Possible Russian sanctions to hit Ceylon Tea
Eastern Europe turmoil leading to possible sanctions on Russia is likely to impact
Sri Lanka’s trade in Ceylon Tea.
Sri Lanka exports about 30 million kg of tea to Russia and with the announcement on Tuesday by UK Prime Minister of possible sanctions should Russian troops enter Ukraine the uncertainty is likely to impact exports to this key market.
Colombo Tea Traders Association Chairman Jayantha Karunaratne told the Business Times that the concern is more so because they are unaware of the kind of sanctions that might be brought in against Russia.
But if these sanctions are imposed the volumes will definitely come down, he explained pointing out that Sri Lankan exporters have been used to these sanctions in the past as well.
Moreover, speaking on the sanctions against Iran, another key market for Ceylon Tea, he noted that though Sri Lanka had signed an agreement with Iran on payments for tea by deducting it through the oil debts it is yet to be implemented.
According to this arrangement the Ceylon Petroleum Corporation has to pay US$ 5 million monthly to the tea exporters.
However, Mr. Karunaratne noted that this is not the time for this arrangement to be implemented either since it could send prices higher.
“If you bring in the Iran deal that will generate more demand for Ceylon Tea and that will increase prices further,” he said.
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