Tea industry starts 2020 with marginally lower prices

• Ends 2019 with 3 m kilogram lower crop production
• Auction average for Jan. only up Rs. 1.42 y-o-y but up Rs. 12.53 when compared with December prices  

The tea industry witnessed a moderate slowdown with decline in production last year and began 2020 with lower auction prices, tea brokers said yesterday. 

The total tea production of Sri Lanka for 2019 recorded 300.1 million kilograms (M/kg) compared to 303.9 M/kgs for the same period of a year earlier.

According to the Forbes and Walker report, High Grown tea production dropped 2 M/kg from 63.7 M/kg in 2018 to 61.7 M/kg last year, while Mediums showed a marginal increase with a total production of 45.9 M/kg compared to the 45.8 M/kg recorded in the corresponding period of 2018. However, total Low Grown tea production declined to 189.8 M/kg last year compared to 191.7 M/kg in 2018, recording a drop of 1.9 M/kg.

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It also showed that total CTC production for last year was 23.58 M/kg, a decrease of 0.4 M/kg in relation to 24.0 M/kg in 2018. High Grown production recorded 3.5 M/kg last year compared to 3.7 M/kg in 2018, while Medium Grown tea production for 2019 was 8M/kg compared to 8.2 M/kg in 2018 and Low Grown tea production remained static with 12.0 M/kg last year.

In terms of the national sale averages (NSA) during January, the report points out that the High and Medium Grown average for January 2020 declined year-on-year (YOY), while the Low Grown has shown an increase.

The total auction average for January 2020 was Rs. 588.85, an increase of Rs. 1.42 in relation to Rs. 587.43 in January 2019. It also shows an increase of Rs. 12.53 compared to the Rs. 576.32 recorded in December 2019.

When analysing the respective elevation averages, High Growns recorded Rs. 535.86, showing a drastic drop of Rs. 41.37 in relation to Rs. 577.23 recorded in January 2019 and it also shows a marginal drop compared to December 2019’s average of Rs. 536.42. Medium Growns were at Rs. 494.62 for January 2020, a decline of Rs. 18.54 in relation to Rs. 513.16 the same period last year, while it shows a marginal gain of Rs. 6.38 compared to December 2019’s average of Rs. 488.24. However, Low Growns have shown a growth of Rs. 18.87, recording Rs. 628.74 in relation to Rs. 609.87 during the same period last year and it also showed a gain of Rs. 8.96 compared to the Rs. 619.78 recorded in December 2019.

The Forbes and Walker report also highlights the fact that the total average shows a marginal increase of $ 0.04 compared to the corresponding month of 2019.

Industry experts said the fundamental challenge Sri Lanka had been grappling with was volatility in the industry stemming from fluctuations in supply and demand, currencies, political climate in importing countries and policy decisions.

Therefore, the industry suggested developing a resilient strategy to face uncertainties and mitigate these risks.