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Monday, September 19, 2011

Tea brews mixed results

Exports volume to Middle East up but industry fears danger of price fluctuations towards year end

By Uditha Jayasinghe

Brewing with mixed fortunes, tea exports have faced the Middle East unrest well, but future price fluctuations may pose challenges in the short term, say industry experts.

Despite the challenges of the ongoing turmoil in the Middle East and North Africa, Sri Lanka’s tea exports have performed well during the first half of the year, Tea Board statistics show.

Around 55% of all tea exports from Sri Lanka are destined to the Middle East, Gulf and North African regions. It is significant that Ceylon Tea consignments have continued to reach these traditional markets despite the prevailing environment. In the first seven months of 2011, total tea exports amounted to 178.7 million kilos worth Rs. 91.65 billion, up from 172 million kilos and Rs. 85 billion respectively.

However, price fluctuations in the short term could pose challenges to the industry. Sri Lanka Tea Exporters Association Chairman Niraj de Mel remarked that prices had been changing in the last few weeks, prompting concern regarding prices even though tea volumes had remained staunch.

“Generally during the last few months of the year the demand from Middle East tends to reduce, but we are hoping that the gap will be filled by increased demand from Russia,” he said, adding that winter usually brought better sales from Sri Lanka’s biggest tea buyer.

Currently Russia sources around 43% of its total tea imports from Sri Lanka.

Iran has purchased 17 million kilos from Sri Lanka during the first seven months of 2011 in comparison to 14.6 million kilos in the corresponding period of 2010, reflecting an increase of 16%. Exports to Iraq had grown to 11.5 million kilos from 7.5 million whilst Syria had purchased 15.6 million kilos in comparison to 15 million kilos in the first seven months of last year.

Given the escalating hostilities in Libya, there has been a significant reduction of 3.7 million kilos or 63% (2.1 million kilos as against 5.8 million kilos during the corresponding period of 2010).

“However, we have seen a significant increase in cross border trades with access to eastern regions of Libya through Egypt and shipments to Gadaffi-controlled western regions of Tripoli through Tunisia,” Tea Board Director of Promotions Hasitha de Alwis told the Daily FT.

source - www.ft.lk