Sri Lanka expects firm tea prices despite commodity bubble burst

Aug 21, 2008 (LBO) – Sri Lankan tea exporters are expecting prices to remain high owing to good quality leaf, savvy marketing and packaging, though the US dollar is strengthening and a global commodity bubble may have burst. Romesh Moraes of the Tea Exporters Association said the trade aims to maintain its price advantage over its main competitor Kenya through marketing techniques that resulted in good profit margins.

Tea prices at the Colombo auctions as well as export prices were consistently higher than those of Mombasa and shipments out of Kenya.

This shows the trade has a differentiation strategy to add value to tea exports by which the benefits of high prices percolate through the entire industry, down to the plantation worker.

Many companies operate out of Mombasa but value addition seems to be done away from that country, Moraes said.

“We do have a battle plan,” he told the association’s annual general meeting recently. “Battle for throat share and battle for brand supremacy.”

Kenya exported 345 million kilos of tea last year and earned 603 million dollars while Sri Lanka shipped 309 million kilos and earned 1.2 billion dollars, he said.

“One argument was that commodity prices across