The plight of migrant workers in the Gulf

In 2014 an estimated 300,000 men and women left Sri Lanka to work primarily in the Gulf States. The majority of men went into the construction industry whilst the women accepted jobs as housemaids. They went because they wanted to provide for a better life for their families, and the government was happy for them to go; not least because the money they send back (remittances ) amounts to $7billion; or 9% of GDP.

What the migrants didn’t know or expect was that the contracts they were promised would never materialise and many of them would end up working in conditions which amount to modern slavery.

This recent report in the Sri Lankan Daily Mirror is a good place to start: www.dailymirror.lk/article/Fotune-favoured-Rani-from-the-jaws-of-death11936

Sri Lanka does not rank highly on the Global Slavery Index, yet pollsters estimate there are approximately 26,000 Sri Lankans trapped in a form of modern slavery in 2016;

My guess is that you might find this hard to believe, but that is because:

  1. Slavery is illegal, so it is either hidden tacitly ignored by the authorities or denied by the perpetrators. But in any case it goes unrecorded; one example Ask yourself next time you stop at the traffic lights in Colombo. Do the beggars you see keep the money you give them or are they forced to hand it over to  others in exchange for the most basic of food and shelter; in effect slaves. We could go on.. the case of sex workers would be another instance
  2. More importantly; most Sri Lankans trapped in slavery are not living in Sri Lanka but in The Gulf States
Facts and Figures: Migrant workers
  • An estimated 1.7 million Sri Lankans are employed abroad affecting 1 in 4 households.
  • A total of 300,413  left for employment in 2014 of which 63.2 were males and 37% were females
  •  80% of females were employed as domestic workers
  • The Middle East is the largest source of remittances: 60%
  • Saudi Arabia, the UAE, Kuwait and Qatar are their main destinations
Why they go

You can think of three groups of factors; geographers will already be familiar with them:

Push Factors:
  • Low incomes whether in rural or urban areas; not enough income to adequately support a young family. Even where there is relatively full employment, wages are low. A textile factory worker will not earn much more than 25000 rupees per month; not enough to sustain a comfortable way of life. The same is true of office workers. Few are paid a living wage.
  • Lack of opportunity for advancement
  • Political patronage at a local level
  • A general feeling that life must be better elsewhere
Pull Factors
  • the promise of high incomes
Facilitating factors
  • migration to the Middle East is a well trodden path; often an individual will know of people in their community who are already migrants; they hear the stories…
  • some migrants already have people living and working in the Gulf who can help them get jobs
  • local agents and their contacts who are active in local communities arranging documents
Plus, of course they have no idea of what is waiting for them when they get to their destination
Where they go and where they come from

The top destinations are Saudi Arabia, Qatar, The Emirates and Kuwait with smaller numbers heading to Oman and Jordan. Whilst Western province is the biggest exporter in terms of numbers; in terms of the % of the population it is, in fact Ampara Trincomalee and Puttalam who export the biggest % of their population; (around 3%) annually

Life for a domestic migrant worker in the Gulf States

The migrants are often recruited by unscrupulous and unregulated agents on the promise of high incomes. The agents or employers not only pay their fares, but also arrange for passports and visas, sometimes illegally.

Migrant labourers often receive a monetary advance as an incentive to work overseas. What they are not told, or don’t realise is that these incentives will bind them into debt upon arrival in their host country. Worse is to follow: recruitment agencies in the host country regularly commit fraud by changing the agreed upon job, employer, conditions, or remuneration after the worker’s arrival.

A recent report alleged that the police and other officials in Sri Lanka accept bribes, and some sub-agents reportedly work with officials to procure forged or modified documents, or genuine documents with falsified data, to facilitate travel abroad for those desperate for a better life. The problem is that these documents are not legal. The migrant enters a country with these documents and is immediately at the mercy of their employers who could report them at any moment.

The report also observed that the Sri Lankan government does not have the ability to regulate sub-agents under the SLBFE, which officials recognized as a problem contributing to trafficking.

