Tea industry will brave all storms- Mahen Dayananda

By Lalin FERNANDOPULLE

The tea industry will not crash under any economic recession, due to high consumption of tea in the world, said Director, Tea Tang Ltd. and former Chairman Ceylon Chamber of Commerce, Mahen Dayananda.

He was speaking at a seminar on 'The Impact of the Global Financial Crisis on the Tea Industry in Sri Lanka' organised by the Institute of Chartered Accountants of Sri Lanka (ICASL).

He said the sharp drop in prices of tea at the Colombo auction during the past three months was a major blow to the tea industry. It was three challenging months for the industry.

The dramatic slide which set in during the latter part of last year with average prices falling below Rs. 200 per kg by end of November. The average price of a kilo increased to a peak level of Rs. 342 from Rs. 330 in July before easing off to Rs. 320 a kilo in September.

The price of a kg of high grown was Rs. 270 and low grown was Rs. 398 in late July.

Dayananda said despite a gloomy world economic scenario tea export revenue last year is expected to surpass the record achievement of US$ 1 billion in 2007.

The demand for tea which is a health beverage will not diminish.

Tea Smallholders who account for over 70 per cent of the industry are the most affected by the global financial crisis.

The low demand for tea at the auction resulted in severe cash flow problems. The poor cash flow has a chain effect on the industry. Tea leaf pluckers do not get a fair wage since brokers do not pay producers on time.

"The tea industry will brave all storms of the world economic recession and be a key export earner to the country.Ceylon tea has been a vibrant brand and its prestige will never be lost", he said.

Prices of tea has been high at the auction due to the quality and diversity of orthodox tea produced in the country. Sri Lanka has a diversity of tea since it is produced in six agro climatic regions.

Tea brokers said the average prices of tea at the last week's auction were satisfactory and added that prices will stabilise in the first quarter.

Prices will improve with Dimbula teas expected in the next couple of months. Director Promotions, Sri Lanka Tea Board, Hasitha de Alwis said there will be a positive impact from aggressive marketing overseas on the tea exports this year.