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Sri Lankan tea output seen lower

Oct 30, 2008 (LBO) – Sri Lankan tea production is expected to fall with a religious holiday stopping plucking this week and factories focusing on making better quality teas, brokers said.

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Demand also improved at the Colombo auctions after the state-run Tea Board intervened to buy stocks, prompting other buyers to resume purchases.

Prices fell sharply at recent auctions and large volumes of tea, especially low grown varieties, remained unsold.

The sudden development created a crisis with brokers and factory owners facing cash flow problems, resulting in lower prices for small farmers who supply the green leaf.

Forbes & Walker Tea Brokers said the crop intake for all high grown teas will show a decrease mainly due to the work stoppage for the Hindu Deepavali festival which took place on Monday.

"Low growns will show a decrease due to all factories going in for finer leaf and a quality product."

The authorities have urged producers to make only good teas to reduce volumes and prop up prices.

Anil Cooke, president of brokers Asia Siyaka Commod

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