War situation may hit Lanka's tea exports to Lebanon

by Elmo Leonard

The war situation in Lebanon could prove a kidney punch for Sri Lanka's exports of tea to that region, for Beirut is a transshipment hub for tea to important Middle Eastern markets such as Syria, Jordan and beyond.

The battle-shock in the Middle East combined with the aftermath of the strike in the Colombo port, saw Colombo tea auctions prices depress last week; most categories eased Rs. 2 to Rs. 6 (Rs. 103 to a US dollar) per kilogram, while the top-end teas were the most hit. "If the war continues, Sri Lanka will have to find new routes for her many markets in that part of the world," a Colombo based multinational said. Conforming, security analysts say that Hizbollah provoked Israel into a confrontation, being heavily fortified with rockets that could hit Israel, and that it will take much fighting by the Israelis to quell its Arab neighbours.

Thus far, the international shipping and insurance services have not imposed precautionary surcharges on commercial vessels, as war-risk and shipping insurance. Such impositions will affect all exports to such regions.

"We do not say that shipments are not leaving the Colombo port," another multinational, who declined to be named, said. Colombo's week-long go slow, saw some shipping lines bypass Colombo and some other goods for export, not only tea, are yet in the port.

This is because some cargo are carried by particular shipping lines. But, the next ship of that line to call, is often not ready to take the left over cargo, or all of it, for want of space, or being outside their lane of travel.

Thus, the stock situation will take time to normalise. Lebanon is ranked 25th in purchases of tea for 2005, having paid Rs 441 million ($440,000). In 2005, Lebanon purchased 1.6 million kilos of tea of 230 million kilos exported by Sri Lanka, including bulk tea, tea in packets, bags, blended and green tea. Syria was Sri Lanka's third largest purchaser of tea for 2005, with imports of 27.7 million kilos of tea, at FOB value of Rs 6.5 billion ($65.0 million).

Jordan was Sri Lanka's sixth largest purchaser of tea last year, taking 12 million kilos of tea, valued at Rs 2.4 billion ($24.3 million), according to Forbes and Walker statistics.