Sri Lanka tea trade warns of threat to Middle East market

Mar 15, 2012 (LBO) – Sri Lanka’s tea industry has called for urgent improvements in productivity and new markets to ride out volatility in major Middle Eastern markets that continue to dampen tea export earnings.

January and February tea prices have averaged about 40 rupees a kilo below that of January February 2011. While there is strong demand for tea in global markets, price increases for Ceylon tea, to compensate for increased cost of production, is seen as unlikely, the Planters’ Association said in a statement.

Uncertainty in Middle Eastern countries, that account for a majority of Ceylon tea exports, continues to cloud industry earning prospects for the year, it said.

Tea brokers and exporters said that about 55 percent of Sri Lankan tea is going into the Middle East.

Out of this, Iran is the biggest buyer of Ceylon tea, followed by Syria.

Both countries are under sanctions and sanctions on Iran are expected to intensify in July. Libya, another strong Middle Eastern tea market, has still not recovered from recent political changes.

“Come July, exporters and brokers anticipate higher costs and longer payment delays in exporting to Iran, when US sanctions on Iran intens