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Analysing The Tea Industry In Sri Lanka Economics Essay

My purpose is to analyse the tea industry in Sri Lanka and identify the global id of your tea. Sri Lanka is the most significant single tea producer in the global market. Identifying the production and accepting the marketplace makes is important to us to consider as an exporter. Determining the market set ups and how federal government intervening to the industry is crucial in the global market. I've included in this article how can Sri Lanka can gain a competitive position through acquiring the advantages from natural endowments and what our global situation for tea industry.


Sri Lanka is privileged with the cool, mistier environment and appropriate dirt and slops which appropriate the tea industry. Ceylon received the first tea herb from Assam in the 1939 in English times where they helped bring more economical, cultural, political and ethnical changes to Sri Lanka. Not until 1867 tea could be produced commercially and it's really James Taylor who acquired basic knowledge from North India and demonstrated on Loolecondera plantations. It really is true tea vegetation were expanded in the graveyard of espresso; where until 1860 the main crop from Ceylon was coffee. Ceylon chamber of the business 1839 was made the private sector to go into the economical expansion in Ceylon. From thereon the private sector prominence to the coffee and tea plantations with Worms Brothers and Ceylon Company. By 1875 tea cultivation accelerated all over Ceylon. A lot of the tea plantations were held by the Uk, Ceylon planters bought their lands to cultivate their tea from coffee. When coffee lost its value in commercial, colonial administrators focused on tea cultivation. Tea substituted the use of caffeine, plantations geared to grow their crops as soon as again Ceylon relied independently economical status.

Resources were properly used where in the 'Local Era' (1900-1920) Ceylon aimed changing the fast trail lands such as Gampola. Galle, Pussallawa and Matara to tea lands. Tea plants increased in accurate weather in steep angled slops. To fulfill the unrestricted need these resources altered as one factor of development. Scarcity of the world tea plantations, allocation of the source and opportunity cost of caffeine was feverish to Ceylon. Original level of tea planting hammered for some scope to the scarcity of tea seed products. Overcoming the problem Sri Lanka was the most valuable exporter across the world. Now we will be the 3rd most significant tea producers in the world market and also have captured 9% as a company.


Mixed market of Sri Lanka is serving to the essential need of the financial standards of the united states. The sources of tea industry were properly utilized in the country with the support of private businesses and point out of plantations. Authorities intervention on this industry is high with the specialist. A lot of the successful resources are owned by the government, but as the capitalistic system the plantations and productivity is held by the private sector. The demand for Sri Lankan tea has increased; motivating the private sector can meet up with the supply for the kids.

Nattukottei chettiars were forerunners of the finance companies now. They played out the center man persona to the enterprises in Sri Lanka until 1925, but by 1930 federal government compelled to adopt the financial sector. Point out Mortgage loan company 1937 accompanied by the lender of Ceylon 1947 occurred in the united states providing all the financial option given from the middleman. The majority of labours were imported from India and the colonialism was disperse about the plantations. Separate laws and regulations were proven for constitutional and labour rights protections.

Sri Lanka Tea Board (SLTB) is really the only regulatory body providing services to tea planters, exporters and manufacturers. Colombo Tea Stock traders Association (CTTA) and chamber of business hold tea auctions each week. The government intervention to auctions of teas from the Sri Lanka tea mother board was an outstanding work to create assurance of the customers. Auctions at the chamber of business have shown an increased price in 2010 2010 than the last year's public sale. This shows the stability and the recovery after the kitchen sink of the industry in 2008. Relating to 'Mahinda Chinthanaya' we identify the young business owners to enter in the global market. Also we explained the investment GDP rates should be increased in 10 percent. Question is how can we raise the GDP rates in the country? Motivating the private sector pays to and likely to be increased. Sri Lanka tried out to tighten the monetary insurance policy from 2007 to handle the recession however the sterilization in outflow of the Central lender high interest levels helped to diminish in the inflation and contributed to loosen the monetary insurance plan. Loosening the fiscal insurance plan can improve the credit demand of private sector and can spend on credits, saying that having an exit policy to government will donate to the growth of private sector. SLTB will move forward with the immediate consistence of the economic policy to maintain the availability and economic progress.