The situation is made worse because the migrants have little knowledge of the situations they are going to end up in. For domestic workers in particular, this involves the Kefala system, which ties the domestic worker to one employer, effectively giving that employer full control over the migrant worker. (click on the link to check this out)

The reality is that the migrants end up in slavery. Their passports are often taken from them. Employers routinely pay well below what the workers were promised, and sometimes refuse to pay their workers at all. Housemaids in particular live under conditions similar to house arrest: subject to mistreatment, abuse and both physical and sometimes sexual violence.

Kuwaiti journalists attend a Human Rights Watch press conference in Kuwait City on October 6, 2010 announcing a new report that shows abuse of domestic workers in Kuwait is rising, and maids in the Gulf emirate face prosecution when they try to escape. AFP PHOTO/YASSER AL-ZAYYAT (Photo credit should read YASSER AL-ZAYYAT/AFP/Getty Images)

This summary from Digital Commons says it all
  • Complaints: 12,061 of which 78% females
  • Physical and sexual harassment: 96% female
  • Not sent back at the end of contract: 92% female
  • Not payment of agreed wages: 81% female
  • Breach of contract: 62% female
  • in 2009 333 deaths of housemaids working abroad were recorded
  • 2009 survey states about housemaid returnees to Sri Lanka
  • 48% were assaulted by someone from the employer’s household
  • 52% were not paid the promised salary
  • 84% were not paid for their overtime work

The situation for the women who end up in domestic work can be grim and there are plenty of examples you can find for yourself by going online: For example have a look at:

rothna-saudi_arabic_mdw_op-ed-october_2015-photo

see link; serious violence in the Gulf States

this an extract from another victim’s story

“Even if I went to bed at 3:30 a.m., I had to get up by 5:30 a.m I had continuous work until 1:00 a.m., sometimes 3:00 a.m…. Once I told the employer, “I am a human like you and I need an hour to rest.” She told me, “You have come to work; you are like my shoes, and you have to work tirelessly.”

The conditions were getting worse. I told the employer that I wanted to leave but she would not take me to the agency. [Her husband] would say, “You want to go, you want to go?” and he would pull my hair and beat me with his hands. He went to the kitchen and took a knife and told me he would kill me, cut me up into little pieces, and put the little pieces of me in the cupboard By this time they owed me four months’ salary.

There are more and more innocent women going abroad, and planning to go. It is up to the women to care of themselves. The [Sri Lankan] government gets a good profit from us; they must take care of us. They must do more to protect us.”

Kumari Indunil, age 23, a former domestic worker in Kuwait

Qatar : The Plight of construction workers

This You Tube clip speaks for itself and needs nothing extra from me

So why is this happening?

Simple answer? Nobody cares!

  • So far as the domestic employers in the Arab world are concerned there is probably little that can be done to combat the blatant racism that exists or to combat an arrogant attitude which views servants as property, and is simply a reflection of the values and attitudes of wealthy Kuwaiti, Saudi, Qatari and Emirati society. They simply don’t see what they are doing wrong. Their servants are theirs to dispose of as they wish without threat of law; they are not viewed as equal human beings in any sense. This clip sums it up.
  • Migrant workers have no legal protection or legal rights in the countries where they work., plus they are usually unaware of what their rights are
  • Some feel that the exporting governments do little to put pressure on the host governments to remedy the situation and do little to support them when they get into difficulties
So what needs to be done?

To begin with  there is a need to collect data to improve understanding of:

  • who is migrating
  • from which villages
  • what factors govern their decision to migrate
  • what factors influence the choice of where they migrate
  • what role recruitment agents playing the migration process; how do they persuade people to move? Are agents regulated, audited or even licensed?

Mapping the results allows NGOs and government organisations to focus initially on areas which are hotspots of out-migration to the Gulf and then to develop a better understanding of the migration process.

After that there are two approaches that could be considered.

