Nov 02, Colombo: Sri Lanka Planters' Association says that the production cost of a kilo of tea has increased from Rs.124.06 in 2002 to Rs.350 by 2011 and is now outpacing tea sales revenues.
While services and materials account for 6% and 16% of total production costs respectively, labour costs account for about 63% - 68% of total manufacturing costs, making this the largest fixed cost component in the production process, the Association reports.
According to the Planters' Association the salaries and welfare measures of the plantation field employees account for close to 70% of plantation labor costs. Labour expenses include accommodation, medical facilities and child care etc.
PA warned that if this trend is continued Sri Lanka's tea industry will become unsustainable in the near future as companies were steadily losing money in their tea production and unable to cope with shouldering.