PLANTATIONS

RPC’s forestry program disrupted

The Planters’ Association of Ceylon is calling on the Government to reconsider a recently imposed suspension on timber harvesting in Regional Plantation Company (RPC) estates.

The Planters’ Association, (PA) the representative body for 23 RPCs, said harvesting of fuel wood and timber, by RPCs, is conducted in accordance with a Forestry Management Plan (FMP) approved by the Plantation Industries Ministry under the supervision of a number of Government agencies, and was therefore not an environmental threat. However, the prohibition on RPCs harvesting trees for timber may result in a backlash in the form of increased illegal logging of State forest reserves, and will also adversely affect RPC cash flows, said the PA.

“The RPCs have well planned out fuel wood and timber growing forestry programs. What is grown mainly in the up country are suitable species of eucalyptus (gum) trees. In the low country, trees like mahogany and teak are cultivated. These trees are grown and harvested in accordance to the FMP, under proper Government supervision, to supply fuel wood for tea factories and to supply timber to the market,” said Planters Association member and a former Plantation Industries Ministry’s Plantation Management Monitoring Division Director Sunil de Alwis.

The RPCs say these estates have been involved in forestry management, for fuel wood and timber, since the 1970s even under State management prior to privatization. They have also been supplying timber to the State Timber Corporation and other agencies like the Ceylon Electricity Board for electricity posts and the Railway Department for sleepers. Timber from these estate lands were also marketed for other purposes such as building construction and furniture manufacture.

However, in October this year, the Government prohibited the felling of trees in RPC lands, for timber, until further notice. As there is an ideal time for harvesting trees for timber, the PA says a prolonged suspension would deprive RPCs from deriving optimum benefits, both in terms of timber and earnings.

“The RPCs have been supplying timber legitimately and in an environmentally sustainable manner. Some RPCs, have even invested in aerial logging equipment that does not damage the undergrowth and the top soil when trees are removed from the fields. However, the current restriction on the supply of timber by RPCs may actually encourage illegal logging to meet market demand for timber.

It will also be environmentally damaging because illegal loggers do not cut trees under accepted forestry management systems or in a sustainable manner,” said de Alwis.

RPC forestry programs are approved by the Forest Conservation Department and these trees are not cut down in an ad hoc manner, said the PA. To harvest these trees, RPCs require the approval of a committee comprising a representative from the Plantation Industries Ministry, the District Forest Conservation officer, an official from the Central Environmental Authority and the District Secretary or the Provincial Secretary, or their representatives.

According to statistics from the Plantation Industries Ministry from 2003 to October 2010, around 4.2 million fuel wood and timber trees were planted on RPC lands. However, during this period permission was granted to harvest only around 458,509 trees, which is slightly in excess of 10 percent.

Given the financial and environmental implications of the RPC forestry programs, the PA is urging the Government to lift the current restriction on harvesting of trees for timber, under the FMP.

The Plantation Industries Minister Mahinda Samarasinghe, who is conversant with the RPC forestry management programs, has already made representations to the relevant authorities to lift the current restriction on RPC timber harvesting, and the Planters’ Association is hopeful that his timely intervention will resolve this issue.

John Keells Tea Market report :

November production to show gains

After a lean spell, where crop intakes were at its lowest particularly in the western quarter since the rush crops of May and June this year, the November production is expected to show some gains.

This is a welcome change which will help contain the cost of production to more manageable levels. All indications are that December crop too will be satisfactory.

The increase in production has been mainly due to the improved weather, where sunny spells have replaced cold and wet conditions.

The tea production for October which has been released by the Tea Board show an overall gain of three percent compared to 2009 and 16.92 percent gain on January to date. Sri Lanka’s highest recorded Annual production was 318 mkgs in 2008. As at end October 2010, Sri Lanka’s production of 274.5 mkgs is slightly ahead of 2008 which would mean that Sri Lanka could end the year with an All Time Record Crop of around 320 mkgs. With Tea sale averages also at satisfactory levels, we could see export earnings from tea establishing an all time record in 2010.

Budget proposals announced by the Finance Minister in Parliament on November 22, 2010 included an increase in the Cess on Tea for Bulk tea by Rs 6 per kg effective from midnight of November 22 and 23, 2010.

The total of all levies on bulk tea exports will now amount to Rs 13/50 per kg. The Cess on all other value added tea products will remain at Rs 7.50 per kg.

The Rs 3.50 introduced on the November 1 and the Rs 6 that was announced on Monday was expected to impact the market by an appropriate amount. However, some of the Low Grown and High grown varieties did not fall by the expected margin and were in fact firm or dearer.