  1. Reduce the flow of migrants to the Gulf
  2. Improve the conditions for those who still want to go
Reducing the Flow
  1.  The obvious answer is to give people a positive reason NOT to migrate in search of work. Poverty is the driving force. Now the government would argue that only 8% of the population fall below the poverty line, but that line is drawn very low. Unemployment per se is not the issue. However, large numbers of Sri lankans earn less than 30,000 rupees per month; this is not a living wage, so what can be done? There are options:
  • a realistic minimum living wage for paid employment enshrined in law would be a start; companies making big profits on the back of cheap labour may not like that idea..
  • improved subsidies to farmers to raise their incomes; this could be paid for out of taxation if taxes were collected more efficiently.
  • looking at ways of decentralising economic activities from the large cities like Colombo, improving infrastructure and road connections in order to spread economic growth. The governments Megalopolis plan could be a large step towards achieving this

2.  Help local people to develop small scale businesses using cheap forms of credit and support from local NGO’s like Sevanatha and The Institute of Women in Management  and the women’s co-operative bank

check out the links and you will see that what they do is:

  • Equip leaders to negotiate with local authorities on behalf of their communities to improve their socio-economic conditions
  • Develop local credit /savings bank operations run by and for the local community (often by local women) which can fund small businesses locally
  • Support and encourage women to take a bigger role as community leaders or as small scale entrepreneurs.

What the above can do is help to create cohesive communities and develop viable economic alternatives to migration for local people.

3.  Educate people to the stark realities of life on a construction site in Qatar or imprisoned in a home in Saudi Arabia : a negative reason not to go.

  • set up groups led by victims to visit communities to tell their stories
  • disseminate material to vulnerable communities on the realities of working conditions in the Gulf: it could be illustrated books, video material, victim narratives
  • mobilise  the press to tell these stories and place the spotlight.

AT the same time pressure must come from politicians, NGO’s the media and local people to force the authorities to ensure all agents are properly registered and licensed via the SLBFE for example. The issue of licences must be on the basis of conditions, which are stringent, open, and subject to scrutiny and enshrined in law. All agents should be required to lodge a bond with the authorities to be used to meet the costs of repatriation, and loss of earnings where migrants fall foul of local practices in the Gulf and need to return home.

Unlicensed agents must be prosecuted, along with corrupt government officials and police, as must those who knowingly mislead clients and do not exercise a duty of care. At present very few licensed agents are audited and few are ever prosecuted.

b.  Addressing the situation in the Gulf States

 The surest way to force a change in attitudes amongst employers in the Gulf is to dramatically cut down the flow of migrant labour. In that respect the SLBFE should be taking pro-active steps to warn migrants of the potential situations they could find themselves in.

In the meantime: there are issues to overcome:

  • governments from source countries like that of Sri Lanka (India, Nepal, Pakistan also) need to become more pro-active in lobbying host governments to ensure their citizens are protected.
  • the appalling nature of working conditions in the construction industry requires immediate attention. British companies engaged in building stadia in Qatar who appear to be indifferent at best to the plight of workers on the construction sites should be prosecuted under  the Modern Slavery Act where they are failing to heed the warnings of the British Government over working conditions.

Steps that should be taken:

  1. The dismantling of the Kefala system immediately.
  2. Migrants must be allowed to retain their passports at all times.
  3. Migrant workers must be afforded through their visa status full rights as they would apply to resident nationals, enshrined in law.
  4. Workers need to be better educated in terms of their rights as migrant workers. Lack of awareness on legal procedures, lax law enforcement  and the inability to communicate in the host country’s local languages all leave migrants vulnerable to exploitation.
  5. Employers whether companies or private households should be prosecuted where clear human rights abuses have occurred and must be made to honour the contracts they signed again under penalty of law.
  6. In the case of Qatar all countries engaged in qualifying for the next World Cup should threaten to boycott the event unless conditions change.

Within the Gulf States the embassies of the “exporting” countries should at least have staff fully trained to support abused victims. There should be a list of all addresses where migrants are living; regular checks made on them visits to ensure health and well being, wages are being paid, and they are not subject to mistreatment or abuse.

Key legal reforms are needed to ensure the most vulnerable workers, particularly domestic workers, who must be covered by basic labour law protection.

Steps must be taken to make certain victims are not further traumatized by arrest and detention if they run away to escape violence or exploitation.

Despite their contributions to their host countries, women migrants are not generally assured of basic protection. A simple 40-day mandatory training programme by the SLBFE does not simply address the concerns of those who seek foreign employment. Employers and recruiters alike must be held responsible for their role in exploiting the helpless workers.

