COLOMBO: Asia Siyaka Tea Brokers reported last week that their Customs analysis findings were that the Sri Lankan tea industry was in crisis. Comparing year – on – year performances, deputy chairman Asia Siyaka Tea Brokers Anil Cooke said that the market drop was substantial.
US dollar earnings dropped to 562 million from January to May 2015. Last year’s comparative earnings over the same period were $ 650 million. Decline quantum for US dollar earnings was 13 . 5 percent.
Rupee value on exports, according to Customs data released was that at the end of May 2015 the value was Rs. 74 billion. The recorded deficit was quite substantial. Further Customs data revealed that last year, over the same period, earnings recorded were Rs. 84 billion, recording a deficit of Rs. 10 billion.
Would this trend continue? The answer is‘yes’. An attributed reason is the declining oil prices, drastically influencing the tea market. Oil being the major commodity prevalent across the board in the Middle East, current developments resulted in reduced markets for tea, because Middle East countries do not have sufficient money to pay for tea already bought.
Additionally, approximately 15 to 20 percent of teas at the auctions remained unsold. The ‘un-sold’ quantities stemmed from auction prices quoted by brokers not matching the declining market. Such teas were withdrawn, because as brokers said, they could not dispose of these great quantities at such low prices. The ‘low price’ phenomenon was prevalent over the past few weeks.
Review of different segments of exports ( tea ), show further weaknesses. Total exports declined 2 percent year – on – year. However, bulk shipments increased 8 percent to 52 . 1 million kilos.
But Packeted Tea exports declined to 59.7 million kilos, the Asia Siyaka report said.
The Tea Market Report of John Keels PLC, on sales on 29th / 30Th June had much the same bad news. Nuwara Eliya BOP remained mostly unsold. Low growns met with less demand. In the leafy category too most grades declined following less inquiry from the Middle East. Russian buyers were fairly active but Middle East markets were subdued, the report said.
The Asia Siyaka report commenting on market conditions, January to end May this year, further said 9.2 million kilos of tea bag exports were sharply down. Last year exported quantity was 11 . 5 million kilos, reflecting a drop of 20 percent.
End may quantities to Russia and CIS countries crashed to a 55 percent low; 0.84 million kilos. It was down from a peak of 2.2 million Kilos in 2001.
We did not have comments from the Colombo Tea Traders Association ( CTTA), but consensus among buyers was that the tea market would continue to encounter these problems, resulting from the vicissitudes of the prices of oil in world markets.
Significantly, other tea auction centers, presumably, did not depend on oil. Our enquiries revealed that such sales origins were not dependent on oil prices. However, Bengal and Assam were hit by bad weather. Kenya too have had their problems. Kenya complained of a production drop.
The Sri Lanka tea arena would also face industrial turmoil, stemming from the wage issue, now under discussion.
