Monday, April 5, 2010

Sri Lanka - Tea prices records tumble - Good Time for Plantation companies

By Steve A. Morrell

True there is nothing sensational if we say prices were good. They were. But last week Uda Radella, a Tea Garden on the upper reaches of the Great Western Range of mountains, achieved an all time record price of Rs.1310. per kilo.

Our reading audience might be somewhat confused because there were instances we said Rs. 5000. per kilo was a record price; we would also have said Rs700. Was a record price What we said then was true and accurate.

But Uda Radella achieved these prices for BOP; and a packed quantity of just about 1000 kilos or 20 chests making up an ‘invoice’; common tea jargon for minimum quantity to make up 1000 kilos Ex Estate ‘invoices’

Kelani Valley Plantations Ltd. Manage Uda Radella, under Hayleys Group of Companies.

The sale was handled by John Keels Ltd. And we are further informed this particular BOP Line will be en route to Japan.

Average tea prices this year were on an all time high effective January. Quoting the Chairman Sri Lanka Tea Board Lalith Hettiarachchi, who said he was confident this year would be a good year for tea, his predictions are now gradually gaining fruition. As for crop improvement, we said last week that low grown had appreciated considerably, mostly tea crop from Tea Small Holders. RPC-managed tea holdings have not had tangible competitive edge to negate fact that the small holders are now more productive than the more fancied formalized tea sector. This was physically proved as contained in the Tea Board circular on production for February this year.

Water was the most drunk ‘beverage’ but through constant hype that Tea is a health drink, tea will replace water as the most drunk beverage in the short term.

Ceylon Tea Brokers said in their weekly tea market report, quoting from BBC World that tea was now the global beverage, most drunk, replacing water and coffee.

The report also said, because of the Tea challenge, ‘Starbucks,’ the main coffee phenomenon developer, faced with the tea challenge, are now closing down their low sales outlets worldwide reportedly quite at a loss to counter the tea juggernaut.

Would such pluses have salutary effects on the tea industry here?

Our discussions with two tea firms point to positive circumspection. These tea companies will do well this year, they said.

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