President to rescue tea smallholders [September 27 2008]

President Mahinda Rajapaksa has instructed officials to facilitate a Rs. Five billion bailout package to rescue tea industry. Tea factory owners who are facing a severe cash flow problem due to considerable drops in tea auctions had earlier asked for a bank over draft bailout package to help them get over the crisis. President Rajapaksa who met with industry representatives instructed Tea Board Chairman to negotiate bank loans to the tea industry.

Colombo tea auctions recorded a serious slump last week with low grown tea sales dropping by over 50 %. Tea prices had also dropped in the market and the situation has aggravated the cash flow situation in the tea small holder sector and in turn has affected the private tea factory owners who serve the tea small holder sector. The whole process has been affected from brokers to small holder. Millions of rupees are now tied up in unsold stocks and brokers are unable to service factory owners with credit facilities any more. Southern low grown tea small holders who fetched anything above Rs. 52.50 per kg of green leaf tea about a month ago are now been assessed at around Rs. 25/- per kg. w