Concerned that growers will be further burdened with almost 18% loss of income per kg of plucked tea
While commending the move to defer the removal of SVAT, The Planters’ Association of Ceylon (PA) said that smallholders and all growers will have to forego an additional 18% off their cost of production. The cumulative annual loss to the industry is estimated at almost LKR 24 billion. PA had noted the importance of postponing SVAT beyond April 2025 earlier, and any further extension by the government would be a boon to the already burdened industry.
The SVAT system has been a cornerstone of stability for Sri Lanka’s plantation sector since its introduction in 2011, ensuring financial liquidity for Regional Plantation Companies (RPCs) and safeguarding the livelihoods of smallholder tea farmers. The retention of SVAT is imperative to ensure financial fluidity, and to streamline export processes. Additionally, support for smallholders in adopting modern agricultural practices and sustainability measures is vital to maintaining global competitiveness. These steps, combined with policies to streamline export processes and enhance productivity, aim to stabilize the sector, increase export revenues, and position Sri Lanka’s tea industry for sustainable, long-term growth.
For tea producers, the negative impact on the Colombo Auction Price consequent to a discontinuation of SVAT would exacerbate existing challenges, that disrupt cash flow and hinder reinvestment. With over 90% of Sri Lanka’s tea being exported, PA highlighted that maintaining SVAT is crucial to ensuring the stability and long-term sustainability of the industry and the livelihoods it supports.
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