Storm brews in Ceylon tea cup with falling auction prices

By Shabiya Ali Ahlam
Storm brews in the Ceylon tea cup as the monthly tea auction prices took a further plunge in September, despite being a promising season for recovery.
While the low, high, and medium grown sectors dropped to Rs.368.18, Rs.379.81, and Rs.334.37, a decline of Rs.71.33, Rs.19.62 and Rs.46.82 compared to the corresponding month the previous year, top industry representatives attributed the low prices to a combination of circumstances which are international in dimension.

“It started with global supply increase all around from the main producing countries and extended to problems in our key importing segments.
“The biggest problem that tipped the scale was the steady collapse of the Syrian market and the sharp drop in the Russian ruble against the US dollar. This caused severe hardship to our exporters and the entire value chain was undermined,” Colombo Brokers’ Association Chairman Anil Cooke said. 

The auction prices for Ceylon tea have been on a declining trend since the beginning of this year, worsening the situation the industry is currently faced with.
Noting the tea trade is surrounded with uncertainty, Tea Exporters Association Chairman Rohan Fernando asserted that there are no positive factors emerging for the market to move on.
“We hope it (auction prices) doesn’t reduce any further. The local tea industry is operating in a highly uncertain environment. 
“To make matters worse, other auction centres are selling tea US $ 1 cheaper than Sri Lanka.  Ceylon tea is now perceived as a product that is not affordable to our traditional buyers,” he said.
Typically during September, which is the winter season in majority of the tea importing, the market performs better than other months. However this year it was not the case.
Sri Lanka was at a slight advantage few months ago due to a crop shortfall in Kenya, but the price recovery in Colombo for high growns diminished as the production dropped amid heavy rain. This led to the market having a higher price accompanied by a higher cost.
“That is worrisome. All stakeholders of the industry are suffering. Unless there is the political will to take strong decisions in the future, we will be in the dark in the short term,” Fernando cautioned.