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| Sunday, 20 February 2005 |
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| News Business Features Editorial
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Lanka's tea industry: bright 2005 by Elmo Leonard The $2.08 per kilogram exports of tea for December 2004 and $2.1 per kilo performance in January this year augurs well for a bright 2005 for the Sri Lanka tea industry. The current low-grown tea performance of $2.40 to $2.60 per kilo and high-grown $2.20 to $2.50 per kilo would offset the growing cost-of-production hike, the tea trade said. With dry weather prevailing in the Western plantations, the Dimbula or Western quality tea season is on and higher prices are expected to be realised at the Colombo tea auctions in the coming weeks. Low-grown crops are down, and will add to the factor of demand, Dilan Polonowita of Forbes and Walker (brokers) said. The Middle Eastern sector is expected to be active and fetch better prices than in the previous year. Iran, for instance who purchases a wide variety of better low grown tea's with purchases of 20.6 million kilos in 2004 is expected to buy more. Accounting for anticipated higher purchases would be Iran's liberalised tea imports. Iraq is also expected to increase her purchases with her elections now past. January's tea crop, not released at the time of going to press is expected to exceed 25 million kilos, with weather having proved conducive for production. Considering that the January 2004 harvest of tea was 24.6 million kilos, the year has begun well production-wise, Asia Siyaka's Anil Cooke said. If the weather remains favourable, Sri Lanka's record tea crop of 310 million kilograms for 2002 could be bettered this year, the tea trade is optimistic. While weather is the predominant factor for a good performance for the Sri Lanka tea, the point is that many other factors are favourable during the year, Romesh Croos Moraes of James Finlay's said. Moreover, Colombo's $1.79 per kilo auction average for 2004 was way above that of Mombasa and Kolkatta and continues to be so. Sri Lanka who after many years lost her lead position as a tea exporter to Kenya last year will now have to settle for second place as that African nation has solved its problem of a dearth of tea factories to handle its produce. The Kenyan Tea Development Authority (KTDA) an akin to Sri Lanka's Tea Smallholder Authority had built over 10 new tea factories in that African nation during the past two years and is expected to build three more in the immediate future, monitored through the web. But there is concern that the recent rise in wages and 15 percent VAT would weigh the industry down, adding to its cost of production, Cooke said. Polonowita was optimistic that the ongoing negotiations with the Ministry of Finance would result in the reclamation of the VAT binding exports, as it was before. Sri Lanka is currently the fourth largest producer of tea, trailing India - 830 million kilos, China, 650 million kilos and Kenya, who exported a world record 333 million kilos in 2004. Indonesia is the fifth largest producer of tea with 170 million kilos in 2004. India and China are the world's largest consumers of tea. India's tea production is 850 million kilos, leaving around 180 million kilos for export and a distant fourth in export performance. China's tea production is 650 million kilos comprising green tea, most of which is consumed at home securing third place in export performance. Indonesia exports 100 million kilos of black tea. Sri Lanka's domestic consumption is 25 million kilos, Kenya's 15 to 20
million kilos leaving these two nations with adequate stocks for export. |
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