Tea to enjoy good year

Tea prices are projected to be buoyant this year. For long term sustainability, the industry needs re-engineering to achieve global competitiveness.

Sri Lanka's cost in producing a kilo of tea is among the highest in the world, states a report by Forbes and Walker Tea Brokers (Pvt) Ltd. in the Sri Lanka Tea preview 2006.

Rising input costs, declining productivity, uneconomic age profile of tea bushes and high social costs are among the reasons for the declining profits. Therefore higher productivity and cost reduction will have to be achieved for competitiveness of "Ceylon Teas" in the world market in the medium to long term.

Therefore global competitiveness of "Ceylon Teas" will largely depend on how quickly the industry addresses these vital issues, the report said.

According to the report the market demand for tea in the second half of 2007 will depend greatly on how the global tea industry would progress during the first half.

We are confident that the market demand for good quality teas would command a significant premium consistently throughout the year.

When prices are compared at various auction centres during 2006 only the Colombo and Mombasa auction centres recorded prices above the global average price which is attributed to the overall better product quality at these centres and the substantial shortfall in Kenya production.