Tea production down ninth straight month

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Sri Lanka tea production fell for the ninth consecutive month to last month (June 2022), where last month’s decline alone witnessed a fall of 22.71 per cent (5.92 million kilos) to 20.15 million kg year on year (YoY), Forbes & Walker Tea Brokers’ data released on Wednesday (20) showed.

Consequently, total tea production in the nine months to last month fell by 14.75 per cent (34.06 million kg) to 196.84 million kg, YoY.

The cause for these declines was former President Gotabaya Rajapaksa’s ban on chemical fertiliser imports. This ban imposed in April last year (2021) was subsequently rescinded by Rajapaksa seven months later in November last year (2021), but too late to reverse the damage caused to the industry.

Tea export earnings were Sri Lanka’s third largest foreign exchange (FX) earner for two consecutive years to last year (2021), Central Bank of Sri Lanka (CBSL) data.

Consequently tea export earnings fell for the sixth consecutive month to last month (June), with tea export earnings last month alone declining by 6.69 per cent (US$ 8.35 million) YoY to US $ 117.42 million (fob), Forbes statistics showed.

Complementing this, tea export volumes fell by 12.63 per cent (3.41 million kg) YoY to 23.58 million kg last month. However, the silver lining was that tea prices increased by 6.87 per cent (US $ 0.32) to US$ 4.98 a kg (fob), YoY, last month, recording its second consecutive monthly gain to last month.

Nonetheless, tea export earnings in the first six months (first half) of the year declined by 11.58 per cent (US $76.15 million) to US $ 581.35 million (fob) YoY and export volumes were down by 8.53 per cent (11.69 million kg) to 125.29 million kg.  In a further blow, average tea prices in the first six months of the year fell by 3.45 per cent (US $ 0.16) to US $ 4.64 per kg, YoY.

According to Forbes, Iraq emerged as the No. 1 major importer of Sri Lanka Tea in the first half of the year with an increase of 46 per cent year on year (YoY) in January-June 2022 to 23.51 million kg. UAE secured second position with a total of 10.74 million kilos which is a four per cent increase against total imports recorded for January-June 2021.

Russia sits in 3rd place with a total of 10.10 M/Kg followed by Türkiye, Azerbaijan, Iran and China respectively during the period January-June 2022.

A significant decrease in imports is reported from Russia (24 per cent), Türkiye (58 per cent), China (23 per cent), Syria (24 per cent) and Jordon (23 per cent) YoY, Forbes further said.

‘Fob’ or ‘free on board’ means the price of the goods when boarded in a vessel for export at the exporter’s port. ‘Cif’ or ‘cost, insurance, freight’ means the price of goods, after being received at the importer’s port.

BY Paneetha Ameresekere