What this needs, however, is co-operation between the sending countries and the host countries. However, if the host governments are unwilling to comply then governments like that of Sri Lanka should take steps to stop the flow of migrants to those countries, which they can do at the exit airports. Although painful in the short run tapping the economic potential of the poor at home, turning them into productive individuals through community and self help schemes could be a way forward and would spare many the fate that awaits them at the hands of  employers in the Middle East.

 

https://www.youtube.com/watch?v=Z7pkhFnwXkImeasures should be taken to challenge perceptions about migrant workers, in order to recognize their values and contribution to the development of the country.

See more at: http://www.dailymirror.lk/115002/Vague-promises-of-greener-pastures-for-migrant-workers#sthash.iHusvVN2.dpuf

 

Challenges ahead for the Sri Lankan garment industry

Many see Sri Lanka as the next “tiger economy” in Asia. It is not hard to see why. The country has stabilised after the end of the conflict in 2009. Economic growth has been around 7% for a while now. However, exports have been in decline recently. In 2000, exports stood at 30% of the Gross Domestic Product. By 2014, it had gone down to 15%, indicating a reduction of 50% percent.
The issue is that the manufacturing sector is lagging behind, according to  the Prime Minister Ranil Wickremasinghe. In his November budget statement he seemed also to suggest that the apparel industry should no longer be seen as the mainstay of the manufacturing sector, calling instead for a diversification which could include car assembly and car component manufacture as well as high tec manufacturing.

So where is the emphasis going to be? Well according to Prime Minister Ranil Wickremesinghe:

I see Sri Lanka’s economic future as a services hub;  a niche manufacturing destination to produce goods which plug into regional and global value chains, particularly light engineering; and a location for high-value agricultural products such as fruits, vegetables and dairy, both to service the rapidly growing tourism sector and for exports, especially, to the Middle Eastern and Indian markets”.

Exports need a boost and it seems that this is targeted to come from the development of “light engineering”, not something Sri Lanka has much experience of. So whether this will turn out to be a wise decision is something that will come out in the wash.

 An emerging economy

Sri Lanka has a lot going for it right now,  and the pre-conditions for strong economic growth look to be in place.

  • increasing political stability
  • the undoubted quality of the labour force,
  • high levels of literacy amongst the workforce
  • a strong business culture
  •  the emergence of a new breed of young ambitious entrepreneurs
  • a go-ahead government with ambitious plans to fast track growth and with  a clear vision for the future

So it isn’t that surprising that Sri Lanka plans to achieve an economic growth beyond 8% in the next three years.

The Megapolis project (see my blog posted 24/02) is a further example of the ambition of the current government as it seeks to leverage a number of locational advantages:

  1. Location; Sri Lanka is perfectly placed to come a transportation hub. It is equidistant between Europe and Far East,  on the major East-West shipping lanes and with easy access to lucrative Middle Eastern markets and rising African markets. India the major industrial player in the region is just 20 miles to the North.

lanak location

credit; sagt.lk

2. Improving trade relationships with its neighbour, India, with the EEC and the USA ( see the Indo-Sri Lanka Free Trade Agreement for example.)

3. High levels of support and investment from China

So where does that leave one of Sri Lanka’s traditional stars; the apparel industry?  Is it in danger of being ignored? What part, if any, will it play in the development of the new economy?

The garment industry has long been a standard bearer for Sri Lankan manufacturing. So what price it can make an increasing contribution to export performance and economic growth? The portents are not promising.
Prospects and Challenges for the Sri Lankan Garment Industry

A note on the role of the textile industry in the development process:

The textile industry often plays a part in the development process for a number of reasons

  • the technology is relatively accessible and affordable
  • there is a large global market to compete in
  • the industry is price sensitive so emerging economies with lower labour costs enjoy a comparative advantage
  • textiles/garments are labour intensive and create significant employment
  • the industry develops industrial/manufacturing skills in the labour force
  • it also makes use of existing skills in the population and draws on existing cultures

The garment industry is already a major industry in Sri Lanka; the question is how can it evolve to help drive the economy forward?

