John Keells Annual Tea Review 2008 out

John Keells PLC, the tea brokering subsidiary of the John Keells Group, recently released the 2008 edition of its annual Tea Review.

The first copy of the Tea Review was presented to Chairman, Sri Lanka Tea Board, Lallith Hettiarachchi.

Whilst discussing the impact of the global economy on the tea industry, it also portrays a comprehensive account on global and local tea production and exports together with the performances of the Westerns, Nuwara Eliya, Uva, CTC, Low Growns, Dust and Off Grades markets.

According to the report, the year under review witnessed unprecedented volatility for tea prices around the world. Sri Lanka’s tea prices touched historical heights up to Q3 due to the restricted supply from major producing tea countries, mainly Kenya.

The uncertainty created in the tea industry by the world cash crunch left a large percentage of teas offered at the Colombo auctions unsold, due to the absence of equitable bids. This created a cash flow crisis right through the supply chain.

The tea industry, which comprises a large slice of the rural tea small holder sector, benefited by timely State intervention. Action by the Tea Board also facilitated a reduction in the percentage of unsold teas, while, in the process, injecting much needed cash flow requirement to the producer.

World production of tea for 2008 was 3.7 billion kgs which is 12 m kgs less than 2007. A significant drop in production was recorded from Kenya which had a 24 m kgs deficit when compared with the previous year.

China and Sri Lanka on the contrary recorded increases in production by approximately 20 m kgs and 14 m kgs over the previous year. India too recorded an increase of 36 m kgs in 2008. Sri Lanka recorded an all-time high tea production of 318.7 m kgs in 2008.

This surpassed its previous best of 317.2 m kgs achieved in 2005, an increase of 4.6 percent over 2007. High Growns recorded an increase of 16 percent, while Mediums recorded a decline of 10 percent. Low Growns also recorded an increase of 4 percent during the year in review.

World exports of tea were 1.6 billion kgs which was 71 m kgs more than the previous year. Kenya retained its position as the largest exporter with a volume of 383.4 m kgs which is an increase of 11.6 percent over 2007.

Sri Lanka was the second largest exporter. India, China and Indonesia also recorded increases in their exports for 2008, while Argentina, Uganda, Tanzania and Malawi recorded declines in their exports in 2008.

Sri Lanka’s tea exports for 2008 were 319.3 m kgs with net exports amounting to 299.2 m kgs. Russia, UAE, Iran, Syria and Turkey maintained their positions as the five largest export destinations for Sri Lankan tea.

Export earnings were yet again a record, being Rs. 137.5 billion, surpassing the previous best of Rs. 113.5 Billion in 2007.