Tea producing countries agree to control production
 

by Channa Kasturisinghe

Some important decisions with regard to world tea production which were taken at the Intergovernmental Group meeting on Tea held in Bali from July 20 to 22 would augur well for Sri Lanka's tea industry.

The Chairman of Sri Lanka Tea Board, Niraj de Mel who led the Sri Lankan delegation at this meeting told the Daily News that world tea producing countries arrived at a consensus to control tea production which would enable tea prices to remain at a reasonable level.

"Due to oversupply world tea prices dipped during the recent years which has affected Sri Lanka's tea industry. We have been lobbying to get the major tea producing countries to address the issue of oversupply of tea to the world market. However, countries such as Kenya were opposing any move to control tea production," de Mel said.

He said at the recent meeting in Bali such countries positively responded as far as addressing this issue was concerned. He said the tea producing countries were also concerned about controlling poor quality tea coming to the world market.

The meeting of the Intergovernmental Group on Tea was preceded by the International Tea Business Conference from July 10 to 19 which also took place in Bali. The Intergovernmental Group on Tea monitors market conditions and provides an update of potential market prospects for tea over the medium term.

World tea production continued to reach new highs in 2004, when output grew by 2 percent to reach an estimated 3.2 million tonnes. The expansion was due mainly to the increases recorded in Turkey, China, Kenya, Malawi, Sri Lanka and Indonesia.

The growth in output from these countries more than offset declines in other major producing countries including India and Bangladesh. Production in Turkey was reported to have expanded dramatically in 2004 as output increased by 32 percent to reach 2,05,431 tonnes. As there were no reported new areas planted in the last five years, it is assumed that the expansion was due to higher yields.

Tea production in Sri Lanka increased slightly by 1.3 percent to 309,000 tonnes in 2004, reflecting the recovery from crop losses after devastating floods in low grown tea areas of the island in 2003. This region usually accounts for more than 50 percent of the country's tea output.

Tea exports from Sri Lanka were 290,604 tonnes in 2004 compared to 291,472 tonnes in 2003, a marginal gain of some 0.3 percent. Attempts to expand demand for Sri Lankan tea in the Far East have led to the establishment of a tea promotion office in Tokyo to promote black tea exports to the predominantly green tea markets of China, Japan and the Republic of Korea in 2003.

The Food And Agriculture Organisation's Composite price, as a world price indicator for tea, increased by 2 percent in 2004, reflecting the significant gains in the Calcutta and Mombasa auctions.

Prices in 2004 opened at US $1.56 per kg in January and after increasing to US$1.65 per kg in April declined to US$1.56 per kg in June, before surging to US $1.77 per kg in September and closing at US $1.73 per kg in December.

Sri Sri Lanka, the second largest exporting country in the world, is expected to increase exports by 1.2 percent annually to reach 330,000 tonnes by 2014, continuing to account for 25 percent of the global total.