Some key facts

  • In 2014 Textiles and garments accounted for 44% of exports (Export Development Board (EDB) Sri Lanka) and 39% of industrial production
  • it employs nearly 1 million workers both directly (300,000) and indirectly (600,000)
  • the industry accounts for 1 in 5 of all industrial establishments in the country
  • In 2013, earnings from textile and garment exports were 4.5$billion  making it the highest foreign exchange earner
  • Exports to the EU and the US, the two main markets recorded annual growth of 6.8 and 21 percent respectively.
The World Bank View

Accounting for $4.4 billion of its exports, Sri Lanka’s apparel sector outperforms other South Asian countries in terms of quality, lead time, reliability,  social compliance and sustainability.  Although its apparel prices are higher than competitors, Sri Lanka produces more sophisticated products. As China gradually scales back its apparel manufacturingSri Lanka stands to gain market share, but currently not as quickly as some Southeast Asian countries.

However, In order to maximize its competitiveness, a new World Bank report recommends that Sri Lanka should:  

  1.  Enter into more trade agreements to help diversify export destinations for existing products, such as active wear and intimate apparel
  2. Expand into new products such as formal wear and high-end outerwear that require higher skills,
  3. position as regional apparel and textile trade hub taking  advantage of its infrastructure advantage
  4. Attract foreign investment through adopting clear investment policies, which currently remains at only 2 percent of GD Increase integration with South Asia and reduce tariffs for the import of man-made fibers, which accounts for 50% of Sri Lanka’s industry inputs, while encouraging domestic growth
  5. Promote industrial relocation
  6. Attract more female workers to relieve its labor shortages

The main players

The industry has some big players notably MAS Holdings and Brandix plus a number of small and medium factories make clothing for a number of global brands: the list is impressive: Nike, Victoria’s Secret, Next, Gap, Speedo and Tommy Hilfiger; and it supplies major supermarket chains such as Marks and Spencer and Tesco.

 

textile-industry-in-sri-lanka-7-638

The Location of the Industry

30% of all factories are located in Western province (around Colombo and Gampaha), especially the larger enterprises whilst the small and medium enterprises tend to be more dispersed. There is also a significant presence in the industrial export zones; see maps below

western-province-map

Western Province

source: Maps of the World

 

zones

Export processing zones

source: BOI Sri Lanka

The Garment Industry: a SWOT analysis

Strengths; 

  • location ; situated on the main sea routes is an attraction for manufacturers.
  • Availability of skilled labour, educated and trainable work force
  • Some of the most modern factories to be found anywhere in South Asia
  • a significant competitive advantage in terms of certain garment types: The lingerie, swimwear and sportswear segments, which require a high degree of skill and utilisation of advanced technical fabrics for manufacture, stand as Sri Lanka’s main apparel strengths.
  • ability to handle high volume orders
  • a reputation for quality short lead times and on time delivery; Sri Lankan manufacturers are now leading the way in terms of reducing  design – to needle – to delivery,  down to a matter of weeks rather than months: this from Sriyan de Silva Wijeyeratne, managing director and CEO of Textured Jersey Lanka.

“It is also about speed.  Brands are now moving towards fast and reactive fashion models. Where lead times were six months a few years ago, they are now six weeks. This makes supply chains much more compressed, and hence the challenge to be nimble.” This is where Sri Lankan companies expect to maintain their  advantage, thanks to a history of fulfilling orders to deadline for international brands and sourcing agents.

  • a reputation for conforming to the highest standards of working practices, working conditions and labour laws (although this last point has been challenged by two visiting EU commissioners recently).

see Daily mirror article 27/04

Listen here to Sami Bandara, general manager of a medium sized apparel company based in Colombo on the strengths of the industry

Weaknesses

  • Lack of marketing skills and a low level of marketing information, and knowledge about export marketing.
  • the need to import all raw textiles
  • high absenteeism and labour turn over.
  • availability of employment in other industries and foreign employment opportunities
  • too concentrated in Western province; needs to decentralise into rural areas, but a factory culture has not yet established among workers in rural areas
  • low labour productivity and Increasing labour cost
  • the absence of a growing “local” market in neighbouring countries which would provide an alternative or addition to the USA and Europe
Sami’s view on weaknesses

The labour leakage/shortage is a critical issue because it means that factories are working at maybe only 70-80% capacity. It makes meeting delivery targets that much harder. At present the leakage rate is anything between 3% and 7% per month depending on the company according to Sami Bandara

Sami again; this time on possible solutions

Cultural factors are at play here plus there is a stigma attached top working in factories. In addition women are harrassed on their way to and from work by men, which is both unpleasant and unnecessary. The long hours and often poor conditions in workers’ hostels are also factors which it seems discourages women from working in factories.

