Fair Trade
FAIRTRADE (Flocert) Relevant to the Ceylon Tea Industry?
The consumer has the power to ultimately control the level of estate returns. I would also suggest that you demand actual named estate tea for authenticity of source and truly exciting teas. We all know a natural product will vary from year to year but that is part of the excitement of drinking estate teas.
Unfortunately, especially in the U.K. the commercial market is in control of the marketing of tea using basic terminology such as Breakfast, Afternoon or Green tea. The packaging is more concerned with highlighting the company who packed the tea or sells it rather than where the tea comes from or when it was made.
When you purchase a Robert Wilson's Ceylon Tea, the packaging shows the district that the tea comes from by exhibiting the internationally accepted logo for the district it was made in and often carries the estate name. As we work directly in Sri Lanka and are registered with the Tea Board there, the teas are tested to ensure that they are from the area stated.
The island has 7 different districts covering a variety of elevations which produce some 32 different agro climates. It is these agro climates and how an individual estate is situated to receive two seasonal winds off the oceans that make Sri Lanka (Ceylon) so different to other producing areas and the teas so exciting to consume like wines from different regions.
Key Questions We Must Answer
Our purchases are negotiated for a special service, with fairness to the estates as our guide. If asked to deal through the 'Fairtrade' (Flocert) organization we are happy to consider this but there are two moral questions that we have to satisfy for ourselves:
- Will this improve the return to the estates over and above the system that we operate with them at present?
- Do the estates wish us to change to this system rather than operate directly at a higher price structure for their personal service?
In joining Fairtrade (Flocert) we would not be allowed to continue our present policy of working directly with the estates and would have to purchase auction teas.
FAIRTRADE (FLOCERT) OPERATION IN SRI LANKA - 2015/2016
Each country of production has their own system of production and in Sri Lanka (Ceylon) there is a specific barrier to the effectiveness of fair trade organizations. Under the land reform act the Government took over the ownership of all company estates and therefore as the owners they are duty bound to invest in worker welfare facilities.
Because of this situation Fairtrade (Flocert) have placed a floor price of $2.60 per kilo which means that should their members purchase teas at below this level they would have to top up to that price level to the estate.
| JOINING FEES - £ to EURO € Oct 2016 = 1.12 | |||
|---|---|---|---|
| Single Estate | Fee | Multiple Company Estates | Fee |
| Central Structure = Offices | €1,568 (£1,400) | Co Office | €1,568 (£1,400) |
| 101 - 499 Workers | €2,727 (£2,435) | Per Estate | €1,261 (£1,051) |
| 1,000 + Workers | €3,977 (£3,551) | Per Estate | €1,886 (£1,572) |
| Per Factory/Packing station 11-100 Workers | €420 (£350) | Per Premises | €420 (£350) |
| Example - Group of 5 estates 500-1,000 Workers apply 2 products - tea + Spice | |||
|---|---|---|---|
| Central Structure | €1,568 (£1,400) | ||
Market Price Analysis
Floor price by Fairtrade for tea $2.60 (£2.13) per kilo = Therefore they never pay a top-up fee as the annual average price for Ceylon tea is Rs.430/= ($2.92) & high grown teas are higher still particularly in the quality seasons.
As shown Fairtrade will pay $0.50 (£0.27) per kilo sold into a Worker account on every kilo that is sold under their certification = cows, sewing machines, uniforms, a mini bus if not already in place. Whilst this does not help the estate directly it does have a small advantage in retaining workers who get the extra help.
Re-planting Programme Costs
As I have stated elsewhere all estates should be operating a re-planting programme based on an average of 2% of the total tea bearing area every year. At Low elevation this should be on a 35 year cycle and at high elevation on a 60 year cycle with costs at £15,307 per hectare planted at 2016 exchange rates.
35 year replanting cycle
Cost: £15,307 per hectare
60 year replanting cycle
Cost: £15,307 per hectare
A huge burden for the industry to bear on top of paying the highest wage levels of any tea producing region in the world. These matters weigh heavily on our decision making as to whether we should certify or not.
Case Study: Maskeliya Plantations
5 estates producing 300,000 kilos
• Sold 70,000 kg to Fairtrade (Flocert) = $35,000
• This equalled £17,949 paid into a worker fund (not the estate)
• Also sold quantities via auction and direct sales at much higher prices
Our Conclusion
It is our opinion Sri Lanka (Ceylon) has some very special conditions for producing amazing teas but its terrain consists of steep sided rocky mountains and deep valleys that are only suited for expensive hand plucking and it cannot compete with the commercial buyers buying cheaper machine plucked teas from other producing countries with undulating tea fields.