Tea industry set for tough times
The tea industry was hit hard last year with crop production down by 9 million kgs and 2016 unlikely to pull through any better particularly due to the crises in key export markets. Total tea production in 2015 was 329 million kgs down by 2.4 per cent compared to 2014. Tea Traders Association Chairman Anslem Perera told the Business Times that the weather was the reason for the drop in volume in addition to drop in prices that led to a fall in production due to the crises in key export markets like Iran, Syria, Iraq and Russia.
Sri Lanka’s tea production in 2015 was reportedly down by 9 million kgs compared to the previous year with the bulk of the losses recorded during the period September – December with January 2016 similarly low. It was noted that both the high growns and low growns recorded losses down by 2.5 per cent and 3.6 per cent respectively while medium grown was up by 1 per cent. As a result total figures recorded a drop of 2.7 per cent in tea production. In addition the orthodox teas was down by 2.5 per cent, CTC down by 4.4 per cent and green tea recording losses amounting to 10 per cent.
Gains in the mid growns was stated to be due to transfer of crop from other elevations and the report on the statistics issued by Asia Siyaka Commodities noted that January, February and March recorded production amounting to 23 million kgs, 25 million kgs and 30 million kgs respectively. However, in view of the current weather pattern an outlook it seemed unlikely that the first quarter of this year could reach these levels, the report said. Mr. Perera also said they hoped to see an improvement this year mainly due to the impact on trade due to lifting of sanction on Iran by the United States (US).
However, the situation in Iran and Syria with the effects of the Islamic militant groups, ISIS, and US strikes on these countries, could hamper trading teas to these key markets. Further, in relation to the Russian currency that was going down last year, Mr. Perera explained that they did not expect the currency to improve. In this respect, he said “2016 could be worse than 2015….we don’t see an improvement unless there’s an improvement in the Middle East and Russia.” Wages was also expected to have a hamper on the tea prices if the pay of workers was increased, he said.
In the meantime, International Trade Minister Sujeewa Senasinghe held a meeting with a group of tea exporters together with the Export Development Board (EDB) and the idea of leveraging foreign made teas to strategically enhance Sri Lanka’s tea export goals and sustain its tea hub reputation came under in-depth discussion. Among the firms joining the January 19 discussion were Akbar Bros, George Steuart Teas Pvt Ltd, Jafferjee Bros Exports Ltd, and Imperial Tea, a release issued by the EDB said.
The exporters stressed that Sri Lanka produces approximately 340 metric tons of tea but they faced many obstacles in the export of domestically produced volumes in a smooth manner and said that with domestic volumes alone, it would be difficult to achieve US$3 billion tea exports by 2020. The exporters noted that they were saddled with heavy tariffs imposed at certain global markets as well as various non-tariff barriers in some other markets.