory and supervisory organs in Ceylon were also actually fiercely protective of British and multinational interests and were complicit in this culture of exploitation, much to the detriment of the local grower and producer. In a later chapter I will deal comprehensively with this aspect of our industry.

Ceylon Tea, which these exporters purchased at very low prices, was sold at levels that were 15-20 times higher in value-added form, after branding and packaging. Allowing for the cost of value addition, marketing, advertising, and promotion, these profits were unfair and unreasonable, whilst our farmers and their workers continued to live in poverty.

The growing influence of brands was also affecting quality. As Ceylon Tea was relatively higher in price than that from other prodestinations, I realised that the proportion of Ceylon Tea in these mass market retail packs would be minimal.

A promise to myself

At the young age of 24, I began to understand the ugly realities of the colonial trading culture. Irrespective of the product, whether it be tea, coffee, or cocoa, its success was based on the exploitation of farmers, growers, and their workers.

In all parts of the underdeveloped world, despite their contribution in skill and sweat, those at the lower end of the production chain, especially the grower-farmer, are still relegated to a marginal existence. However, that effort by the grower at origin has helped develop millionaire traders in Britain and elsewhere in the Western world.

I found it difficult to understand how and why our country permitted the perpetuation of that culture. In my ignorance of the power and outreach of the international trader, and in the brashness of youth, I vowed to myself then and there that someday I would develop my own brand and offer consumers the finest tea on earth – SINGLE ORIGIN, 100% PURE CEYLON TEA – thus bringing integrity and honesty back to the trading of tea.

By marketing my own brand of tea from origin, earnings, which now accrued to foreign traders, would remain in Sri Lanka. I also made a pledge to myself that I would share my earnings with the underprivileged, and bring hope and comfort to our tea farmers, and their families and workers, by making my brand the world’s first ethically-produced tea. However, I was soon made to understand that it was a daydream, a fantasy. A few friends I shared my hopes with were discouraging and sometimes scornful.

Despite the obvious impediments and the lack of encouragement from even those close to me, I never abandoned the idea. Common sense, conventional wisdom, and the prevailing realities of the tea export industry argued strongly against the realization of my dream of a personal, independent brand. However, whilst I pushed it to the back of mind, there was always an inner compulsion that kept the dream alive within me.

Though my career and business interests took me along various different paths over the next few decades, in retrospect, I realize now that what drove me on was the inner conviction, that all those diverse avenues would one day converge in the achievement of that long-held vision – a brand of my own making, developed on the strength of ‘Single Origin, Pure Ceylon Tea’. Naming my own brand ‘Dilmah,’ after my two sons, Dilhan and Malik, many years later was inspirational, but the vision that gave birth to that brand had been in gestation for four decades.

A culture of domination

The culture of the tea export trade I stepped into in 1954 was deeply influenced by the British stranglehold on the industry, which extended from production in the plantations to broking, selling, export-shipping, distribution, and retail marketing overseas. They had first commandeered and then controlled the value chain from beginning to end. It was a prime example of an octopus-like outreach, influencing and manipulating every aspect of the industry.

The centuries of Western colonial domination of this country, commencing with the Portuguese in 1505 and continuing with the Dutch and, thereafter, the British, seemed to have instilled a deep sense of submissiveness in the outlook of the local industrialist. The statutes, regulations, and conventions governing the export trade had been framed according to English law and, obviously, were heavily weighted in favour of the British exporter.

The Britishers’ suppression of indigenous enterprise and innovation was also aided by the local entrepreneur’s docile acceptance of this overriding colonizer’s dominance. Six years after independence from British rule, despite retaining production power within the country, we still remained economic vassals of our colonial masters. The British overlords of our economy had indoctrinated their native successors, the ‘Brown Sahibs,’ very well.

After my very enlightening stay in London, the world’s tea centre, I returned to Ceylon and to the realities of earning a living and resumed my work at A. F. Jones Co. Ltd. The Chairman of Joseph Travers & Sons Ltd., Russell Shaw, had sent very favourable reports about my work in London to Dennis Jones. Shortly after my return, I asked Dennis why we did not export value-added tea. His honest answer was, “We don’t know how to do that. The best place for that is London.”

Whilst I disagreed silently, I bowed to his opinion as, at that time, I was in no position to make a difference. I resumed the business of bulk tea exports, which grew steadily. In addition to the two sons, Dennis and Alan, there was Terrence Allan, a brilliant taster, and Geoff Law, the CFO. They were particularly nice to me, which caused some resentment among the other executives. That made life in the company difficult for me in my early years.

Within my first year of employment I acquired a good understanding of all the aspects of the tea trade and, importantly, of my own choice, I studied factory operations, shipping, finance, and all other related segments of the trade. In my second year, whilst Alan Jones and Terrence Allan were on leave in the United Kingdom, Dennis contracted hepatitis and was hospitalized. I was suddenly compelled to handle most of the key operations alone. I was genuinely frightened by the responsibilities and, on a visit to Dennis in hospital, shared my fears with him.

Dennis demonstrated greater confidence in my competence than I did and said: “Merrill, you are capable of handling all the business issues; just do your best.” Perhaps inspired by his faith in me, I managed the correspondence, tea contracts, blends, and other related work, praying that I would not make any mistakes. Quite surprisingly, I was also able to sell an unusual amount of tea during this period, handling the complexities of blending and shipping without any problems.

When Dennis returned to work three weeks later, I requested him to check all the blends I had prepared in his absence. His immediate response was: “I don’t want to know; you have done a great job.” However, I persuaded him to taste all the blends.

He did so and said: “Full marks, Merrill.” Obviously, my unsupervised contribution in the absence of the proprietors had bolstered their confidence in me, and I found that they were soon permitting me greater latitude for independent decision making and action. The Joneses began to treat me as one of the family and I enjoyed working with them. Their confidence in me was further affirmed when I was appointed to the Board of the company in March 1958.