Exports Fall 9% YoY to US$ 705 M due to Low Volumes

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Tea export prices gained for the third consecutive month to last month (July 2022) aided by high oil prices, Forbes and Walker Tea Brokers data released on Wednesday (17 August)  showed.

 Tea prices move in relation to oil prices. When oil prices rise, tea prices increase, but when oil prices fall, tea prices too decline.

Consequently, the ‘free on board’ (fob) price of a kilo of tea rose by 14.47 per cent (US$ 0.66) to $ 5.22 per kg (fob), year on year (YoY) last month.

However, tea export volumes fell for the third consecutive month to last month, scarred by President Gotabaya Rajapaksa’s six month chemical fertiliser export ban from April 2021 to November 2021 which has hurt tea production.

Nonetheless, tea export earnings gained for the first time last month, after previously losing out consecutively, YoY, in the preceding seven consecutive months, since, at least from December 2021, available records showed. Subsequently, tea export earnings last month increased by 1.99 per cent (US$ 2.32 million) to $ 118.79 million, YoY, Forbes data showed.

Nonetheless, tea export earnings in the first  seven months  of the year declined by 8.90 per cent ($68.88 million) to $ 704.73 million (fob) YoY and export volumes were down by 8.90 per cent (14.47 million kgs) to 148.05 million kgs.  Meanwhile, average tea prices in the first seven months of the year remained unchanged at $ 4.76 per kg, YoY.

Iraq remained the No. 1 major importer of Sri Lanka tea with an increase of 35 per cent in imports YoY for January-July 2022, Forbes said. UAE secured second position with a total of 12.77 million kgs, a five per cent YoY increase in the review period, it added. Russia sits in 3rd place with a total of 12.34 million kgs., followed by Türkiye, Iran, Azerbaijan and Libya respectively during the period January-July 2022, Forbes said. “However, a significant decrease in imports is reported from Russia (22 per cent), Türkiye (58 per cent), China (21 per cent), Syria (26 per cent) and Jordon (20 per cent) YoY, it also added.

“A ‘notable’ increase in imports is recorded from Azerbaijan (six per cent), Libya and USA (eight per cent each), Saudi Arabia ( seven per cent), Germany (20 per cent) Poland (16 per cent) YoY,” Forbes further said.

Tea export earnings were Sri Lanka’s third largest foreign exchange earner for two consecutive years to last year (2021), Central Bank of Sri Lanka data showed.  “Fob” is defined as the export value of a commodity, upon it being boarded for shipment at the exporter’s port. It excludes insurance and freight costs, to the importer’s port.

By Paneetha  Ameresekere