Sri Lanka has retained to hold the power of the tea market in the tea industry to overcome the market failures while retaining the poverty. An allocate efficiency has observed in this industry and shown the earth the public-private-people strategy by providing the highest public sale price. Assimilate in a tremendous speed with the private sector; administration can grow success absorbing improvements in technology and knowledge. From your direct advice of SLTB countries monetary coverage and fiscal plan will point out the stake holders such as retailers, importers, exporters and plantations. Bureaucratic hurdles of the industry from import restrictions, protecting tariffs, taxations, will distortion by intervening of the government. Capitalistic of the private and public enterprises and mixing both economies can guide Sri Lanka to a significant growth with the present day economies.


Our tea industry demonstrates the amount of vendors of tea is relatively less and admittance obstacles are also high due to government regulations and taxations. SLTB will provide the specialist and the auctions will decide the price. Virtually there the price makers where government regulatory body of SLTB has given the exporters the stabilize quality ISO 3720 level to keep the global quality and standards of Ceylon tea. This causes an Oligopoly market globally for Sri Lanka's tea industry where we've a close alternative coffee. Nevertheless to enter to the solid countries must have the natural endowment for tea industry. With few vendors and many customers, natural resources in the producing countries lead to the market framework.

Also sellers are earning very significant profit in the long run if we consider from the view of oligopolistic market. But also when India supplies were reduced on 2009 Sri Lanka increased their resource to the world market to fully capture more stocks and profit which contributed the countries market. Exchange of knowledge in tea industry is processing when our plantation Minister Mahinda Samarasinghe visited Kenya and compared the both systems of the countries with the agriculture minister Dr. Sally Kosgei of Kenya. Where we can think there can be exchanges of knowledge in this industry in future with the result of joint venture of free lands for coconut cultivation from Sri Lanka in change of buying back the crops. High amount of exporters internationally like Kenya, India, China and Indonesia shows the amount of firms because of this structure.

Global tea creation up to Feb compared with 2010/2009

(Desk 01)

Even though we can say in the global market Sri Lanka's tea industry will need consists of monopolistic market composition. Because Market makes will deliberate these form of constructions. Industry contradicts a perfect competition market since it is the purchase price takers in the market. Differentiation from dark tea, green tea and many brands highlights it. With only few obstacles to entry on the market such as legal factors, federal government regulations and natural obstacles it will concentrate on product differentiation. Resource will be relatively high contrasting the demand on the market will show a high elastic demand. The demand for Ceylon tea has increased rapidly where the world wide web profit US$ 1. 37 billion from export tea. On the other hand the prices is only going to change pretty in the global market.

We can conclude tea has a combined framework but more in to the oligopolistic market as a result of less main exporters and high admittance barriers especially because of natural endowments.


Till the end of 2010 Sri Lanka has a strong demand for Ceylon tea in the global market. We are able to say the shortage of vegetation in India and Assam in July 2010 benefited us to execute well in the global market. The demand has increased in the Colombo auctions for the drop of plants in both countries. Also Sri Lanka's auctions price will usually go high when the demand of the market is high on the other hand when the supply is high the price will be increased too. Especially the potential buyers will be increase when the demand is high. Increasing auction prices will have a strong stable demand in the world market. Also the demand of Ceylon tea on the globe market has increased, even though china tried out to complement the taste of Ceylon tea we were empowered to keep carefully the standards of our own tea in the global market. Supply of all the plantations increased the demand for Ceylon tea. Also CTC packet tea has a high demand for the drop of Assam tea. If Sri Lanka can keep up with the same quality and preference, the amount of importing countries increase rapidly. However the quality of the product should be maintained even in the erratic weather of weather. Colombo auctions help the SLTB to keep up the equilibrium of the market by exporting the market surplus of tea. Also Sri Lanka can promote more in the world market and improvements of technology can improve the demand in the global market as well as the changes on the weather and months can fluctuate the source. Sri Lanka is planning on high demand in the Ramadan in July and in winter where else the supply of plantations should be high too. All the stakeholders' plantations, broker agents, SLTB, manufacturers will be looking forward and expecting the boom of this industry. Brook-bond Lipton Ltd (Unilever), Lyons Tetley, Dilmah and leading brands gets the demand in the market where they keep up with the supply. New technology, fluctuating price, improvements can drop the demand. Country will always equilibrate the demand and supply with getting the best price paid in auctions.

