Tea report

Bartleet Produce Marketing tea report:

Selective buying from Saudi Arabia, Turkey

The quantity of tea arriving at the Colombo auction this week increased to 7.785 m kg from 7.752 m kg traded in the previous week’s sale. Meanwhile, the ex-estate crops showed a decrease from 0.972 m kg to 0.931 m kg.

Market segments

In the ex-estate segment a steady market was witnessed where select best varieties were mostly firm to dearer than last week. The Uva’s were strong whilst the Udapussellawas were weak. Due to the Darjilling set back the light liquoring teas were quite strong. The UK and Continent were buying quite heavily whilst Japan and the CIS displayed a strong buying pattern too.

The Uva seasonal teas are getting brighter and it is forecasted that from the beginning of August till mid-August will witness more improvements in the teas.

The market is anticipated to be quite strong till the end of September whilst any increase in the crop will not see much of a price reduction due to the reduced volumes from other auctions around the globe.

In the Tippy market segment, fair demand was witnessed where buyers from Iran and Dubai were active whilst the CIS was moderate. Very selective buying patterns were witnessed from Saudi Arabia and Turkey.

In the Leafy grade segment, well made neater teas of OP, OPA categories picked up this week due to few inquiries for some good quality teas from Russia.

This could be an indication of winter buying. Though the well-made Pekoes came down the Bold types were holding on. BOP1 and OP1 grades continued its trend of high prices with both grades realising an all-time record price.

Company news

Maskeliya Plantation is planning to introduce greater mechanisation in its tea fields and factories in order to reduce the dependence on its costly labour force.

The company has changed planting methods to make mechanised harvesting easier in the future, according to the chairman. The company makes almost nine million kilos of black tea, or 12.5 per cent of the national production in the high grown elevation areas.

Meanwhile, the Chairman of the company has reiterated that the long-term strategy in the industry should be to link productivity to wage hikes.

Company has already introduced incentive schemes to motivate workers and improve productivity in its estates.

Junk mail

Due to the internet invasion some are claiming that the brokers are an overly costly middle-man. Internet does present a challenge to the brokers in their task of collection of tea data of which used to have a monopoly.

But, this is only one of many important tea-broker functions.

The grading of tea for example is highly skilled and can never be replaced by automation and the internet.

Brokers also provide crucial behind-the-scenes business information, such as wholesale buyers’ credit worthiness and confidential history of timely payments.

Moreover, the brokers’ connections with government officials, regulatory agencies and banks make them the king-pins of the industry.

They also have a less glamorous role and an underperformed one - which is the monitoring of the warehousing of tea awaiting sale or export, dealing with common problems of humidity, pests, damage and even theft.

From quality to credit decisions, brokers do provide services that have nothing to do with the internet.

Meanwhile the brokers extend out of the national boundaries to tie up with leading firms and brokerage agents under agreements of ‘correspondent’ company.

This system transcends national and political boundaries, giving brokers a lasting power-base in the new world order of export globalisation.

Tea mosquito

India’s tea production has been affected with widespread pests adding to the woes of the cash-strapped tea industry in Assam.

According to sources, a tea mosquito has attacked nearly 200 of Assam’s estimated 800 tea plantations during the past two months. Following a sudden outbreak of blisters on tea plants, the attack continued spreading like wild-fire to scores of gardens in eastern Assam, according to the Secretary of the Assam Chamber of the Indian Tea Association (ITA). Tea Board officials say that large estates in eastern Assam have borne the brunt of the attack and the production losses are expected to be high.

The loss in terms of production is estimated at 10 to 15 per cent of the total produce and as this is the main production season from May to July, the problem is indeed extremely severe.

Assam is crucial to India’s US $ 1.5 billion tea industry and accounts for about 55 per cent of the total annual production.

Plantation stocks

With reference to the weekly surveillance of the 18 plantation stocks, 14 were lower in value whilst two reported a gain and two reported static. Agalawatte and Tea Smallholders reported a gain of two per cent each, week on week.