Tea exports hit new high

During October, auction prices in Colombo commenced a gradual upward trend.

The beginning of winter buying mainly contributed to this favourable development. By end October, the national sales average had reached Rs. 368 per kilo while the low grown average is registered at Rs. 383. The cumulative auction average from January to October 2011 works out to Rs. 356.

SLTB Director - Promotion Hasitha De Alwis

Tea prices are expected to rise further during the coming month with the peak of winter in traditional markets approaching said Sri Lanka Tea Board (SLTB) Director Promotion, Hasitha De Alwis.

The tea crop in Sri Lanka reached 245.2 m. kgs. by end of September 2011. During the corresponding period of last year, production stood at 248.3 m. kgs. This reflects a decline of the tea harvest by 3.1 m. kgs. or 1 percent.

While high grown production remains constant at 59.7 m. kgs., medium grown has declined from 42.7 m. kgs. to 38.6 m. kgs. (10 percent) and low grown has increased marginally from 145.8 m. kgs. to 146.8 m. kgs.

The low grown segment with 60 percent of the national production, dominates the local tea industry. Sri Lanka, a custodian of the black orthodox teas in the world market has manufactured 226 m. kgs. of that type as against 17 m. kgs. of CTC tea while Ceylon green tea constitute 2.5 m. kgs.

The Colombo Tea Auction prices which averaged at Rs. 390 per kilo during the beginning of the year exceeded the Rs. 400 mark by end of February and remained at Rs. 390 national average in March. Henceforth, prices at the Auction commenced a slow but gradual decline until September.

The turbulent situation in the Gulf, Middle East and North Africa, the depreciation of the Russian as well as other former Soviet Union currencies, the sanctions on Iran and the strong local Rupee all contributed to this negative result. Incidentally, other major tea producing countries such as Kenya with a 30 percent depreciation of their currency, India with 15 percent, Bangladesh with 10 percent, Malawi with 12 percent and Vietnam with 9 percent have supported exports.

The global supply of black tea remains tight although a bumper crop in China has increased the availability of green tea in the world market. Tea production in Kenya is expected to fall short of last year's crop of 399 m. kgs. at least by 20 m. kgs.

Tea production in Sri Lanka which registered at 330 m. kgs. last year is expected to decline by about 5 m. kgs. during the current year. However, exports recorded at 315 m. kgs. last year is projected to reach around 325 m. kgs. in 2011 due to imported teas being re-exported. Revenue from tea exports which reached US$ 1.4 billion in 2010 is expected to reach at least US$ 1.7 billion in 2011.