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Sri Lanka tea trade under pressure in first quarter, after record earnings in 2006

February 03 (LBO) - Sri Lanka's tea crop is set to drop in January after record earnings in the past year, as unfavourable weather slowed a recovery of strike-hit estates, industry officials said. "Estates which normally send had 8,000 to 10,000 kilograms to the auctions, are sending about 2,500 kilograms," says Lal Alawattegama, of Asia Siyaka Commodities, a tea brokerage in Colombo. "That is a sharp drop." January production data are due next week. In 2006, Sri Lanka exported a record 327 million kilograms of tea, helped by carry-overs from 2005 and re-exports of 12.4 million kilos of imported tea, despite production falling to 310 million kilos from 317 in 2005, according to Sri Lanka Tea Board and Customs data quoted by brokers. A strike which disrupted production late last year, but a removal of a fertilizer subsidy by government is also taking its toll. Though the strike was settled in the third week of December, its effects are lingering. Bushes were not plucked for long enough for leaf to mature, needing a light pruning known as a cut-across, a task usually performed by male plantation workers. "It takes some time to do a cut-across of an entire estate," says Alawattagama. "Then we had unfavourable weather in January which delayed bushes from coming in to flush," he adds. As a result, some estates would be back to full strength only in February.         In 2006 Sri Lanka earned 91 billion rupees (881 million US dollars) with most of the tea going to the Middle East and African countries. Russia and CIS countries bought 29.4 million kilos of Ceylon tea, earning the top spot, the United Arab Emirates came second with 44 million kilos, Syria came third with 30 million while Iran came fourth with 28 million kilos of tea. Low-growns continued to lead the way, with production of 183 million kilograms compared with 73 million for high-growns. .  
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