Orthodox black tea commands highest prices in the world:

Tea market active in first half of 2009

Harshini Perera

Most of Sri Lankan tea markets were initially affected by the economic recession but tea being an essential beverage the buyers returned to the market in mid December 1, 2008 and the markets were active in the first half of this year, said the President of Asia Siyaka Commodities (Pvt) Ltd, Anil Cooke.

He said that the markets recovered fast because the global supply declined as a result of dry weather in many producer countries and the low fertilizer application due to the economic crisis.

Sri Lanka’s orthodox black tea commands the highest prices in the world market. These teas are popular in the Middle East and North Africa which absorbed 52 percent of Sri Lanka’s exports. On the other hand, Russia/CIS countries became the single largest market that buy a fair amount of Sri Lankan tea, he said.

According to Anil Cooke the Sri Lanka Tea Board confirmed that tea production until the end of May this year was 105m kgs which was a 21 percent decline compared to 2008 production of 144 m kgs for the corresponding period. As many of the plantation companies incurred heavy losses during the period, the market increase was not sufficient to compensate for the production shortfall.

The market for tea not only increased at the Colombo tea auction, but also increased in Mombasa in Kenya and the main tea auction centres in India as well. Indonesian prices too had increased but the Jakarta auction increased the prices thereafter.

The prices of tea at the Colombo tea auction are high at present but one has to consider the cost of production because there has been a significant drop in tea production. The drop in production from January to May this year was 105, 547,818 kgs compared to 144,401,428 kgs during the corresponding period last year. The highest decline in production is from the low grown elevation. The national drop in production from all elevations is 38, 853,610 kgs, said Chairman, Private Tea Factory Owners Association, Anil Perera.

He said that Sri Lanka has to expand and increase its promotional activities and make the funds available to accelerate those activities as the strategy to face the competition in the world market.

Managing Director, Forbes and Walker Tea Brokers (Pvt) Ltd, Y. Fernando said that Sri Lanka is experiencing a global shortfall of approximately 80 m kgs compared to January-May 2008/09.

“We believe that most of the buyers will be fairly tight stocked, given credit and trading conditions over the past 6 - 9 months. Therefore, the current demand levels should be sustained,” he said.

The decline in tea production would have been mainly due to the climatic change and the reduced usage of fertilizer owing to high cost or the escalation in petroleum prices in 2008, Fernando said.