Sri Lanka drought dries up tea company cash flows

Oct 04, 2012 (LBO) – A severe drought has damaged tea plants in key Sri Lankan growing regions causing crop losses and cash flow problems for some plantations companies already grappling with high production costs. A statement from the Planters’ Association, which represents listed plantation companies, said some factories had been forced to close owing to low leaf intake, depriving workers of work.

The Planters™ Association of Ceylon said the drought is the worst the country has faced since 1992, with large parts of the island’s tea plantations being “devastated”.

Regional Plantation Companies were facing a “drastic drop” in crop intake due to the severe drought, with output of high grown teas falling by 11.6 percent during January to August this year from a year ago, it said.

According to the Sri Lanka Tea Board, tea production in the high grown elevation during the eight month period dropped to 48.3 million kilos from 54.7 million recorded during the same period last year.

Total tea production from all three growing elevations during the period fell 3.1 percent to 214.4 million kilos from 221.1 million kilos in the same period in 2011.

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