Sri Lanka tea earnings seen holding up despite lower crop

Dec 24, 2009 (LBO) – Sri Lanka’s tea production this year will be
lower than in 2008 because of drought and a strike but earnings should
match last year’s as prices have been good, a senior official said. “Prices have been good – at least 10-12 percent more than last year.”

Sri Lankan tea prices had a good run last year until around October
when prices crashed with the bursting of the global commodities
bubble.

But prices recovered this year as drought in key export origins like
Sri Lanka, Kenya and India reduced the crop.

However, the Food and Agriculture Organisation has forecast crops will
recover next year on better weather, with prices seen easing from
record highs. Sri Lanka Tea Board chairman Lalith Hettiarachchi said the crop up to
November this year is only about 263 million kilos.

“This means we’ll probably end the year with just about 290 million
kilos,” he said.

The island produced about 318.5 million kilos of black tea in 2008 and
earned about 1.27 billion dollars through exports.

A strike by estate labour unions in the third quarter of this year
disrupted cropping. The crops had also been reduced earlier in the
year because of drought.

Hettiarac