Sri Lanka scales down tea production forecasts as trade union strikes continue

December 07, 2006 (LBO) – Sri Lanka is unlikely to reach last year’s tea production record, as trade unions strikes on estates since November over a wage hike, shows no signs of slowing. December production is likely to reach about 21 million kilos over the usual 25 million kilos. “The outlook for January too is not optimistic at the moment,” Asia Siyaka said.

Scaled down annual forecasts for this year is in the region of 300 to 305 million kilos over the 317 million kilos last year, with mid to higher growing elevations the most affected.

Commodity brokers say recovery on estates could take weeks, even leading into January as overgrown tea bushes have to be pruned before they can be plucked again.

“Plantation Managers estimate that many of the over grown bushes will now need to be pruned and recovery could take two to three weeks,” Asia Siyaka Commodity Brokers said.

“This would mean that even if the current dispute is resolved soon, the recovery could extend into the last week of December or depending on how long it takes to resume work, even as late as early January. Even then workers stay away some 3 to 5 days during the Thai Pongal festival held on January 15. It seems that this too will be an issue.”

Trade unions representing over 250,000 estate workers clashed with plantation companies over a wage hike, which is fixed every three years.

Trade unions want a daily wage of 280 rupees a day, inclusive of allowances, over the existing 180 rupees a day. Companies have offered a maximum of 250 rupees a day, adding that companies cannot sustain a further hike.

Talks broke down over a week ago, with work coming to a total halt on estates on most high and mid grown elevations, Asia Siyaka said.

Heavy rains until mid November also affected crop intakes on estates, with the go-slow since that time resulting in very little crop being harvested.

November tea production is expected to be well below last year at 26 million kilos at about 20-23 million kilos.

High and mid grown elevations are likely to lose three to four million kilos, Asia Siyaka said, while low grown elevation teas would have also lost crop due to bad weather.