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Sri Lanka Pushes Tea Exports at Washington Symposium
Diplomatic Pouch / November 2012

By Larry Luxner

For most of his career, diplomat Jaliya Wickramasuriya was preoccupied with Sri Lanka’s long-running civil war, which killed more than 100,000 people, displaced millions and shattered his country’s economy.

But with one of Asia’s bloodiest ethnic conflicts now in the past, Sri Lanka’s veteran ambassador to the United States can finally return to his favorite subject: tea.

“This subject is very close to my heart, since I began my career in tea. I could talk about tea for hours,” said Wickramasuriya, kicking off a symposium co-sponsored by his embassy and the Sri Lanka Tea Board entitled “Ceylon Tea: Sri Lanka’s Gift to the World.” The one-day event, held at the Washington Hilton, attracted about 50 dignitaries, diplomats, journalists and executives representing all segments of the tea industry.

“With the emergence of peace in 2009 following a 26-year war against the LTTE [Liberation Tigers of Tamil Eelalm] terrorist organization, Sri Lanka is becoming an excellent environment for international business,” Wickramasuriya told his audience. The ambassador noted that Sri Lanka’s GDP exceeded $55 billion last year — up 8.3 percent from 2010 and more than double the 2005 figure of $24 billion.

At present, the United States is Sri Lanka’s single largest export market, with about $2.1 billion in purchases (mostly garments and apparel). Yet it ranks 18th in terms of tea imports from Sri Lanka, buying only 1.1 percent of the island’s total tea exports.

That’s an irony Wickramasuriya would like to change.

“As the fourth-largest importer of tea in the world, the U.S. plays a very important role in the global tea economy. U.S. retail tea sales exceed $8 billion, and Sri Lanka is the world’s largest exporter of orthodox black tea,” he said. “Ceylon tea is grown under the highest social and environmental standards, and Sri Lanka has achieved a unique milestone by becoming the world’s only country to produce ozone-friendly tea. We’re very happy that Sri Lanka is the first country to receive this certification, and I have no doubt this could lead to a new international niche market.”

Michael Delaney, assistant U.S. trade representative for Central and South Asia, said the fact that the U.S. market for tea has grown considerably faster than the overall economy bodes well for a major tea exporter like Sri Lanka.

“Of all the countries in my area of responsibility, I have long felt that Sri Lanka ranks in the very top tier for economic potential due to its combination of natural resources and human potential,” said the official, who first visited the country in the early 1970s, when it was still known as Ceylon.

“Unfortunately, Sri Lanka was hobbled by political conflict. But the war ended three years ago with the total defeat of the LTTE. One would be hard-pressed to overstate the significance of this development. It has removed the biggest impediment to economic development in Sri Lanka,” he said. “Sri Lanka is very different today than it was just three years ago. The country is now well-positioned to build on its traditional strengths, and tea is certainly one of them.”

Hasitha de Alwis, promotion director at the Sri Lanka Tea Board, agrees that the industry has “enormous” opportunities for growth now that the war is over.

In 2011, tea exports reached $1.5 billion — more than any country in the world — cementing Sri Lanka’s position as the world leader in production and export of orthodox black tea. In addition, tea accounted for 15 percent of the nation’s foreign exchange earnings, 65 percent of its agricultural export revenues and 2 percent of its overall GDP.

Some two million people, or 10 percent of the population, are directly and indirectly employed by the tea industry. Only garment exports and remittances from Sri Lankans working abroad earn more hard currency for the island than tea.

The island — about the size of the state of West Virginia — has seven specific zones for tea cultivation, ranging from sea-level plantations to tea gardens located 6,000 feet above sea level. Last year, Russia was Sri Lanka’s best customer for tea, buying 15 percent of total exports, followed by Iran, Syria, Iraq, United Arab Emirates, Turkey, Azerbaijan, Kuwait and Ukraine.

U.S. tea drinkers, by contrast, still get more than half their black and green tea from Argentina, with lesser amounts from China, India, Indonesia, Japan and Kenya.

Joseph Simrany, president of the New York-based Tea Association of the USA, said Sri Lanka was the first tea-producing country he ever visited.

“It’s under-appreciated, just like the tea industry in the United States is under-appreciated,” he said. “But that’s good news, because it shows what the potential is. We’re fortunate to be associated with a product that has so many intrinsic qualities.”

Granted, most tea in this country is consumed as an iced beverage where quality is not critical. “However, there’s an exploding specialty tea market,” said Simrany. “Even the big coffee houses have indicated a desire to open up separate tea rooms, because consumed as a hot beverage there’s probably nothing better out there.”

Industry projections show U.S. tea consumption will likely double, from $1.4 billion in 2005 to $3 billion in 2015. Yet as Simrany pointed out, Americans still aren’t big tea drinkers. Annual per-capita tea consumption is only 400 grams — less than a third of the 1.3 kg consumed in Sri Lanka.

But he said the beverage’s health benefits “gives consumers a new reason to consider tea as an alternative when they’re reaching for soft drinks.”

Janaki Kuruppu, chairwoman of the Sri Lanka Tea Board, said her country exported 97 percent of the 330 million kilos of tea it produced last year. Sri Lanka now ranks fourth in world production and third in exports, while the United States is the world’s second largest importer of tea.

“You buy garments and so many other things from us, so how come we’re not doing more business in tea?” she asked. “Either we’re not giving you something you want, or you’re not looking at us as a partner. The sole objective of this meeting is, let’s do more business.”

She added: “When you think of Sri Lanka, we want you to think of enjoying a nice cup of tea. Whether it’s green tea or black tea, there are so many health benefits — cardiovascular, weight loss, anti-cancer, anti-osteoporosis — and it’s a natural product, so you can promote it without any guilt.”

Unlike its larger rivals like China and India — both of which produce for huge internal markets — export-driven Sri Lanka has always sold its tea at premium prices.

“This tea is for you, not us. And good things don’t come cheap,” said Kuruppu. “We’ve been doing this for 140 years. Taste the difference and see.”

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