Tea Board to continue purchases at Auction:

Major boost for tea industry

Colombo: The direct participation of the Sri Lanka Tea Board at the Colombo Tea Auction has restored the buoyancy of the tea market and spurred a rejuvenation in the industry, financial sources said yesterday.

The Sri Lanka Tea Board went to the Colombo Tea Auction on the directive of President Mahinda Rajapaksa after he had a lengthy discussion with the stakeholders of the Tea Industry on October 24 at Temple Trees in the backdrop of falling Tea prices.

Accordingly, the SLTB Chairman and officers were physically present at the auction on October 28 and bought 917 million kgs of tea at a cost of Rs. 232 million. “This intervention with the assistance of all eight brokers operating at the auction gave enough confidence to the buyer community so that withdrawals at this auction were considerably less than the previous week. In fact the quantity of withdrawals at the auction went down from 20 per cent to 15 per cent,” a senior Tea Board official said.

This intervention fulfilled the wish of the Government to keep the average sales price at a level where the leaf suppliers can get a price slightly above their cost of production, the average price ranging from Rs. 250 to Rs. 270.

“Since the market was very buoyant and there was increased bidding after the initial intervention the Tea Board did not participate in the auctions held on November 4 and 5. The Tea Board is ready to participate in the tea auction when the need arises,” the official added.

The Tea Board has advised leaf producers to lower the levels of green leaf harvest by plucking only the best quality leaves and limiting the factory production to quality tea.

The next auction at the week beginning tomorrow is going to be very active due to the strong possibility of Russians buying bigger quantities to meet the demand in winter, sources close to the Tea Auction said.

Earlier, the Government announced several measures to boost the tea industry. Commercial banks will cut interest rates on loans offered for purchasing tea by 6 per cent, while the existing grace period of one week for settlement of these loans is to be extended to four weeks. A ‘Tea Price Stabilisation Fund’ will also be set up.

The Government has allocated Rs. 1.5 billion as the initial capital for setting up this ‘Tea Price Stabilisation Fund’.

The above moves will ensure the viability of the industry, which includes about 400,000 small-scale tea estate owners and other contributing parties such as suppliers, manufacturers, exporters and stockbrokers.

The current problems in the tea industry are said to be a temporary phenomenon and it is expected that things will return to normal as the global financial situation improves.