Sri Lanka’s tea industry continues to be depressed in November and December compared to 2014, with lower volumes and prices recorded in both exports and the Colombo Tea Auction, according to a report by Forbes & Walker Tea Brokers (Pvt) Limited.
“Sri Lanka tea exports for November 2015 totalled 26.3 million kilogrammes (kgs), showing a decrease of 2.6 million kg vis-à-vis 28.9 million kg of November 2014,” Forbes & Walker said.
In a further disappointment, volumes of tea packet exports fell to 11.96 million kg at Rs.544.41 per kg from 15.59 million kg at Rs.566.82 per kg year-on-year (yoy), and volumes of tea bags fell to 1.79 million kg at Rs.1,182.21 per kg from 2.41 million kgs at 1,107.61 per kg yoy.
The least value-added bulk tea recorded a growth, increasing to 12.02 million kg at Rs.498.56 per kg from 10.33 million kg at Rs.550 per kg.
“Total revenue of Rs.15.4 billion realized for November 2015 too show a decrease of approximately Rs.2.6 billion vis-à-vis Rs.18.01 billion of November 2014,” Forbes and Walker said.
The report noted that export volumes from January to November fell to 281.5 million kg with revenues also declining to Rs.166.9 billion from 297.5 million kg and Rs.194.2 billion respectively yoy.
“Russia followed by Turkey and Iraq have emerged as the largest importers of Sri Lankan Tea for January – November 2015. Iran and UAE are some of the other noteworthy importers. Meanwhile Pakistan, India and China too show a fairly significant growth in imports,” the report said.
At the Colombo Tea Auction last week, just 6.5 million kg of tea went under the hammer compared to 7.19 million kg yoy.
“Most markets were less active-possibly a combination of the plainer quality and the ensuing holiday period,” Forbes and Walker opined.
However, Ceylon Tea Brokers PLC, in its report, said that the Mombasa auction saw strong and improved demand, with just 7.29 percent of the teas remaining unsold.
In Sri Lanka, the unsold lots have amounted to around 40-50 percent in recent months.
Prices at the Colombo Auction declined by between Rs.5-30 across most categories this week compared to the preceding week due to poorer or irregular quality.
In the sales of December 15-16, the average price per kg was Rs.420.15, falling from Rs.437.12 in 2014, and Rs.503.80 in 2013. The tea prices in the year to date averaged Rs.400.70 per kg, falling from Rs.461.78 in 2014 and Rs.442.29 in 2013.
The cost of production is considered to be around Rs.440 per kg of tea, with 70 percent of the cost comprised of labour. While wage negotiations of the Regional Plantation Companies are in a deadlock, the recent budget requested the private sector to provide a Rs. 2,500 wage increase.
In the production side, 25.2 million kg were produced in November compared to 29.9 million kg yoy. In the year to date, production amounted to 305.3 million kg, falling from 313.7 million kg yoy. Low grown leaf has showed an increase in production, while high and medium grown teas showed a decline.