Tea exports to dip below 300 million kg this year

By Nizla Naizer

With exports in the first quarter of the year taking a significant dip, Tea Board Chairman Lalith Hettiarachchi said that it was unlikely Sri Lanka tea exports will reach the record quantity of 317 million kg (inclusive of re-exports) achieved in 2008.
“We expect the quantity of tea exported to improve in the second quarter and rise in the last two quarters, but we do not expect the same levels of exports as 2008,” he stated. He forecast that production of tea would be around 300 million kg in the year 2009.
Planter’s Association Chairman Dhamitha Perera said that the 317 million kg of tea produced by the country in 2008 was the highest record of tea production, and that despite the global slump which hit the industry in mid October, the expected revenue from tea exports for 2008 would be around $1.25 billion. “There are many reasons why production will be low this year: the drought in the first quarter, frost attacks in the high grown areas and moisture stress in the low growns,” he explained
However, the low quantities of tea being traded at the auction have contributed to higher prices of tea, with low grown varieties reaching an average of Rs.360/kg. “It is more than what we expected this month. However, only 5 million kg of tea was traded whereas we usually see 6-7 million kg of tea at the auction.” With the rains finally reaching the plantations and fertiliser applied by the planters, Hettiarachchi was confident that quality and quantity will improve within the next few weeks.
Delayed loans
In further developments, Hettiarachchi expressed his disappointment at the Working Capital loans still being delayed by banks that he claims are ‘dragging their feet.’ “Despite the letter of assurance provided by the Treasury informing the banks of a 100% guarantee on the loans taken by the planters, some banks are still asking for clarification.”
Currently, the Tea Board has recommended over 250 applicants to be eligible for the loans amounting to Rs.2 billion, but none of them have been able to obtain loans from the commercial banks. “The banks have issued queries on the interest subsidy,” he added,
”But the subsidy is a matter between the Treasury and the planters. The borrowers will take the loan on the going interest rate and the 6% subsidy will be provided at the end of the year by the Treasury to the borrower.”
Dhamitha Perera added that planters who have been approved by the Tea Board will be provided the loans on a first-come, first-serve basis. “We believe the banks are in the process of formalising the documents, and checking on collateral for these firms.” Despite the assurance that the tea industry is recovering from the crisis, Perera stated that the planters still welcomed the working capital loan, as with the ensuing festival season more commitments will have to be made to provide bonuses to the workers. “We have already paid a Deepavali and Pongal bonus since the crisis started, and we intend paying their Sinhala and Tamil New Year bonus. This will require more working capital and the subsidy on interest which we will be reimbursed with is a welcome incentive.” He also explained that the one year’s moratorium on capital payment for project loans as proposed by the stimulus package, will be appreciated by the industry.