Sri Lankan February tea output lowest in decade

April 19, 2007 (LBO) - Sri Lanka's tea production in February fell to its lowest monthly level in 10 years because a strike by labour unions and bad weather affected the crop late last year, brokers said. Among the worst hit were top high grown tea growing areas like Bogawantalawa and Talawakelle.
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The February tea production at 17.5 million kg was the lowest since the drought year of 1997, Brokers Asia Siyaka Commodities said.

"This year's figure is down a massive 23% on the 2006 figure of 22.9 million kg." High Grown production crashed to 3.6 million kg, the lowest since the 1982 drought when 3.4 million kg was produced. This February's high grown production was 32 percent lower than the 5.

3 million kg achieved in the same month in 2006. Brokers Asia Siyaka Commodities said Ceylon tea production was likely to come back to normal levels only in May.

"Estates were forced to prune and discard overgrown tea after the strike," the brokers said in a report.

"The bushes could not recover as there was little or nor rain thereafter and losses would have continued to mount through March." March production too is expected to be sharply lower than last year's very high 29 million kg. Low grown teas, that make up over half the crop and are produced mainly by small holders, also fell sharply in February as a result of dry weather.

Production fell 21 percent to 10.

7 million kg, the lowest crop since 1998.

Worst hit was the Ratnapura sub-district with neighbouring Balangoda also showing a shortfall, but to a lesser extent. In the southern area, Galle, Deniyaya and Morawaka also recorded the sharpest production drops compared with 2006. Tea pluckers and other estate workers went on strike in November 2006 to back demands for higher pay, which they eventually won. The industrial action brought work on most up-country estates to a complete halt, resulting in the neglect of bushes which took time to recover. "The strike and subsequent drought also delayed application of fertilizer," Asia Siyaka Commodities said. "Most estates and small holders could have only resumed applications in end-March or early in April, results of which would be visible from end-May.

" Losses on estates due to the strike, reduced income to small holders due to the drought and the sharp rise in the cost of fertilizer would affect future fertilizer applications, they said. The mid grown elevation, which has a mix of estates and a proportion of small holders, produced 2.9 million kg of tea in February 2007, down 19% from the year before. "Not since the El- Nino year of 1992, when a similar quantity of 2.

6 million kg was produced, has such a low figure been recorded," the brokers said.

On the Western slopes, production fell sharply in Nawalapitiya and Hatton. Supply shortages at the Colombo tea auctions caused by the strike led to a sharp increase in prices as buyers scrambled to buy to meet overseas orders. But the brokers said the high auction prices for the smaller volume on offer did not make up for crop losses.



"We believe therefore that the higher costs not just from wages and historic losses, will impact on production by Regional Plantations Companies through 2007."