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July tea output falls 4% on drought

23 August 2012 05:47 am - 0     - {{hitsCtrl.values.hits}}

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Sri Lanka's tea production fell in July for a sixth straight month, data from the state-run tea board showed on Thursday, as an extended drought sapped output of the island nation's top agricultural export commodity.

Sri Lanka's July tea output fell 4.2 percent to 24.11 million kg, from 25.17 million in the same month a year ago.

Production in the first seven months dropped 3.9 percent to 188.16 million kg from 195.83 million in the corresponding 2011 period.

"The shortfall comes from the high- and medium-grown tea since we didn't have proper rainfall from April," said Anil Cooke, head of tea broker Asia Siyaka Commodities.

Cooke also said the cost of production had shot up, forcing some tea factories to close operations temporarily as thedrought hit output.

The Indian Ocean island nation now expects 2012 tea production of around 325 million kg, below its original target of 330 million kg, because of the drought.

Sri Lanka produced 328.37 million kg of tea last year and the tea board expects 2012 tea export revenue to hit a record, surpassing last year's $1.5 billion, on the back of higher prices. Output hit a record 331.43 million kg in 2010.

Revenue from tea has fallen 10.8 percent to $530.1 million in the first five months of 2012 versus the previous year, the latest central bank data showed.
Analysts say the earnings outlook for 2012 is unclear due to a possible dip in exports to Iran, which buys a fifth of Sri Lanka's tea directly.

Other Middle East countries are also major buyers, but political turmoil may limit their appetite for Sri Lankan tea, traders say.

Tea is one of the $59 billion economy's main foreign currency earners, along with remittances, garment exports and tourism. (Reuters)
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