Wednesday, October 5, 2011

Value added tea exports plummet

Auction prices fall attracting buyer interest, but plantations take a hit

By Steve A. Morrell

Packeted tea, tea bags, and other export categories, apart from bulk exports, have declined considerably, export data up to end August showed.

Chairman Asia Siyaka Tea Brokers Plc., Anil Cooke told the Island Financial Review there was a distinct reduction in value- added exports, although both Ministry and Tea Board sources have continuously said value addition was critical for future progress of the industry. Packeted Tea had dropped 40 percent year-on-year and tea bag exports fell 8 percent.

"However, there is some good news," Cooke said. Colombo had attained more conducive price positioning and was now more attractive to buyers, because based on dollar cent values, auction prices had dipped to more attractive levels. "We are not pricing ourselves out. Conversely, Kenya has now entered the ‘over priced ‘category, and were faced with the specter of loosing buyers," he said.

But the regressive slide of Colombo averages has affected plantations. Cost of production at Estate level is now about Rs. 450 per kilo, and sales averages are just about Rs. 300 per kilo.

At the time of writing we were not in a position to talk to plantation sources, but going by what was said at the Ceylon Planters’ Society (CPS) Annual General Meeting last week, indications are clear that the plantations were subjected to belt tightening. Nobody was quite that happy at their 75th anniversary celebrations.

Our discussion with Anil Cooke also centered on the Syrian memorandum, banning imports of luxury goods into Syria. He said the tea trade was not quite certain if such restrictions were also applicable to Ceylon Tea. Particularly that value added products to Syria far out classed bulk exports.

Syria imported approximately 18 million kilos to date this year. Their value added quantum was around 16 million kilos.

Tea exports to Russia and CIS countries increased significantly. To end August this year these countries took in 53 million kilos, against 46 million kilos a year earlier.

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