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| Sunday, 11 August 2002 |
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| News Business Features Editorial
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Record world tea production in 2001 by Elmo Leonard World tea production during 2001 recorded a new milestone of 3,000 million tonnes, amounting to a growth of 3.7 per cent over the previous year. It is also the first production increase in three years, according to Sri Lanka Tea Review 2001, the Forbes and Walker Tea Brokers (Pvt) Ltd. publication.
Most of Sri Lanka's tea production has traditionally been the orthodox type, which commands a premium price in the export market. North Indian tea is also largely the orthodox type, including Darjeeling and Assam teas, which are exported by India. South Indian teas are of the CTC type, and most of it is consumed by India's teeming millions as a caloric food, with the addition of milk and sugar. CTC tea is the economic part of the tea pack, and is used in the export arena to give colour and strength to the tea pack and tea bag. With Sri Lanka increasingly going into packaged tea exports against the export of bulk tea, the island also purchases CTC teas from Kenya and the subcontinent for blending. The Forbes and Walker publication says the global tea industry had been in a state of near constant oversupply over the last several years, which contributed to low prices. This situation had placed tremendous pressure on tea producing countries with virtually no light at the end of the tunnel. More countries are taking to the planting of tea. The annual global increase is around two to three per cent, according to the Forbes and Walker report. The cumulative effect of extra teas in the world market had resulted in significant pressure on prices. The factors which contribute to depressed global prices are unregulated increases in tea production; favourable weather conditions contributing to record crops; and stagnant consumption in both tea producing and tea consuming countries, possibly brought about by other alternative beverages. In 2001, Sri Lanka's tea exports were a record 294 million kilograms, up from 287.9 million kilograms in 2000. Sri Lanka maintained its top position as the leading exporter of tea. Kenya secured second position, with exports of 258.8 million kilograms of tea, up from exports of 216.9 million kilograms in 2000. In the year 2001, Sri Lanka's export earnings from tea amounted to Rs 61.6 billion (USD 60.6 million) as against Rs 53 billion (USD 684.7 million) in 2000. This was due to increased export volumes combined with higher unit FOB values and a larger percentage of tea leaving the country in the form of value added exports. The Forbes and Walker publication argues that while rupee earnings have recorded a growth of around 13 per cent, the US dollar earnings recorded a negative growth of around 0.5 per cent. During the year 2001, the rupee had depreciated by 16.5 per cent against the dollar. The FOB value equivalent of the US dollar in 2001 was US$ 2.33 as against US$ 2.38 in 2000. Therefore, the Sri Lanka Tea Review 2001 says that the depreciation of the rupee had not affected the price. Value added exports, which accounted for 36.5 per cent of the total exports in the year, grew to 41 per cent in 2001. |
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| Editorial | Security Produced by Lake House |
Much of the increase is attributed to the recovery of African tea
production last year, which is essentially CTC teas. CTC (Cut, Tear, Curl)
tea, on average, gives five times more cups per kilo than orthodox teas.
This adds to the supply factor, and pegs down price.