This would indicate an improved demand for such teas at present and the market correction will take place when demand weakens.

The 0.99 mkgs of Ex-estate teas on offer met with lower demand with price declines of Rs 10 to Rs 15 on average for most varieties. However, some of the plainer teas remained firm. Russia was somewhat selective whilst the tea bag sector, UK, Japan and Continental buyers lent some support.

The 3.6 mkg of Low Growns met with good demand. Although prices for the Leafy varieties maintained, Small Leaf prices declined as the sale progressed, particularly for FBOP and FF1s.

It is customary at this time of the year, the Russian buying eases due to the impending Christmas holiday season.

However, it was encouraging to see strong buying by the main Russian buyers. Iran too was quite active whilst, the main Saudi Arabian buyer was selective.

The main Iraqi buyer too was somewhat subdued.

More demand was seen by the Syrian buyers. All in all another satisfactory sale as far as prices are concerned.

Western Teas

A few Select Best BOPs were firm, others declined Rs 10, Below Best sorts shed Rs 5 to Rs 10, plainer varieties were firm. Select Best BOPFs were firm to Rs 10 easier, other good invoices along with the Below Best sorts shed Rs 10 on average, plainer varieties were firm to irregular. Medium BOPs declined Rs 20 to Rs 30. BOPFs shed Rs 10.

Nuwara Eliya Teas

BOP/BOPFs declined Rs 5 to Rs 10 on average.

Uva Teas

Coloury BOPs advanced Rs 10, others declined by a similar margin. Udapussellawa BOPs advanced Rs 5 to Rs 10. BOPFs declined by a similar margin.

CTC Teas

Low Grown PF1s declined Rs 15 to Rs 20. BP1s were firm. High & Medium PF1s advanced Rs 10, but eased as the sale progressed. BP1s were firm to easier.

Low Growns

Fair demand. Select Best OP1s were firm on last levels, the Best and Below Best types too maintained last levels, Below Best clean varieties were firm to Rs 5 to Rs 10 dearer at times, however stalky types tended lower by Rs 10 to Rs 15. Select Best BOP1s were steady, Best types appreciated Rs 5 to Rs 10, clean Below Best types too were dearer by a similar margin, others along with the poor types were mainly firm. Select Best OPs were firm, however the Best and Below Best types were irregularly lower by Rs 5 to Rs 10, poor types were firm.

Select Best along with the Best OPAs eased Rs 5 to Rs 10 and more at times, Below Best and poor types maintained last levels.

Select Best Pekoes shed Rs 10 to Rs 20, other bold Pekoes commenced the sale on a firm market, however appreciated Rs 5 to Rs 10 as the sale progressed. Shotty Pekoe1s appreciated Rs 10 to Rs 15 Best types too were irregularly dearer by Rs 5 to Rs 10, Below Best types and poor types were easier by Rs 5 to Rs 10. Select Best and Best BOP/ BOP SP shed Rs 10 to Rs 15 and at times more, Below Best and poorer sorts declined Rs 10. Select Best FBOPs and FBOPF1 were lower by Rs 10 to Rs 20, Best types too were lower by a similar margin, Below Best and poorer sorts were lower by Rs 20.

Select Best and Best Tippy varieties declined substantially on last levels, Below Best and poorer types too eased Rs.20/- to Rs 30.

Off Grades

Select Best liquoring Fngs1s depreciated Rs 5 to Rs 10, whilst the Best and the Below Best types were lower by Rs 10, poorer sorts appreciated Rs 10 and more at times.

All BPs were lower by Rs 10. Select Best BMs were dearer by Rs 5, Best and the Below Best types appreciated Rs 5, poorer sorts were irregularly dearer by Rs 10. All Low Grown Fanings sold at firm levels.

Select Best and Best BOP1As were firm to easier by Rs 5 to Rs 10, Best and Below Best too followed the easier trend depreciating by Rs 15 to Rs 20, poorer sorts too declined by Rs 15 to Rs 25 and more at times with poor demand.

Dust Select Best Dust1s declined Rs 10 to Rs 15, other Dust1s in the Best and Below Best category were firm Rs 5 dearer at the commencement of the sale, but advanced Rs 10 to Rs 15 as the sale progressed, poorer sorts declined Rs 5 to Rs 10. Clean secondaries were firm, whilst the balance appreciated Rs 10 to Rs 15, Best Low Grown Dust/Dust1s declined Rs 5 to Rs 10 whilst the balance gained by a similar margin.