Strategic clustering of foundation suppliers of Sri Lankan tea and their impact on the macro supply network

Abstract

The tea sector is important to the Sri Lanka economy and offers employment opportunity to those who live close to tea cluster areas. Tea small holders account almost 76 % of total tea estates in Sri Lanka but their output is comparatively low with respect to other tea estates in Sri Lanka. By comparing other tea exporting countries, it is found that Sri Lanka is far behind in tea production and has lost its position in global market of tea. This is mainly because of the industry not being very profitable and the state assisting by subsidies for the survival of industry. Due to the high cost of production, tea estates and tea small holders are minimising the cost on welfare facilities of workers, replanting and technology improvement. Sri Lanka tea clusters are located in Kandy, Dimbulla, Bandarawela, Nuwara Eliya, Galle and Ratnapura. It is important to understand the drive performance indicators of tea estates and the constraints along the growth in order to formulate remedial actions. Market stability, human resources, technological capacity, finance, infrastructure, safety, administration and environment are the main factors that are affecting the performance of clusters. A Shortfall from any factor can weigh down the overall performance of tea clusters of Sri Lanka. Recommendations provided for the problems may significantly reduce the risk in driving performance criteria and improve the efficiency of tea cluster. Assistance from the State could further improve the overall facility that may improve the quality of finished tea.