Tea on a roll while production drops

Prices at the tea auction have been significantly gaining momentum with low grown teas reaching an average sales price of Rs. 361 / kg last week. However, tea production has continued to slump with production levels at the end of March 41% lower than first quarter levels in 2008.
Tea production fell from 83,477,642 kg in the first quarter of 2008 to 48,791,145 kg in 2009 with all elevation of teas from low grown, high grown to medium grown teas seeing significant drops in production levels. Production for the month of March totaled 18.1 m/kg recording a decrease of 12.55 m/kg or 41.05% compared to 30.8 m/kg in 2008.  This is the lowest figure for the month of March since 1998 when 14.58 m/kg was recorded. Speaking to The Bottom Line, Tea Board Chairman Lalith Hettiarachchi said that these levels are expected to improve in the coming months as planters apply fertiliser with the current rains.
“The decrease in production may have led to the rising prices in the tea auction,” he explained. “However the current price of Rs. 361/kg for low growns is sufficient to keep the planters and the small holders happy as they make Rs. 50-65 for their green leaf.”
Low grown teas were selling at an average price of Rs. 350/kg in April last year. While informing that the depreciating rupee has also led to the good market performances, Hettiarachchi assured that the tea industry was back on track.
According to Forbes and Walkers Tea Brokers however total exports for the month of March totaled 29.03 m/kg recording a deficit of 2.19 m/kg compared to 26.8 m/kg in 2008 while a category-wise breakdown shows that tea in bulk and tea in bags have shown a growth compared to last year while tea in packets show a decline. 
Reaching out to China
Meanwhile, in a bid to expand Sri Lanka’s tea export market in the Asia Pacific region, the Tea Board is continuing to encourage exporters to participate in the Hong Kong International Tea Fair to be held from the August 10-13 this year. “We have already received five confirmed participants who want to gain exposure to the Hong Kong market through this fair,” Tea Board Promotions Director Hasitha De Alwis explained, “But since this is the first time we are participating it is a grope in the dark which we hope will pay off.”
Hong Kong is the largest consumer of tea among the Asian cities with a market of 16000 Metric Tons of tea annually, 4000 MT of which is re-exported to mainland China. “Hong Kong has always been important to Sri Lanka when it comes to black tea exports and we supply 45 % of Hong Kong’s current requirement.” However, the opportunity to supply tea to the bordering Chinese states is the appeal of this particular fair. “It’s difficult to capture the entire Chinese market, but Hong Kong can serve as a gateway to the bordering Chinese markets, which will be a start,” de Alwis explained. Adding that this year is a difficult one for exporting companies who prefer to focus on their essential, revenue generating markets, de Alwis hoped that the Sri Lankan representation at the fair would bring about positive results.
(NN)