Tea turns around

*Low growns average prices reach Rs. 440/kg
*Production expected to drop by 30% this year

By Nizla Naizer

Tea production in Sri Lanka is expected to drop by 30% this year, however prices for tea are on an upward trend with falling production and financial markets abroad stabilise.
Average prices for low grown teas reached Rs. 440/kg last week continuing from an upward trend witnessed since June. Speaking to The Bottom Line, Brokers Association Chairman Sarath Sirisena explained that high grown teas are also following a similar pattern with prices increasing from an average of Rs. 268 in May to Rs. 286 in June and an average of Rs. 309 in the first week of July. “The Uva season is also beginning so we can expect prices to increase in the Uva quality teas as production is less than before.”
Tea production at the end of May totaled 25.5 million kgs, which was a drop from 33.07 million kgs in the first half of 2008. Sirisena attributed the dramatic drop in Sri Lanka’s tea production this year to the lack of rain in the first quarter, adding that the loss of production within the first six months may not be recovered during the rest of the year. “On average, 60% of Sri Lanka’s tea is produced within the first half of the year,” he informed, “due to the drought however, we’ve seen a drop in as much as 30% which we expect to be the overall drop in production this year.”
In the auctions too, quantities traded are expected to be along the 6 million kg mark for the next month and beginning of August. “The tea industry faced a crisis as the world went into recession, not because people were drinking less tea but because the exchange rates made our teas more expensive. Now that the exchange rates have stabilized, the demand for our teas is back on track.”