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| Thursday, 22 April 2004 |
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Tea records highest average price by Steve A. Morrell
These records were broken this year with a kilo being sold at Rs. 3.35 per kilo more, an increase of 2%. Tea sources said this price achievement is quite considerable and should have a salutary impact at estate level. Plantation sources said that this should have been the outcome. "Costs have seen a cork-screw spiral, and Ceylon tea could not be quite that competitive in the world market," they said. They itemised cost components and confirmed that the labour factor was the highest on their cost of production list which absorbed 65%-70% on costs per kilo. "The sum total of it all is that prices although high, have been totally negated by high costs, because of the drought which prevailed in December 2003 through March 2004, which resulted in low crops," they said. "When production is low unit costs increase and although the public image is one of euphoria the hard facts are that the tea industry is not in an enviable position", they said. Plantation Company sources said that their costs were high and that crops were low compared to last year. Although drought conditions prevailed in December 2003 through March 2004 tea exports have increased compared to the same period last year. 80.7 million kilos were sold to end March 2004. 77.6 million kilos were exported last year, an increase of roughly three million kilos. Brokers said that the main crop contributors were Uva and the Galle districts which experienced moist conditions in December last year, and also early January 2004. "The smallholder land tracts made the difference", they said. CIS countries continued to support our teas. In the short term this position would hold, but they were wary of making a firm statement on these prices being sustained in the years to come. This year, however, will be a bright year for prices". "Ceylon Tea is expensive, and unless the industry takes a long hard look at these realities, we would loose out on our options to remain competitive", the brokers said. The "Common Market for Eastern and Southern Africa", COMESA, factor has caused serious concern in trade circles, because we have lost to Kenya in countries such as Egypt. Egypt, like Pakistan, was one of our major buyers but the Kenyan CTC (Cut Twist & Curl), has usurped 'Ceylons', and their buying has dwindled down to merely token levels. COMESA is the unified trade Block for African countries, which has influenced their tea buying habits. The real cause for the shift was that they could no longer afford to buy tea from Sri Lanka because it was beyond what they were prepared to pay. "The Kenyans were at hand and much cheaper", they said. Unless there was collective strategy formulation to meet this challenge, we would gradually lose our market destinations, and that would be serious, the brokers said. Due to the escalation of hostilities in Iraq, the trade was concerned that orders to that country would be affected, but shippers were confident that forward orders would not hold any risks of sudden cancellations. The Iraqi order was quite substantial, they said. At producer and buyer levels, the collective inferences were that the new Minister would address these urgent issues and suggest sustainable alternatives. |
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Produced by Lake House |
Tea prices to end March 2004 have recorded the highest ever average of
Rs. 167.85 per kilo compared to the corresponding period last year where a
kilo fetched Rs. 164.50.
