Turning over a new leaf: how tech is transforming Sri Lanka’s tea industry

cup of tea in someone's hand

By Sook Hoon Cheah, General Manager, Southeast Asia New Markets

Tea is a drink with endless variations – whether you like it with a serving of scones, or spiced, like Indian Chai, or infused with mint like Moroccan tea, or even Japanese Matcha. It’s the most popular drink in the world after water, with a staggering 3.7 billion cups consumed globally every day.

In Sri Lanka — the home of Ceylon tea — it’s also central to the economy. Ceylon tea finds its way from the island’s mountain estates onto breakfast tables around the world. The industry provides income to about a tenth of Sri Lanka’s population. It’s a hugely important source of employment in rural areas, where smaller farms account for about 70% of total tea production.

From live auctions to a digital platform

The COVID-19 pandemic has been bruising Sri Lanka’s economy. Tea had a particular point of vulnerability. For 137 years, live auctions were the fulcrum of the industry, where the island nation’s eight brokers sold tea to exporters and tea brands, who prepared the final product and distributed it to supermarket shelves in more than 100 countries.

The auctions threatened to grind to a halt entirely in the early days of the pandemic, as governments everywhere restricted movement and enforced social distancing. So, the Sri Lanka Tea Board and the CTTA turned to a local Microsoft partner, CICRA Solutions, to create an alternative.

“The entire team worked tirelessly – almost 20 hours a day – to ensure that tea factories get their price for their production and in return can pay salaries and bonuses to estate employees before the traditional Sinhala and Tamil New Year,” said CICRA Holdings Group Director and CEO, Boshan Dayaratne.

Buying and selling are now conducted safely and securely via the Colombo Tea e-Auction platform, which uses Microsoft Azure as its cloud platform. It is now used by all of Sri Lanka’s eight tea brokering companies and over 300 tea buyers and exporters. It has five concurrent virtual auction rooms, which are connected via Microsoft Teams. Users of the e-auction have access to analytics and digital dashboards.

Eighteen months on, Sri Lanka is selling as much tea as ever, and the industry is looking towards a more profitable and sustainable future.

Continuity turns into transformation

Currently, the e-Auction sells 3.5 lots per minute but the goal is to achieve five lots per minute to reduce the auction time to just one day a week instead of the current two.

The system works and it had an almost immediate impact that helped the industry navigate the economic shock of the pandemic, according to Jayantha Karunaratne, the CTTA’s Chairman.

“About two million people depend on this industry for their livelihood. We had to keep them paid and safe. With the new system in place, the industry could continue to operate, and we saw tea prices increase by about 9%, which benefitted the whole industry down to the producer level,” he said.

Last year the system facilitated the sale of 278 million kgs of tea, contributing $1.2bn to the country’s export revenues. That was only a slight drop from the pre-pandemic levels, and Sri Lanka’s exports for 2021 are expected to grow an additional 8% over 2020. That’s an astounding feat considering the challenges the industry faced, both locally and globally.

But if the changes were initially about survival, they are also helping to secure the future of the industry. Now that the system is well-established, the industry has found that it’s a better way to do business too, according to Huzefa Akbarally, the Director of Sri Lanka’s biggest exporter Akbar Brothers Tea.

“If you ask stakeholders, many will admit they were reluctant at first, but now they can’t imagine going back to the old auction system. Most of them want to keep the e-platform because they’ve found it ensures a level playing field and keeps the process fair and transparent,” he said.

Reading the tea leaves

Now that the industry has tasted the impact of technological solutions, it is looking at the future. Most of the key players expect there’ll be more changes ahead, both to help the industry remain globally competitive, and to ensure that it’s more sustainable.

The auction system has already been upgraded from its initial version. After a tender process evaluating over 70 local and international solution providers, in September 2021 the CTTA went live with a modern, real-time e-Auction platform provided by OKLO Private Limited, a technology solutions provider in Sri Lanka.

“OKLO’s SmartAuction platform was specifically designed to handle the complex and varying requirements of buyers, brokers, and producers alike. As we work with CTTA on their journey to automate the tea industry, we hope to incorporate AI and other complementing technologies to truly make the auction platform a game-changer,” said OKLO Private Limited Managing Director Thilanka Withanage.

But greater efficiency isn’t the only area the industry hopes to improve. Environmental sustainability is high on the agenda too. Sri Lanka has the world’s only certified ozone-friendly tea, and the industry is working to reduce its carbon footprint. Also, it’s using satellite mapping to minimize the industry’s impact on Sri Lanka’s forests and its water supply.

“We’ve got a lot of plans. We’re thinking about bringing the whole value chain downstream, right up to the producer and farmer level and upstream to the buyer. We want to introduce things like traceability — what we call from the leaf to the cup — for all consumers,” said Anil Cooke, the head of the Colombo Brokers Association.

The Sri Lankan tea industry has been filling cups for over a century. But even if its products are steeped in tradition, it’s a sector that will benefit from an innovative approach to technology. When the pandemic hit, their livelihoods were suddenly at risk. But innovative technologies – created with Microsoft’s help – not only allowed the industry to navigate the initial economic shock but have also helped the industry transform.

Related Posts