Monday, February 15, 2010


Translated to Rupees, these earnings read Rs.136 Billion last year. Just one percent short of 2008 performance. All told resilience of the industry had shown up and in real terms FOB price reached stunning levels of US$ 4.09 per kilo. Asia Siyaka weekly Tea market report underscored this performance further substantiating correlated plusses that the market would have seen more lucrative times if the serious global financial crash had not usurped the industry early 2009.
Although quantities offered at weekly auctions were consistently low auction prices rose steadily. Allround market performances were described ‘good’, at all elevations. Particularly low growns.
However an exclamatory issue was wishy washy inconsistency on policy on importation relating to value addition and movement of these products to outside markets. This gave rise to the incredible position of, for instance, Dubai exporting tea. That is one instance. Similarly there are few other countries who know nothing of tea planting, but they too are in the tea export trade. Strange but true.
Further, adding grist to indecisiveness international brands built on Ceylon Tea identity have sought to dilute standards to overcome high import duties moving on shore.
Sri Lanka exported 289 million kilos last year, recording shortfall of about 30 million kilos; lowest since 2000. (Y2K). A global shortage of tea exacerbated dearth in tea production contributing to salutary market conditions.
Major producing countries India, Kenya, and Sri Lanka contributed to compounded shortfall of just about 100 million kilo deficit globally. However, Malawi was the only other major exporter who returned crop gains.
However, critical aspect of the tea industry was the cost of production. (COP). Irrespective of increased net sales averages, (NSA) they were hard put to recoup crop losses and turn in profits mainly because of increased wages. And drought conditions that prevailed, they said.
Last year, as reported by us, Plantation Industries Minister D. M. Jayaratne too was concerned that high cost of production should be addressed and Regional Plantation Companies were noticed to consistently monitor this aspect of production.
This year, 2010 tea prices rose significantly and are now at an average above 2009. Good news no doubt, but could this price bonanza be translated to profit, is the question that would need answers.
Lanka Commodity Brokers Ltd reported resurgence in price increases last week. Best Westerns increased Rs 10 per kilo. Nuwara Eliyas, sold at gains of Rs. 20 per kilo well made Uda Pussellawas too sold about Rs. 20. better than last. 6.7 million kilos were on offer last week.
Low-growns did remarkably well. FBOPF/SP and EXSP, metaphor for Flowery Broken Orange Pekoe Fannings, special, and Extra special, sold for Rs. 2,400 per kilo, and moved up to Rs. 3,800 per kilo.
Good prices no doubt, that would have the tea small holders being paid in excess of Rs. 70 per kilo, green leaf.
Tea factory owners too now seem in a better mood because of better prioces.
RPCC however have yet to come up with a turn around formula to ensure consistant profits. 

source - 

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