Tea industry ends 2010 as a record year

Year 2010 which was beneficial to Ceylon tea, is likely to be a record year for the industry with dollar earnings surpassing previous record figures, industry officials said.

By Cheranka Mendis

It is estimated that the dollar earnings of the industry would reach a record USD 1.3 billion, exceeding the earnings of the record year 2008 by over USD 0.1 billion. In 2008 this figure stood at USD 1.2 billion but could not be sustained in the succeeding year— 2009.  In fact that year saw a sharp drop in the dollar earnings with the actual earnings being approximately USD 1.1 billion.

The industry is also likely to pick up from the 2009 export figures, Chairman Colombo Tea Brokers Association Anil Cooke said yesterday adding that stakeholders were expecting an export quantity in the range of 310 to 312 million kgs.

Year 2009 a ‘drought year’ for those in the sector, yielded only 289 million kg, compared to 2006 which reported a record yield of 327.4 million kgs, he said.

 The overall performance of Ceylon tea has also been good in 2010 with a positive carry over demand and supply situation from 2009. The year was especially good for low grown teas considering that this was the second year after the restrictions were placed on low grown tea sales outside auction. Concentration of demand in auction is now clear and transparent for both buyers and sellers alike, Cooke said adding “The high grown teas often realised the value but at the same time crops were low due to heavy rain fall and most estates could not therefore benefit despite the high prices as the cost of production was high.”

Colombo Tea Traders Association Chairman Avindra de Silva agreeing with Cooke stated that 2010 was a year the industry consolidated the challenges and turbulent times of the 2008/2009 period due to the recession. “It was a year where we saw prices to be high from the beginning of the year with a slight downward trend in the middle of the year,” de Silva said.

He asserted that with more tea producing countries making available more tea in 2010 and Kenya facing a record year, Sri Lanka has done well in keeping with the global trend increasing the country’s national tea production. This has been backed by branding, differentiated products and specialising projects undertaken by the local companies. “Overall, the prices in 2010 have been higher than 2009,” said de Silva.

“Sri Lanka is blessed with quality and variety and not a specific type of tea only. With all this we are tracking above 2009 with biggest gains coming from low growns and the mid growns,” asserted de Silva. He stated the credit for the high production of low growns is due to the agro climatic area it has been planted on with lesser rain than the upper country high grown teas.

Following up, 2011 would start off on a positive note with a good 1st quarter, stated Cooke.  He also stated that there would be challenges for corporate producers, with fresh wage negotiations due to commence, and the higher electricity cost. The currency which is seen heading in the opposite direction will also offer little support to the industry, he said, “Sri Lanka will have to look aggressively at boosting the quality of the products.”

De Silva as the Chairman of Colombo Tea Traders Association stated that the Association would continue to follow the programmes that have been conducted in the past year with the focus on improving quality, bringing in more globally approved standards such as environmental compliance and food safety regulations. “We would continue to focus on improving efficiency through agri practices and replants and maintaining cost at a reasonable level. We will work towards realising the ambitious plan of setting high standards for Sri Lanka,” he asserted.

“We have done well in 2010. In 2011 the industry should look at improving branding and promoting its tea in the international markets and brand promotion. This should help the country realise its true potential in the Tea sector.”