Sri Lanka tea estates still making heavy losses

Sept 30, 2011 (LBO) – Tea estates in Sri Lanka’s central hills have had no respite from a market downturn and continue to incur losses of 150 rupees a kilo owing to lower prices and crops, a broker said. However, despite lower crops in recent months, an anticipated recovery in production in the last quarter could enable the island to match last year’s record output, John Keells tea brokers said.

“With eight months of the year gone by, plantations have had no respite from the low crops and weak markets we have witnessed, particularly during the third quarter of 2011,” they said in a report.

Although at recent sales, there has been a slight revival in prices particularly for the BOPFs grade with Russia showing good inquiry, price levels for the ‘Below Best’ and plainer teas continue to fall “well short” of current production cost, they said.

The situation has been made worse with low crop intakes from all three elevations owing to erratic weather.

Most estates in the high and medium elevations are run by plantations companies listed on the Colombo bourse.

“The present cost of production (in) most estates in the ‘High Grown’ sector in the past three months have been averaging abov