IV. ANALYSIS OF SECTOR-LEVEL MEASURES USED TO INTEGRATE ENVIRONMENTAL CONSIDERATIONS IN TERMS OF PERCEIVED EFFECTIVENESS IN ACHIEVING POLICY OBJECTIVES
A. Types of measures and intended impacts: ministries and agencies responsible
4. Measures for integrating environmental considerations, and their effectiveness in achieving policy objectives
(a) Effectiveness of measures for minimizing soil erosion and soil degradation
The Ministry of Plantation Industries is responsible for implementing policy measures related to minimizing soil erosion and soil degradation on large tea plantations owned by the State, while the technical standards for the various measures are usually set by SLTRB.
In the case of private sector tea small holdings, the Tea Small Holdings Development Authority (TSHDA) is responsible for the implementation of policy measures. However, neither the Ministry of Plantation Industries nor TSHDA have such authority over the large privatized tea plantations.
A number of measures are discussed below:
The intended impacts of the above measures relate more to preventing the degradation of tea plantation land with a resultant drop in yields and a further reduction in the cultivated area under tea, rather than any significant short-term increases in the productivity of the sector.
The plantations still under the State sector will be regulated to ensure adherence to most of the above cultivation practices, especially the avoidance of replanting on steep slopes by uprooting existing tea bushes. The private sector is unlikely to resort to such practices for their own benefit in the longer term. In fact, the present method of replanting appears to be by the infilling of vacancies as it does not cause soil erosion. Vegetative propagation of selected high-yielding clones rather than the use of tea seedlings is also practiced in order to achieve uniform quality as well as higher yields.
Judging from past trends, it is unlikely that land use in the hill country in the medium term (i.e., the next 5 to 10 years) will result in an increase in the area under tea. However, the extent of land under mixed perennials may continue to increase, particularly in the low-yielding smallholder tea plantations in the mid-country areas. On the other hand, the rate of reduction in the area under tea at the high elevations, as well as on the large plantations, is likely to be halted by the adoption of measures described above.
(b) Effectiveness of measures for increasing fertilizer applications while minimizing related environmental hazards
Although no institution is directly responsible for the implementation of policy measures related to fertilizer use, SLTRB in its capacity as a research organization develops standards, recommends best practices and monitors field results with the objective of improving productivity and minimizing adverse environmental impacts.
Tea is a perennial crop that responds to nitrogen. In the past, nitrogen was usually supplied in the form of ammonium sulphate. Excessive use of fertilizer is known to aid soil erosion by lowering soil pH or acidity. A drop in pH tends to reduce microbial activity which normally helps in the binding of soils.
SLTRB recommends an optimum annual dosage of 360 kg of nitrogen per hectare on tea estates. However, according to an SLTRB scientist, there is a tendency on some estates in Sri Lanka to replace at least a percentage of the nutrients lost during the cropping season, which results in higher than recommended amounts of fertilizer being applied. That observation was indirectly confirmed by an official of a large plantation company, who said he estimated the nitrogen requirement in terms of the weight of made tea per hectare. According to SLTRB field observations in some areas of the hill country, e.g., Hatton and Talawakelle, the harvest of the maximum crop and the concurrent application of the fertilizer takes place during the monsoon season. As a result, the fertilizer tends to leach away into downstream water bodies, especially if the condition of the soil is poor, and results in downstream water becoming a potential source of intestinal diseases.
With respect to phosphatic fertilizers, the tea industry uses crushed rock phosphate or apatite (extensive deposits of which occur in the North Central Province of Sri Lanka) as a substitute for imported triple phosphate. Although it is relatively slower in action, the rock phosphate is a cheaper source of phosphate for the tea industry, and its effectiveness is comparable to imported phosphates since the phosphate content in the soil is generally satisfactory. Rock phosphate has also not been shown to cause any environmental hazards.
SLTRB plans to conduct studies to determine the manner and extent to which downstream water bodies are being contaminated with nitrates as a result of fertilizer losses from tea plantations in the central hills. However, SLTRB does not support the view that fertilizer applications should be controlled purely for that reason. SLTRB is more interested in conducting the field investigations to determine how the use of fertilizer can be maximized in order to achieve the policy objective of enhancing tea sector productivity, while at the same time minimizing any adverse environmental impacts.
But despite the measures adopted to optimize the use of fertilizer to enhance productivity, the overall consumption of fertilizer by sector declined between 1993 and 1995. However, it picked up again in 1996, as shown in table 9. That trend resulted mainly from the high cost of production in the tea sector, relative to prices fetched on international markets. In addition, the private sector which hitherto only had management control of privatized plantations, and that too only for the relatively short period of five years, appeared to be reluctant to commit resources to achieving long-term benefits, and instead tended to adopt measures which ensured short-term gains. However, as a result of a government decision to grant 50-year leases to private companies together with majority ownership under the current policy for privatizing plantations, that trend is expected to be reversed. Although the consumption figures for 1996 tend to confirm that view, they may actually be the result of better prices that Sri Lankan tea was fetching on international markets during that year (table 9).