(Table 02)

Tea industry of Sri Lanka has a century old history. Exporting poor quality tea can be move forward of the world market if they demanding them, to maintain the specifications of the tea exports in Sri Lanka SLTB has applied ISO 3720 to restrict the export of low quality. Even though we have restricted exporting but not importing poor tea to the country. Somalia, Ethiopia is some countries who get them for mixing purposes. Sri Lanka will likewise have a chance of reaching their demand as well if we can export the poor qualities that happen to be produced in the united states. Russia and past Soviet Republics are the largest customers of Sri Lanka tea followed by Midsection East and North Africa. Also reduce in olive oil prices can results the demand for our tea from the center East countries. Additionally the global current economic climate make a difference the demand and the supply of tea. The world's first ozone friendly tea is made by Sri Lanka, promoting for healthy mindful beverage can boost the demand and profit us.


Propagation of tea plants pioneered with English and fairy spread of plantations helped the expansion of the cultivations. Other than the Black and Green tea extract Gold Tips tea, Golden Tips tea, Instant tea, Packet teas are a few of the products we export. China, India, Sri Lanka, Bangladesh, Kenya, Tanzania, Zimbabwe are some significant tea producer countries. International trade will benefit us in the long run to the industry. Western european Good Trade Organizations have 17 lovers in Asia and Africa to import tea including Sri Lanka. Good trade on the list of countries in the trade will benefit us in reasonable costing where we can reduce the expense of creation. Also countries will have a long last trusted marriage in trading. Tea fair happened in Hong Kong, china in '09 2009 where more of the customers from across the world has taken place. Sri Lanka grabbed an enormous demand for Ceylon tea by joining the Tea Fair by promoting the tea exports. They are some advantages we shoot from international investments.

Sri Lanka happens to be under negotiation with the Iraq to increase exports in packet tea. Economic integrations numerous countries will be gain for main exporters like us to truly have a significant develop. Iranians are getting Ceylon tea within an unofficial way where this negotiation will give the good quality tea to enter into the marketplace and the center men will prevent from the two countries. Cooperation with the planet Bank to aid Sri Lanka as a middle class earned country can beneficial to us to create a firm marriage and establish, utilize the resources. I'm glad to say even Sri Lanka is eligible for IBRD financing with the World Bank. Also Sri Lanka and Kenya acquired a dialogue when our plantation ministry went to there and comprehended about the importance of the tiny manufacturers in both countries looking at their systems. Ministry was enthusiastic about this integration of the proposal for a jv with free lands for coconut cultivations in our country in change of shopping for the plants.


As a member of South Asian Associations for Regional Assistance (SAARC) the conflict between Pakistan and India affected our Tea industry with India too. Indo Lanka free trade contract helped to emerge new changes to the industry where TATA tea Ltd disperse their plantation to Sri Lanka and industry advised it will serve the Sri Lankan market. Economic integrations will aid us to remove the obstacles to trade among the intergovernmental contracts. The trade blocs can be as free trade areas or preferential trade systems. The tariffs and non tariff barriers will be decreased by the countries' free movements or goods. Sri Lanka helped bring employees from India to the plantations, where now we have another category called 'Teas Tamils' and get spread around of colonies around plantations. Sri Lanka will always look for new friends on the planet market now after the end of conflict to build to raise the current economic climate of the country. End of terrorism after 43 years the attention of the world increased for us. Many exports and imports occurred with no fear. Increase in the travel and leisure sector helped us to increase the investments. The new port has been built-in the Hambanthota by the Chinese federal to help Sri Lanka. This will likely facilitate our administration to ease the congestion of the plug-ins. World Trade Firm (WTO) gets the jurisdiction over tea exports. Which often regulate commodities on the market. Also Food and Agriculture Business (FAO) of United Nations will play a huge role in the tea industry of Sri Lanka as an exporter. Exports aid the raise the foreign currency for us. The Honest trading Effort (ETI) a partnership of NGO's is principally concerning about placing criteria of labours internationally recognised. Ethical trading goals on the labour protection under the law in the plantation and revel in goods. Also Tea Sourcing Relationship (TSP) created 1997 to understand the fluctuate conditions of the plantations and validate the continues audits in the UK based Companies including R. Twining& Company Ltd. Integrations with many countries can help us to raise the market of the country. Sri Lanka should take the entire access of FTA's from integrations.


