Good Time for Sri Lanka - Tea prices unmoved by India pest attack

International tea prices remained firm despite a pest attack on India’s farms, the Tea Board of Kenya (TBK) said disappointing farmers who had hoped for a windfall arising from lower output.

The board’s managing director Sicily Kariuki said India contributes a relatively small portion of the global supply, meaning its absence would not unsettle the market.

“We don’t anticipate much because India’s contribution in terms of volume is relatively small,” Ms Kariuki said.

A pest attack of helopeltis has affected tea farms in the north-eastern state of Assam, which is India’s largest tea producing zone, cutting the country’s tea output in June by 11.9 per cent and lifting domestic tea prices by nearly 15 per cent since late July.

Good harvests from leading global producers as a result of good weather are also expected to dampen the effects of production cuts in India.

Statistics showed that over the first half of 2010 tea production in Sri Lanka increased 26 per cent over a similar period last year.

Locally, Mrs Kariuki said both production and earning is expected to grow substantially, driven by quality and demand.

Kenya’s tea production this year is likely to rise 5 to 10 per cent above the 2009 levels of 315 million kilograms supported by good weather conditions that have been experienced since December last year.

Sufficient rains over the first half of the year helped improve both output and crop quality that had suffered serious damages from prolonged drought conditions in 2009.

She added that the ongoing humanitarian crisis in Pakistan was unlikely to have an impact on Kenyan tea exports in the short term.

Pakistan is among the leading export destinations of Kenyan tea.

“Prices and exports have remained stable since the flooding in Pakistan began but we are not ruling out any effects in the long term,” she said.

Purchasing power

Pakistan has in the last fortnight experienced serious floods that have claimed 1,600 lives, displaced two million people and disrupted the livelihoods of 14 million people, or 8 per cent of Pakistan’s population of 172 million.

Such disruptions directly threat the purchasing power of individual households, a development that may have an effect on imports as buyers turn to more essential commodities.

'We haven’t recovered yet but the demand for tea is unlikely to change much because even some of the displaced people may need to keep warm with beverages such as tea,” Mrs Kariuki said.

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