Tea runs dry

Wednesday, 19 February 2014 00:52 - - {{hitsCtrl.values.hits}}

Drought blasts production by 50%; 400,000 smallholders in trouble
Govt. assures relief if “disturbing” situation continues
Production targets for 2014 uncertain but auction prices still unaffected

By Cheranka Mendis Frowned upon by the weather gods, Sri Lanka’s tea production has plunged by 50% causing havoc to the livelihoods of about 400,000 small holders and prompting possible relief from the Government, which has described the situation as “disturbing”. Tea smallholders numbering close to 400,000 have been affected by this condition, which has resulted in low income for factories that have begun processing every other day due to leaf shortage and daily intake becoming uneconomical. The Government has assured it is closely monitoring the situation and in the next few weeks, if the condition does improve, would resort to giving financial aid to smallholders. The production targets of the country’s highest foreign exchange earning crop are also in doubt due to the severe weather.

Sri Lanka Federation of Tea Smallholder Development Societies Chairman Neville Ratnayake and former Sri Lanka Tea Factory Owners Association Chairman Anil Perera told the Daily FT yesterday the production drop of 50% has caused chaos among the smallholders who depend entirely on their small plots of plantations. The drought condition has existed for well over three weeks now, according to Ratnayake, who observed the Department of Meteorology has given notice of the dry spell continuing till mid March, even though the industry is hopeful that the rain gods will take mercy on them by mid next week. “We have discussed the situation with the Plantation Ministry and the Minister told us to compile details in this regard. We are hopeful that they will come to our rescue if times get tougher,” Ratnayake said. Plantation Industries Minister Mahinda Samarasinghe when contacted agreed that the reports on the drought and smallholders were ‘quite disturbing’. “There is bound to be a production drop. We are monitoring the situation very carefully and evaluating it on a daily basis. We will do whatever we can to help the smallholders.” Samarasinghe recalled a similar condition prevailed in Uva last year. “We then spoke to the Treasury and injected Rs. 50 million into smallholders of the area by providing them with new plants as the old were affected.” The Ministry will adopt a similar program covering all affected areas if needed. “Our commitment is very clear as some of these smallholders have less than two acres as plantations and their livelihood depends on this.” The drought in Q1 is likely to affect the overall results for the year’s production, Sri Lanka Tea Board Director Promotion Director Hasitha De Alwis predicted. The industry will have to work hard to maintain momentum from the record teas crop of 340 million kilograms in 2013, which was a 3.6% growth from 2012. Alwis reflected that this year’s target was to increase production by 1-2% to 348 million kilograms. Expectation of this increase was based factoring in good weather condition as well as results of the tea replanting campaign that was carried out during the previous years. “However, we never anticipated this severe drought. Hopefully, if it clears up in Q2, we would be able to hit on the 340 million kilograms mark,” De Alwis disclosed. The drought has not yet begun to affect the auction prices, Asia Siyaka CEO Anil Cooke pointed out, presenting a thin note of optimism. Due to a considerable quantity of carry-forward of tea from the previous two months due to auction restriction on offer during long stretches of holidays, the impact of drought has not been felt significantly, he added. Auction quantities of high grown teas are however beginning to come down, Cooke warned. “It will start dropping sharply in the mid to latter parts of March and into April.” Even though there has been no clear projection for Q1 this year, Cooke noted that in 2009, when the Southern hemisphere of the world was affected by drought, Sri Lanka’s tea production in Q1 that year was at a low of 49.7 million kilograms. This number was exacerbated by the tea price collapsing in 2008 as a result of the global financial crisis. “Hopefully it won’t come to that this year.” Cooke divulged that tea production in Q1 2013 was 81 million kilograms compared with 74.9 million kilograms of the previous year. “Supporting the 2013 Q1 figure was the bumper harvest enjoyed by the industry in March. In 2011 Q1 production was 77 million kilograms.”