Source:Central Bank of Sri Lanka, annual report, 1995.
The measures adopted to optimize fertilizer use for enhancing productivity, together with the integration of environmental considerations, should assume greater importance with time.
(c) Impact of privatization of State plantations
The Public Enterprises Reform Commission is responsible for the implementation of the government privatization programme (under which the sale of State ventures is effected). Under that programme (chapter I), the major reform now taking place involves the changes in the ownership pattern and the management structure of the large plantations.
Previously, the operation of some large plantations was carried out by the private sector under specific terms and conditions which were embodied in five-year management contracts. However, the ownership of those plantations remained with the State. Thus there was no incentive for the private sector to invest in the long-term sustainable growth of the sector, which would also encompass environmentally friendly practices.
In terms of the present active implementation of the privatization programme for State plantations, the majority ownership of privatized plantations is transferred to the private sector with the sale of government shares to the successful bidders through 50-year renewable leases.
The long-term leases are governed by the General Law of Property and the General Law of Lease; under those laws, the benefits to which lessees are entitled during the lease period are governed by the terms and conditions in the lease agreement.
Because of its confidential status, information is unavailable on the specific terms and conditions that are contained in the lease agreements formulated by the Public Enterprises Reform Commission. However, with respect to environmentally related issues, it is understood that a condition in lease agreements stipulates that the private sector parties should obtain prior approval from the Forestry Department and (or) CEA for activities, such as tree felling, crop diversification etc., as CEA is the regulatory agency for activities which impact on the environment.
However, unlike the policy measures applicable to replanting of tea on large State plantations (replanting in hilly areas with a gradient exceeding 450 is not permitted), it appears that the Ministry of Plantation Industries or other State agencies have no direct control over the privatized plantations, unless such an activity comes within the definition of a prescribed project. In such instances, the EIA process will come into play. Nevertheless, private plantation companies are unlikely to resort to practices which would jeopardize their productivity and profitability in the long term.
The privatization of plantations in the above manner, through long term leases coupled with a majority equity ownership, should stimulate long-term investments in the sector and promote environmentally friendly management practices in order to achieve sustainable growth, enhanced productivity and profitability. It should also make plantation managers more sensitive to long-term sustainable growth and enhanced profits, compared with short-term gains through the cultivation of annuals, with little or no conservation practices. As such, the integration of environmental considerations, in order to achieve the policy objective of enhanced productivity in the tea sector, will be facilitated.
In that regard, it is noteworthy that a plantation sector reform project is being implemented with financial assistance amounting to US$ 60 million from ADB. The objective of the project is to provide long-term loans and grants to the privatized plantation companies for improving the environmental conditions in their project areas, increasing land productivity and maintaining the competitive advantages of the tree crop industry. Long-term loans for replanting will be provided at competitive interest rates in contrast to the prevailing high commercial interest rates which make replanting uneconomical. In addition, grants will be provided for specific purposes. The project, which was launched in 1996 and is being implemented for five years, is expected to be co-financed by the Overseas Economic Cooperation Fund (OECF) of Japan.
Specific measures for which assistance will be available under the project are detailed below.
d. Effectiveness of environmental protection measures related to production technology and post-production quality checks
CEA is responsible for measures related to processing activities of tea factories. Issuing EPLs to tea factories to carry out processing operations, which are classified as low-polluting, is usually delegated to the local authorities by CEA. For that purpose, national standards for effluent disposal are laid down by CEA. However, in the case of complex processing activities (e.g., the manufacture of instant tea), CEA may carry out its own inspections and impose special conditions for the issuance of EPLs.
Normal tea processing in factories consists mainly of drying, and effluent discharges are minimal. Fuelwood or diesel oil with a low sulphur content is used as fuel for drying, as per the standards laid down by CEA, to avoid sulphur-containing fumes which are an environmental hazard. Factories are also required to design and build tall chimneys for the emission of smoke.
The National Development Bank of Sri Lanka is responsible for the management of a donor-funded PCAF. Financial assistance for the minimization, control and abatement of pollution is provided to industrial enterprises, in the form of low-cost loans and grants, from PCAF through designated commercial and development banks. Investments that are eligible for PCAF assistance include:
(iii) Post-production quality checks
SLTRB and SLTB are responsible for quality control activities. With regard to post-production quality checks, SLTRB is operating an internal quality monitoring system, under which samples are drawn for testing, both prior to the introduction of teas to the Colombo auctions and after the auctions. The tests are to ensure that the manufactured teas are free of harmful chemical contaminants and that the percentage of moisture is within permitted limits to avoid fungal infestation.. In addition, SLTB carries out random checks of export shipments to ensure conformity with international standard specifications.