Opportunities
  •  re-instatementof GSP+ now looks to be a a strong probability. This will  allow Sri Lankan garment manufacturers to export to Europe without incurring taxes or quotas
  • the major players like Brandix for example look set to expand textile production in Sri lanka, thus reducing reliance on imported textiles. The country already supports four main fabric mills, with companies like Textured Jersey – a subsidiary of Brandix – having expanded regionally in recent years. and this is necessary because the GSP+ scheme mandates that apparel exports be manufactured using regionally sourced fabrics, meaning Sri Lankan garments made with fabric from major source markets in East Asia will not benefit from GSP+.

    A note: 

The EU’s “Generalised Scheme of Preferences” (GSP) allows developing country exporters to pay less or no duties on their exports to the EU. This gives them vital access to EU markets and contributes to their economic growth. the standard/general GSP arrangement, which offers generous tariff reductions to developing countries. Practically, this means partial or entire removal of tariffs on two thirds of all product categories.

GSP plus: the “GSP+” enhanced preferences mean full removal of tariffs on essentially the same product categories as those covered by the general arrangement. These are granted to countries which ratify and implement core international conventions relating to human and labour rights, environment and good governance.

Threats

  • increasing competition especially in terms of lower labour cost from Bangladesh, Cambodia Laos and Vietnam Myanmar
  •  Sri Lanka’s labour costs are increasing at a faster pace than productivity
  • competition for labour with other emerging industries especially in Western Province ( see Prime Minister’s commets re manufacturing “mix”
  • the necessity to reduce lead time from the manufactures to the shop, and the distant suppliers’ inability to deliver the value added garments on time
Capturing the Niche Market
  • Large companies like MAS Holdings and Brandix are now moving to a complete integration of the manufacturing process where design, manufacture and packaging are all sourced “under one roof” which cuts costs but more importantly cuts down the time iot take sto bring new designs to market
  • They are also moving to establish own high quality brands
  • increasingly Sri Lankan companies are developing niche products which gives them a competitive advantage in the global market place

Sami’s company Textile Lanka occupy a specialised niche in the market which gives them a competitive advantage. Listen here for a run down of the way his business world

The Future

It seems inconceivable that Sri Lanka should ignore one of its most successful industries as it continues its march towards higher levels of prosperity. Hi Tec industry will come to Sri Lanka but as yet there is a shortage of highly trained and qualified personnel for the communications and IT industry. Similarly where are the engineers? Developing them will take time.

And in the meantime Sri Lanka needs to nurture is garment industry. However, where are the state of the art garment research institutes? Is there a college or institute specifically aimed at creating the next generation of marketeers and entrepreneurs? Should more emphasis be placed on developing home grown fashion designers and should fashion design be given greater status within the education system? How about a bringing major international fashion show to Colombo? Finally how about the government getting behind the industry both in words and deeds. The garment industry is a real “gem” that deserves recognition and support from senior ministers.

Solving the labour shortage is also a key issue. Quite why the industry has such a low status is a puzzle but a long term campaign to win the hearts and minds of potential workers needs to be undertaken. Perhaps TV programmes which don’t show the  industry in such a negative light will help, as would encouraging words from senior members of the government. In the meantime harassment of female workers has to be stopped.

Plus,  pay and working conditions need to be improved. Although many owners argue that they pay a competitive wage they may need to review  their approach. 27,000 rupees per month is not a high salary. If it was men and women would be clamouring to work in the factories rather than leaving in droves which is what seems to be happening. Sami argues that people driving tuk tuks would be better employed in the garment factories. However, if they can earn as much or more driving a tuk why would they work in a factory?

