FAIRTRADE (Flocert) RELEVANT T0 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 and the district logo can only be applied on packaging that is a) submitted for testing and b) packed at source to ensure its authenticity.
The island, as mentioned elsewhere, 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. As the picture shows Ceylon teas are still hand plucked which ensures high quality manufacture. However with rising wages and benefits (see the separate section on wage progression and & benefits for estate workers) labour costs add considerably to the cost of the teas.
It is my opinion that the very extensive background information that I have supplied on this website will satisfy even the most welfare concerned consumer that the producers of Ceylon teas have the greatest regard for their workers abiding by laid down regulations that the Government have published to ensure transparency. As we work direct with the estates for specialist manufacture, this means that we are charged a higher price than if we were to purchase teas at the auction. There is undoubtedly a problem where estates rely upon auction prices. It was some twenty five years ago in 1991 that estates were obtaining only 66 % of their cost of production. We seek to promote this sense of value between consumer to estate and estate to consumer, which includes the labour force. We would certainly not agree with any statement that estate managements seek to under value their workers. In fact a major issue that guards against that possibility is the lack of labour on the estates compared to the 1960’s. Repatriation of half the estate Tamil families to India under the Government Citizenship deal with India has meant that estate managements value every single person available to them in this particular production area.
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:
1) Will this improve the return to the estates over and above the system that we operate with them at present.
2) 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.
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 that price level to the estate.
Brunswick is in a company which decided to test Fairtrade (Flocert) in their flexibility to the Ceylon tea industry situation and therefore inviting Fairtrade (Flocert) to invest more heavily into the raising of the wages package and perhaps if not into that then into funding towards the hugely expensive re-planting programme. To-date Fairtrade (Flocert) has been non-co-operative in this matter which has led to Fairtrade (Flocert) having a very low membership level within the Ceylon tea industry.
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. 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.
The one area that fair trade organizations can help the estates with is in introducing large buyers and recommending an estate to those buyers. Where Fairtrade will have a better chance of attracting members is where the estate is owned on a community (private ownership) basis. Here a family or even in some cases the workers may own the land and not the Government. Therefore the question of whether fair trade organisations are relevant or not is a complex judgement. However I was horrified in 2010 to hear on my visit to an estate that we work with where the workers own the land and the estate is certified with Fairtrade (Flocert), a recently completed new housing complex with all services received no help whatsoever from Fairtrade (Flocert). In discussion with the project manager I was told that the managing company paid 50 % of the cost and the workers paid the balance without any input from Fairtrade (Flocert).
Unfortunately I have come across totally erroneous statements made by some other fair trade organizations, who may understand conditions in a particular area such as perhaps recent reports on some conditions in clothes factories in the Far East that operate outside vague guidelines laid down by some Governments and where enforcement is lax. I have had to challenge those misconceptions when information is put out about the Ceylon tea industry and it has been clear that the perpetrator of the report has absolutely no first-hand knowledge of the tea industry that he or she was blaming.
In trying to give a balanced view on this subject I have here laid out the present method of operation that ‘Fairtrade’ (Flocert) operate with in Sri Lanka for the tea industry in particular, although they also apply to rubber, spices, coconut production, rice and certain other products.
Below is a table of the costs involved for estates to belong to Fairtrade (Flocert) but of course there are costs for those who actually buy teas from auctions on behalf of foreign clients who also have to be certified. As I understand it from Fairtrade our office in Colombo would have to be certified with an initial application fee of Euros 525 and an annual certification cost of Euros 2,800. This is on top of the costs shown below which the estates pay.
The fee structure for these sorts of Organizations is as is often the case complicated and below I have tried to give as accurate details as I can having received the latest figures from a colleague in Sri Lanka (Ceylon).
FAIRTRADE (FLOCERT) OPERATION IN SRI LANKA – 2015/2016
| 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) | ||
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.
However 2016 has seen a huge change in achieved prices at auction for October. The latest new that I have just received is that with the falling yields and an unusual period of long drought this year, the North/West Monsoon had failed up to the end of October and consequently yields have fallen considerably. As a result the auction prices for October 2016 have been as: The overall auction average for October including all elevation teas has been Rs.550.92 a kilo against the October 2015 average which was Rs.390.13 a substantial gain of Rs.160.79. However in comparing this it must be understood that the amount of teas being sold is right down and therefore it is not likely to change the financial situation at the estates. However the Flocert floor price for Ceylon teas will look very sick indeed unless altered.
