High demand for Lankan tea this year

Hiran H.Senewiratne

The demand for Sri Lankan tea this year would increase from Commonwealth of Independent States (CIS) countries and Middle-Eastern markets, industry sources said.

There will be strong demand for Sri Lankan tea in the first two months of this year as a result of world's largest tea exporter Kenya experiencing civil riots.

As a result of this, movement of goods especially tea and other goods have been restricted, Vice President Asia Siyaka Dinal Fernando said.

Therefore, the quality of high grown teas will improve prices for high volumes in the next few months," he said.

He said 2008 would be a good year for the industry as many Western CIS countries are purchasing tea from Finland and due to that shipments to Finland has increased remarkably. Further, Iraq is stepping up purchasing high grown quality Sri Lanka tea.

With these developments in the sector tea brokers are expecting that there would be a big demand for especially high grown tea this year, Fernando said.

This year an additional demand is also coming from many countries including Iran, Finland, and Libya. The international tea market will become conducive for the Sri Lankan tea this year. "But in the long-term perspective other competitors including Kenya, Vietnam, India and other tea producing countries will convert into operations in orthodox tea consuming countries.

This would impact the Sri Lanka tea market with the high cost of production in the region," he said.

Fernando said the market was becoming very strong and it had recorded a highest ever market price in the history in December.

It went up to Rs 357.47 for a kilogram in December due to the 16 million kilo short fall of tea production last year due to the drought and non-application of fertilizer for tea estates during the last year.

Most of the tea is coming from tea smallholders and most of them refrain from applying fertilizer for their tea gardens.

The overall tea crop as end of November 2007 kg 269 million and the corresponding year production was kg 289 million, which is a seven per cent, overall drop in production.