Our president Honourable Mahinda Rajapakse mainly emphasis on the young and full of energy businesses to enter in the marketplace and induces in the exports. To keep the criteria of the tea industry and also to create a competitive place in the market is a huge task we have try too. Companies like Unilever and Tata will have mass show of the world market and will be supplied off their own plantations. The small manufacturers will have a good demand in this situation where we must moreover can focus on our own exports. Highlighting our value chain to go with our competition in the international market, we can focus on branding. Acquisition of Tetley offered Tata to capture the united kingdom and Western tea markets. Also being the worlds first ozone friendly tea manufacturers we haven't used any priorities to market our Tea and pay a role on the market.

Capturing a distinct segment market to a wide market with tea we can concentrate on differentiated products to the marketplace. Other than Black color and Green tea extract Sri Lanka has produced Natural and Dollar super fruit Tea where it proved a decrease in the demand. But if we can promote and become innovative to build a competitive border we can concentrate on a larger demand for them. Packet tea has a demand in Western counties where we are wedding caterers them, but making them more innovating and unique can aid us. If main exporters like India or china will continue steadily to get more market, we will have to be the purchase price taker and those to be price designers. When the source surpasses the demand we will have to face more inescapable circumstance so that it is important to create a good competitive edge. As the largest single tea manufacturer Sri Lanka has to think about the international demand for our Tea and exactly how much we can meet up the desires and make use of the proper resources in a powerful way. Without having to be in the traditional way we have to come out of the restrictions and employ the god's surprise to our nation and show the world our unique preference of tea. Sri Lankan enterprisers should start and can diversify from the marketplaces. But rather than capturing a new market it does apply for us to go focus on product differentiation.

(Stand 03)


Looking at the earth market and importance to Tea, that i have talked about in the aforementioned article I Rifna Rajab is planning to get started on a business 'Tips Tea Dealers' in reselling Tea to the local market.


The perspective of Tips Tea Dealer is to be the most competitive and lasting tea maker as a tiny holder in Sri Lanka.


Mission is to provide the best value tea to the marketplace to predict their needs and fulfill the stakeholders.


Increase profitability by producing quality tea in 25% by 2012.

Increase market share with more marketers by 10% before 2012.

If I wish to succeed in the market as seller I have to concentrate on a lot of things before I start up the business. I will have the administrative centre. Inside Sri Lanka, tea market takes on a monopolistic market. The access barriers are very low for a retailer or buyer. Also there a wide range of companies in the same industry as retailers and clients too. Getting the appropriate capital and having with rules and regulations will aid me to begin the business enterprise. Also the demand for tea in the global market is increasing as well as the local market. Even poor quality tea which can't be exported can use within the country. Buyers will buy them for many purposes such as combining. So I think the demand will be high, even price will fluctuate based on the demand from buyers. Moreover to master competition thus there will be no price conflict. All retailers' prices will be comparatively same. Also starting my business in Kandy will gain me with the natural resources, weather where there a wide range of firms that I can sell my products that will assist in my need.

Government, Sri Lanka Tea Board, Factories are my main stakeholders. I must cater and make them satisfy is very important. Following SLTB and authorities rules and make sure they are aware and update them is important. Also if I can create a good relationship numerous factories I could buy refused tea in mass for a cheaper price for mixing purposes. Also differentiating the merchandise such as Particles, Dark Peko, Orange Peko, fenis can assist in my market. Retailing quality products in packets and paying the factories promptly can gratify my stakeholders and I will have the capability to face inescapable circumstances such as natural weather, vegetation and demand to reach our prospects.


Increase the brand personality 'Ceylon Tea' more to the global market.

Maintain the specifications in exporting tea.

Attract more importers of Ceylon tea attending Tea fairs, more economical integrations and free trade areas.

Providing permits to all the sellers and present specialist to buy tea in bulk from plantations.

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