Feature/Advertorial

Modest increase in tea production expected in 2009

Continued from yesterday:

Global market shares

In terms of the composition of exports for local teas no major changes are expected but some recent trends are worth noting. In the first ten months of 2008, Kenyan exports to Pakistan lost 7.94 per cent. Similarly, Kenyan exports to Germany in the same period fell 90 per cent whilst exports to Turkey and South Africa eased by 34.53 and 51.23 respectively.

Therefore, continued interest from shippers to these destinations can be expected in 2009 and local teas have an opportunity to increase market share at the expense of Kenyan exports. Conversely, there is a danger that Iran, the Netherlands and Poland who have increased their imports from Kenya, will continues to look to East Africa. Currently Sri Lankan exporters have intensified calls for a devaluation of the local currency in recent months.

The entire exporter community is of the view that the rupee is overvalued by at least Rs. 10 to Rs. 15 against the dollar.

We also expect the overall country situation to improve during the second and third quarter of 2009 and this will serve to strengthen the rupee.

This could take place concurrently with a fading out of unnecessary imports resulting in a more favourable balance of payments position during the second half of 2009.

Supply-side factors Production

Due to international market conditions, demand has the larger say in the global tea market as compared to other commodities like, for example, oil.

Tea is comparatively price in-elastic as most consumers are habitually addicted to the beverage which has been increasing in popularity in recent times in comparison to its competitor beverages as a result of its health related benefits.

Consequently, production has had to rapidly adjust to match the sudden fall in demand since September 2008.

In the period January to October 2008 local production totalled 273.8 mkg which represents a gain of 28.35 mkg. from the same period in 2007. However, the figure is a reflection of high production during the first two quarters that was spurred by high prices during that time. Since September, there has been a dramatic turn around and the factories have cut their production by drastic levels. Low grown teas have been hit the hardest resulting in smallholders being directly affected with factories refusing to take in black tea leaf during much of the forth quarter of 2008. For example, October's production fell eight per cent as compared to October 2007 to just 23.9 mkg. whilst exports fell to a four-year low of 25 mkg.

It represents the second lowest October crop in over ten years. In November production recovered slightly to 24.6 mkg. but remained well below the 27.2 mkg. production in the same month of 2007, representing a low of 9.6 per cent.

Elevation wise, the November rop represented a decrease of 22.75 percent for the low grown varieties whilst the mediums lost 14 percent.

The high grown crops gained 28.5 percent as compared to 2007. The cumulative trend for the year to November shows an increase in the crop for all the agro-climatic district of 8.4 percent.

Likely scenario

Westerns: For the period January to October 2008, Westerns posted a crop output of 35.9 mkg. representing an increase of 14.9 per cent from the same period in 2007. Apart from the Patana / Kotogola teas, all other varieties increased their crop. However, production in Q1 and Q2 of 2009 is likely to remain at constrained levels with a greater emphasis on quality than quantity.

By the end of 2009, we expect the supply of Westerns to have adjusted upwards by a smaller margin of between five and eight per cent from 2008.

Mediums: The output of medium grown crops increased by 8.2 per cent up to 38.1 mkg. during the first ten months of 2008 as compared to 2007.

All varieties apart from the Hunnasgiriya / Knuckles were up for the year. The largest contributor to this segment, Gampola / Nawalapitiya raised its output by 14.6 per cent.

Uda Pussellawa / Uvas: These varieties rose by 8.2 and 11.9 per cent in the period under review. However, the Ella / Namunukula teas fell by 36.3 per cent. The production of these teas in 2009 will be closely related to the quality related factors.

Low growns: This segment increased production to 138 mkg. to October, representing an increase of 13.3 per cent. Again, the gain resent the surge in supply to meet strong demand during the first two quarters of 2008.

The coming year is expected to witness a modest increase in the production of between five and seven percent as demand conditions ease.

Key sources: The Research Intelligence Unit / Sri Lanka Tea Board All copyrights reserved (RIU 2009).

By the Research Intelligence Unit and the Sri Lanka Tea Board

SriLankan presents schols for children

SriLankan Airlines presented scholarships and awards to the children of its employees who performed best at the last Year 5 Scholarship Examination, in keeping with the National Carrier's corporate commitment towards uplifting the education of children throughout the country.

A total of 28 children who passed the exam - 14 boys and 14 girls - were presented cash awards and gift packs by the SriLankan Airlines Staff Welfare Society, at a ceremony in Katunayake recently.

The top four students received scholarships of financial support for their education for the entirety of their school careers - seven more years.

Head of Human Resources, SriLankan, Pradeepa Dahanayake said: "The SriLankan Airlines Scholarship Program has proved to be a resounding success over its 10 years in existence, and has assisted a large number of children to further their education. Everyone of the 4,900 staff of the National Carrier is immensely proud of the success of these children, who are members of the extended SriLankan Family."

The program was founded in 1999, and the first scholarship winners have now successfully completed their schooling.

This year's winners included 14 children from the Gampaha district, seven from the Colombo district, three from the Kandy district, and one each from the districts of Galle, Kurunegala, Kegalle and Puttalam.

SriLankan Airlines and its charitable arm SriLankan Cares have built a strong tradition of supporting children's education. The airline recently completed the first phase of a project to uplift the Debarawewa Primary Navodaya Vidyalaya in the Hambantota District. Notable projects in the recent past have included the reconstruction of a Tsunami devastated school at Kalmunai through a Rs. 81 million project in 2006, and the adoption of Meepagama Maha Vidyalaya at Kalawana in the Ratnapura District in 2003.

The airline has also been involved in gifting schoolbooks to hundreds of the poorest school children throughout the country through an annual program. In addition, it provides continuous support for undergraduates of the Universities of Colombo, Ruhuna, and Moratuwa, through dozens of internships every year.