Future of tea secure despite West Asian crisis – Anil Cook

Friday, 22 April 2011 02:12 - - {{hitsCtrl.values.hits}}

By Cheranka Mendis

World famous Sri Lankan beverage tea has nothing to fear even as the world market seems wary with West Asian crisis, Former Chairman Sri Lanka Tea Brokers’ Association Anil Cook told the Daily FT yesterday.

Cook stated that the market demand has been fairly good for the first quarter of the year. He stated that the prices for high grown has been supported based on quality though the quality period has been short due to heavy rains in January.

The rains he said had slowed down production and decreased quality. “Demand from traditional buyers supported by pure Ceylon tea packs has been on an attractive level even though producers had to bear a high cost due to the low crop experienced within the first two months of the year,” Cook said.

In low country the demand was widespread. The biggest challenge industrialists had to face was the social issues in Libya which slowed down the normal way of life, therefore affecting the transactions between the two countries. “Transactions are few and far between actually,” Cook claimed.

However the Egypt crisis which was also a major concern for economies and sectors all over the world has not affected the local tea companies, he said. “On the other hand the crisis in Egypt did hit Kenya as 30% of their tea exports go to Egypt. Destabilising of the Kenyan market has had its impact on general prices in Colombo. Following this the outlook could be a downward process on high grown in the medium and long run.”

Low growns have however seen an increase in demand even with the Libya issue with demand coming from Iraq and other countries. “Each country’s situation unfolds at a different pace. Sri Lanka does not have a homogenous product and countries such as Syria, Jordan, Iraq, Iran and Libiya thrive on what we offer. We have a full grade mix so we will not be hurt if the situation escalates.”

Cook stated that the industry is going into periods of higher production. “We are far from being in a crisis. There is good demand. Low country has shown more demand after the April holidays,” he asserted adding, “Sri Lanka now needs to focus on quality and make the regular buyers see the quality they are used to. Most factories are focused on this and hopefully the quality level will increase further during the next few years.”

At this week’s Colombo Tea Auction 7.6 Mnkg of tea was on offer. The previous week tea on offer was only 7 MnKg. Cook expressed that at the next week’s auction, the last for the first quarter of the financial year a bulk of 6.1 MnKg will be on offer. At the auction 3.63 Mnkg were low grown main grades and 0.82 Mnkg were High and Mid Grown Main Grades.

Commodity broker Asia Siyaka in their weekly market report mentions that the low grown teas showed widespread demand in this week’s auction while there were activity in the small leaf catalogues as well. “high growns have been at the tail end of the quality season,” Cook said.