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Bartleet Producemarketing weekly tea surveillance report up to September 10:

Lanka to sign MOU with Tocklai for research

The quantity of tea arriving at the Colombo auction this week decreased to 6.688 mkg from 6.864 mkg traded in the previous week’s sale. Meanwhile, the Ex-estate crops showed an increase from 0.699 mkg to 0.711 mkg.

Market Segments: In the Ex-estate segment a lower market was witnessed where the seasonal Uvas came down slightly due to the quality issue resulting in a drop in invoices. The reason given by sources is that the erratic weather pattern had caused the quality to come down somewhat.

In the meantime, international markets had changed the retail prices to the higher side where industry sources are anticipating the market to be strong with slight volatility due to this. UK was slightly selective, the continent was active on the Uvas such as Poland whilst Japan showed active buying for Uvas and Dimbullas.

In the Tippy market segment fair demand was witnessed where buyers from Iran and Dubai were active whilst CIS showed a moderate buying pattern.

In the Leafy grade segment, grades such as OP, OPA and Pekoes showed a further improvement to last week particularly the Bold Pekoes. Middle East buyers were active very much for the wiry types but poor types remained same as last week’s levels.

Research Deal: Sri Lanka, India’s biggest competitor in tea exports, is set to sign an MOU with Tocklai for a joint research programme on tea. Tocklai which is the oldest tea research station in the world, built under the Tea Research Association (TRA) at Jorhat in 1911 will be facilitating this venture.

A 12 delegation team headed by the industry minister will look at areas of exchange in information on plant breeding, control of pests, mechanisation of field and factory operations and patents.

The Sri Lanka Tea Research Institute and top officials from the Tea Board and the Tea Research Association will also be present during the signing of the MOU. Meanwhile research parties are to exchange germplasm and other materials to expand the genetic base of tea and also to identify resistant traits for tea diseases.

There will also be studies on maximum residue limits with particular reference to copper and sulphur levels. Control of pests will be another important area of work in this joint venture.

Fertiliser Hike: With the cost escalation of fertiliser, its usage in the tea plantations had decreased drastically according to industry sources. Meanwhile comparing with Central Bank figures, fertiliser usage for tea in 2003 which was 168,000 metric tons (mts) had come down to 128,000 mts by last year.

Urea, which is the main fertiliser component in the plantation industry which was Rs. 10,000 a mt in 1995, has gone up by more than ten fold to Rs. 105,000 at present. It has been stated that if tea prices come down, the industry would not be able to afford whatever limited fertiliser that is applied currently in the estates.

Fertiliser being the single most expensive input in the cost of production has made it a major risk in the agricultural out put. It is been estimated that without fertiliser, agriculture output in the world would drop by 50 per cent or more as no soil in the world is able to continuously supply the full requirement of major nutrients.

The fertiliser shortfall will eventually impact on the physical properties and chemical components of the tea leaf and this will lead to lower quality of made tea which will result in Sri Lanka losing the only competitive advantage it has over other tea economies and industries in the world.

Company News: With an initial investment of Rs. 250 million by the MJF Group, Rilhena Estate in the Ratnapura district has ventures into a ready-to-drink tea production facility. It was stated by company sources that the beverage will be in lime and peach flavours. The project will get an additional investment of Rs. 50 million and a joint venture in Russia for bottling the beverage is in the pipeline too.

Meanwhile, the company is looking at having it contract packed in Australia, where its Dilmah tea has a strong brand presence. Currently it is already being packed in Kuala Lumpur and trial marketing is on.

The company will commence exporting liquid tea concentrate and ready-to-drink tea whilst the plans for a bottling plant here have been postponed. Test marketing in several countries will proceed further to company officials.

Plantation Stocks: With reference to the weekly surveillance of the 18 plantation stocks, nine were lower in value whilst eight reported a gain and one reported static. Maskeliya and Malwatte plantations gained 4 per cent each whilst Kelani Valley plantation reported a gain of 3 per cent week on week.

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