As shown at the bottom of the above table 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. However if the estate is suffering financially and cannot maintain areas such as re-planting then the workers incomes will be suffering to a greater extent than this small advantage and retention of the workers will suffer.
In the table above it is to be noted that Fairtrade allow a 12 % reduction in their fees if an estate is Organic certified but costs for organic certification are another huge area of costs for the estates, the buyers, the importers here in the U.K. and often the ultimate seller of the teas if they re-package the teas. Again certification for Organic status has not been of great importance with Ceylon teas as the teas have been reported to be exceedingly low in residues if detectable at all for many years now.
Two years ago Maskeliya Plantations produced the figures shown below: 5 estate producing 300,000 kilos sold 70,000 Kg to Fairtrade (Flocert) = $35,000 at that time this equalled (£17,949) paid into a worker fund and not the estate but Maskeliya
Plantations also sold quantities of their teas into the auction and more importantly via direct sales at much higher prices.
The comment of a past director of this company was: “Even though western consumers and retailers champion fair wages, improved working conditions and welfare, they appear to be reluctant to pay the producers extra for it.” It is this total reluctance by Fairtrade (Flocert) to be sensibly flexible and seeing that the welfare is provided by the Government, perhaps seek to find other areas where they can support the workers such as funding towards the huge costs of the re-planting programme. This would maintain yields of leaf at good high levels and the workers would benefit by having greater quantities of leaf to pluck, boosting their income from greater over kilo payments instead of the declining yields as at present.
It is my opinion that 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 to expensive hand plucking and I believe it cannot compete with the commercial buyers buying cheaper machine plucked teas from other producing countries with undulating tea fields unless consumers understand the quality of these teas and pay the extra price needed for the area to remain in production of these fascinating teas or we as consumers will be the worse off for that.
The above information was compiled by and are the opinions of Robert Wilson, of Robert Wilson’s ‘Ceylon’ Tea U.K. with help from colleagues in Sri Lanka and may not be used or copied without his permission and reference to source. 1998 – 2016.
FAIRTRADE (Flocert) RELEVANT T0 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 and the district logo can only be applied on packaging that is a) submitted for testing and b) packed at source to ensure its authenticity.
The island, as mentioned elsewhere, 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. As the picture shows Ceylon teas are still hand plucked which ensures high quality manufacture. However with rising wages and benefits (see the separate section on wage progression and & benefits for estate workers) labour costs add considerably to the cost of the teas.
It is my opinion that the very extensive background information that I have supplied on this website will satisfy even the most welfare concerned consumer that the producers of Ceylon teas have the greatest regard for their workers abiding by laid down regulations that the Government have published to ensure transparency. As we work direct with the estates for specialist manufacture, this means that we are charged a higher price than if we were to purchase teas at the auction. There is undoubtedly a problem where estates rely upon auction prices. It was some twenty five years ago in 1991 that estates were obtaining only 66 % of their cost of production. We seek to promote this sense of value between consumer to estate and estate to consumer, which includes the labour force. We would certainly not agree with any statement that estate managements seek to under value their workers. In fact a major issue that guards against that possibility is the lack of labour on the estates compared to the 1960’s. Repatriation of half the estate Tamil families to India under the Government Citizenship deal with India has meant that estate managements value every single person available to them in this particular production area.
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:
1) Will this improve the return to the estates over and above the system that we operate with them at present.
2) 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.
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 that price level to the estate.
Brunswick is in a company which decided to test Fairtrade (Flocert) in their flexibility to the Ceylon tea industry situation and therefore inviting Fairtrade (Flocert) to invest more heavily into the raising of the wages package and perhaps if not into that then into funding towards the hugely expensive re-planting programme. To-date Fairtrade (Flocert) has been non-co-operative in this matter which has led to Fairtrade (Flocert) having a very low membership level within the Ceylon tea industry.
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. 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.