The garment industry has the capacity to evolve to meet oncoming challenges, and it will need to do so if it is to remain viable. The UK lost its textile industry 100 years ago because it did not move with the times. The same does not have to be true for the Sri Lankan garment industry.

Listen here to the full interview

Sri Lankan Tea: a primary product?

Tea exports bring in around $2500 million annually to Sri Lanka and account for around 14% of exports by value. True, export earnings have fluctated but the overall direction of revenue is up.

Tea is one of Sri Lanka’s success stories not just because it produces arguably the best tea in the world but because when you take a closer look, the Sri Lankan tea industry doesn’t conform to the stereotypes of primary production.

The stereotype

Tea is a commodity; a primary product. We tend to think that primary products are produced at low cost, and sold in bulk at relatively low prices. Little value is added by the producer. Instead the product is exported to more advanced economies where value is added. So the processing companies mostly in the developed world buy in cheap and sell at a big profit: and, of course, it is all “unfair because the poorer producer countries are being exploited but are unable to do much about it.”

Time to re-evaluate

When I was an examiner I read this kind of stuff on a regular basis; but how true is it in the modern global context? I think it is a generalisation based on a eurocentric view of the world and, in the case of Sri Lanka, it is wide of the mark.

For a start only about 35%  by value of Sri Lankan tea is exported in bulk. The rest is sent in packets and tea bags not just as black tea but as fruit tea, instant tea, single estate varieties, organic tea and so on. In all cases it is obvious that value is being added not at the point of consumption but at the point of production. So what that suggests is that teachers and exam boards in particular need to re-examine the old stereotypes of primary products, at least where tea is concerned

Increasingly within the tea trade the emphasis is adding value before export and that is certainly the case with Sri Lankan tea. What that does is enable Sri Lankan companies to compete successfully in the global market.

An example

Let’s just consider one example; a company trading and succeeding in a highly competitive global market: Eswaran Brothers, which is based in Colombo.

The company was founded in 1963 and has become one of the leading value added tea exporters in Sri Lanka. Why are they successful?

  • they place a strong emphasis on high quality tea blends using tea from Sri Lanka and Kenya
  • they package their own tea creating a number of different brands to appeal to different markets and age groups (for instance iced tea, lemon tea fruit tea for the younger age groups)

todays_brand         jolly_sun_brandolinda_brand

A cup of freshness                       Tea of the tropics!                   The elegant cup

golden_brand-1  jolly_brand

Pure Ceylon Tea                     Cups of Fun!

 

  • the management are across current trends in tea drinking and are flexible in their ability to respond
  • they market a wide range of blends which are each aimed at particular markets. So the tea exported to the Russian federation is different from the tea sent to the Middle East or to the UK
  • tea is exported increasingly in tea bags which further adds value (bigger margin available)
  • the company is carbon neutral certificated, something which appeals to the middle class markets in Europe and the USA
  • the company supports sustainable practices wherever possible and thas made significant reductions in energy and water consumption aand waste generated throughout the company
  • they have their own packaging plant which is part of the value added process

Because it specialises in specific areas of the market for tea the company has found a very successful niche to slot into and numbers amongst its customers global heavyweights such as Tesco.

There are challenges.

  • customers will always try to get the best/lowest price they can. Quality, reliability, and market savvy are key attributes in this particular game
  • quality standards are constantly evolving and the company has to be able to meet the highest current kite mark standards and to adapt to them
  • changing environmental factors both in the short medium and long term mean that tea crops are not uniformly the same year in year out either in quality or quantity
  • the market itself is dynamic and volatile

The key is to stay ahead of the game. Because Eswaran Brothers:

  1. are not exporters of a bulk primary product
  2. have a sophisticated marketing set up which can adapt to changing tastes in the market place,
  3. do not depend on just one market but are able to supply to many
  4. sell high quality tea
  5. are still a family concern, run by committed and knowledgeable people

the company is not as vulnerable as we might suppose. Eswaran brothers are just one of a number of highly successful tea producers based in Sri Lanka.

My point is that, at least in the case of tea, the times changed quite a while ago. Rather than make sweeping generalisations about primary products in classroom teaching, it is time to accept that this one size fits all stereotype is out of date; time to look at each commodity and each country in turn and time to see what is really happening.