Tea exports have not caught up with growing production

Sri Lanka’s tea exports have not caught up with its fast growing production this year, with the difference between the two quantities notching up to 27 million kilos, up from an average 10 million kilos in other years. Industry watchers however say the extra teas could be absorbed in the current winter buying.

The higher than average gap between production and exports comes as a result of a bumper tea crop coming out of the April and May holiday season.

Industry watchers say the quality of teas suffered with the increase in the crop, with buyers not too keen on marginal quality teas.

The weekly and monthly sales average that took a beating due to the marginal quality teas are still to recover against 2004 averages.

Forbes and Walkers Commodity Brokers reported that the average price of all teas sold in September 2005 was Rs.192.12 per kilo – an 8 percent increase on the August average of Rs.178.13.

The national average for September 2004 was however higher at Rs.195.17 with August of that year also posting a higher Rs.188.53.

The sales average for the year however is on the high side, thanks to higher prices in the beginning of the year and higher prices for the low grown tea crop.

The total sale average up to September 2005 notched up to Rs.182.74 against Rs.170.88 posted in 2004.

Meanwhile statistics published by Asia Siyaka Commodity Brokers in their weekly report indicates that Sri Lanka recorded a nine million kilo increase in packeted tea exports as tariff barriers in some tea importing countries are relaxed and new market for Ceylon tea emerge.

Officials said higher shipment to Libya and a move by Egypt to cut duty on packed teas helped Sri Lanka export a total 52.49 mn kilos in packeted form.

A number of other tea importing countries have also reportedly cut tariffs on packeted tea shipments.

Officials say the increase in packed teas was partially responsible for the drop in bulk tea exports and the overall drop in exports up to Aughst 2005.

Bulk tea exports dropped to 144.58 million kilos from 127.1 million kilos last year.

Bulk teas accounted for 53 percent of all teas exported in 2005, again down from 64 percent in 2004.

While lower bulk teas exports is the strategy Sri Lanka should look to adopt it should also look to increase other streams of exports to take up the teas left from the volume exports.

-Shafraz Farook: shafraz@vanguardlk.com