The one area that fair trade organizations can help the estates with is in introducing large buyers and recommending an estate to those buyers. Where Fairtrade will have a better chance of attracting members is where the estate is owned on a community (private ownership) basis. Here a family or even in some cases the workers may own the land and not the Government. Therefore the question of whether fair trade organisations are relevant or not is a complex judgement. However I was horrified in 2010 to hear on my visit to an estate that we work with where the workers own the land and the estate is certified with Fairtrade (Flocert), a recently completed new housing complex with all services received no help whatsoever from Fairtrade (Flocert). In discussion with the project manager I was told that the managing company paid 50 % of the cost and the workers paid the balance without any input from Fairtrade (Flocert).
Unfortunately I have come across totally erroneous statements made by some other fair trade organizations, who may understand conditions in a particular area such as perhaps recent reports on some conditions in clothes factories in the Far East that operate outside vague guidelines laid down by some Governments and where enforcement is lax. I have had to challenge those misconceptions when information is put out about the Ceylon tea industry and it has been clear that the perpetrator of the report has absolutely no first-hand knowledge of the tea industry that he or she was blaming.
In trying to give a balanced view on this subject I have here laid out the present method of operation that ‘Fairtrade’ (Flocert) operate with in Sri Lanka for the tea industry in particular, although they also apply to rubber, spices, coconut production, rice and certain other products.
Below is a table of the costs involved for estates to belong to Fairtrade (Flocert) but of course there are costs for those who actually buy teas from auctions on behalf of foreign clients who also have to be certified. As I understand it from Fairtrade our office in Colombo would have to be certified with an initial application fee of Euros 525 and an annual certification cost of Euros 2,800. This is on top of the costs shown below which the estates pay.
The fee structure for these sorts of Organizations is as is often the case complicated and below I have tried to give as accurate details as I can having received the latest figures from a colleague in Sri Lanka (Ceylon).
FAIRTRADE (FLOCERT) OPERATION IN SRI LANKA – 2015/2016
| 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) | ||
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.
However 2016 has seen a huge change in achieved prices at auction for October. The latest new that I have just received is that with the falling yields and an unusual period of long drought this year, the North/West Monsoon had failed up to the end of October and consequently yields have fallen considerably. As a result the auction prices for October 2016 have been as: The overall auction average for October including all elevation teas has been Rs.550.92 a kilo against the October 2015 average which was Rs.390.13 a substantial gain of Rs.160.79. However in comparing this it must be understood that the amount of teas being sold is right down and therefore it is not likely to change the financial situation at the estates. However the Flocert floor price for Ceylon teas will look very sick indeed unless altered.
As shown at the bottom of the above table 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. However if the estate is suffering financially and cannot maintain areas such as re-planting then the workers incomes will be suffering to a greater extent than this small advantage and retention of the workers will suffer.
In the table above it is to be noted that Fairtrade allow a 12 % reduction in their fees if an estate is Organic certified but costs for organic certification are another huge area of costs for the estates, the buyers, the importers here in the U.K. and often the ultimate seller of the teas if they re-package the teas. Again certification for Organic status has not been of great importance with Ceylon teas as the teas have been reported to be exceedingly low in residues if detectable at all for many years now.
Two years ago Maskeliya Plantations produced the figures shown below: 5 estate producing 300,000 kilos sold 70,000 Kg to Fairtrade (Flocert) = $35,000 at that time this equalled (£17,949) paid into a worker fund and not the estate but Maskeliya
Plantations also sold quantities of their teas into the auction and more importantly via direct sales at much higher prices.
The comment of a past director of this company was: “Even though western consumers and retailers champion fair wages, improved working conditions and welfare, they appear to be reluctant to pay the producers extra for it.” It is this total reluctance by Fairtrade (Flocert) to be sensibly flexible and seeing that the welfare is provided by the Government, perhaps seek to find other areas where they can support the workers such as funding towards the huge costs of the re-planting programme. This would maintain yields of leaf at good high levels and the workers would benefit by having greater quantities of leaf to pluck, boosting their income from greater over kilo payments instead of the declining yields as at present.
It is my opinion that 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 to expensive hand plucking and I believe it cannot compete with the commercial buyers buying cheaper machine plucked teas from other producing countries with undulating tea fields unless consumers understand the quality of these teas and pay the extra price needed for the area to remain in production of these fascinating teas or we as consumers will be the worse off for that.
The above information was compiled by and are the opinions of Robert Wilson, of Robert Wilson’s ‘Ceylon’ Tea U.K. with help from colleagues in Sri Lanka and may not be used or copied without his permission and reference to source. 1998 – 2016.