Sri Lanka heads for record tea export growth despite estate worker strikes

January 4, 2007 (LBO) – Sri Lanka shipped a record 28 million kilos of tea in November 2006, amidst weeks’ long trade union action that cost over a billion rupees, commodity brokers Asia Siyaka said Thursday.

Despite strike action by unions demanding a wage to cope with a soaring costs of living Sri Lanka exported a record 300.3 million kilos of tea from January to November last year a 7-percent on year rise over 2005.

Russia the biggest importer purchased 72.44 million kilograms last year which was an increase from 63.9 million in 2005.

The total value of exports during last year’s 11 month period was 83 billion rupees or 809 million dollars, a 14 percent increase of 73 billion in 2005.

The rupee gain was a result of seven percent increase on quantity.

Asia Siyaka says the earnings during the 11 month period in 2006 were the highest ever for tea exports, with tea prices fetching an average 2.70 dollars per kilo.

Sri Lanka’s value added exports have declined to 39 percent from the total last year compared to 43 percent of 2005.

Exports of packet tea declined 6.86 million kilos from 79.3 million in 2005 to 72.5 million kilos in 2006.

Asia Siyaka hopes the country’s total exports for 12 months last year will exceed 325 million.

One of the main competitors China exported 291 million kilos in 2005 of which 60 million was black tea.

Second largest black tea exporter Kenya exported only 288 million kilos for the 11 months in 2006 as a result of the drought in the early part of the year.

Sri Lankan tea industry lost over a billion rupees in revenue when unions representing over 250,000 estate workers struck work in November demanding a 50 percent wage hike of 360 rupees.

Both sides struck a compromise in December and estate workers now take home 260 rupees a day.

The new wage deal will cost companies an additional 3 billion rupees a year and increase costs of production to 21 rupees a kilo of tea.