Sri Lankan plantation companies suffer combined loss of Rs.2.9 bln in 2014
View(s):Nineteen Regional Plantation Companies (RPCs), troubled by plummeting tea prices, a rubber market at an all-time low and high production costs, have collectively made a staggering loss of nearly Rs. 2,850 million on rubber and tea in 2014, the Planters Asociation (PA) said this week.
By the end of 2014, on average RPCs were making a loss of approximately Rs. 30 on each kg of tea sold, with average cost of production at Rs. 455 with Net Sales Average at just Rs. 425. In the case of rubber, the other main crop cultivated by most RPCs, the loss on each kg was even higher at Rs. 35, with average cost of production at Rs. 327 but Net Sales Average at only Rs. 292, according to a PA statement.
“The situation is now (further) aggravated leading to further accumulation of losses with the average tea prices declining sharply at the Colombo Tea Auction within the first two months of 2015. Prices have slumped below corresponding levels in 2014, despite the increased cost of production since then,” it said.
Roshan Rajadurai, Chairman of the PA which represents the RPCs, says, “tea is available the world over at Tea Producing Auction Centres at around US$ 2 a kg and therefore tea traders tend to buy cheaper teas from these origins because of the cash flow and liquidity problems they themselves face. Our tea prices are in the range of $3 and above. In this scenario, the immediate survival and by extension the sustenance of the over one million population resident in our estates is facing a great danger, as we are finding it extremely difficult to manage our day-to-day operations and commitments.”
Rubber losses too have spiralled and some RPCs are now on average incurring a loss of around Rs. 70 per kg of rubber sold.