By Steve A. Morrell
The Sri Lanka Tea Board ( SLTB) confirmed that small holders continued to contribute highest production making the industry viable. The tea Small Holders, however complain of myriad of woes affecting them, especially of fertilizer delivered under the subsidy scheme being sub standard. They said their crop returns were dwindling and although they had sought professional advise from the Tea Research Institute ( TRI ) to test such samples, the TRI response had not been encouraging.
Irrespective of substantial minus pointers, they continue to have positive impact on the industry which the Tea Board confirms keeps the industry viable.
Low grown production to end June this year confirmed by the SLTB was about 72 percent, while Asia Siyaka (AS) analysis in their weekly Tea update said High growns accounted for about 24 percent and mid grown teas about 16 perecent of the total production.
End June production 2012, as indicated in the AS report was 163.2 million kilos, registering crop drop of about 7.5 million kilos in comparism to the corresponding period of 2011. The question that now demands answers are, how and when will the tea industry sustain itself? More to the point will the Estate sector get a fair deal?
The Tea trade continues to make money. This was confirmed by the Brokers we spoke with nothing new, really, but these profits have not been reflected at plantation level.
Average sale prices last week stood at Rs.403.20. The same period last year as reported by John Keels Tea Brokers , (JKH) was Rs.340.08; distinct improvement of about Rs.60 per kilo. How and when will the plantations manage their holdings at a profit? Borkers said there was no other alternative to increasing crop. In the current circumstance they really had no option. But that was long term strategy which bore no relevance to the minus ratio at hand.
In terms of real market conditions Dollar earnings were down; brought about by devaluation of the Rupee. The Dollar was selling yesterday at about Rs133. Although Rupee prices were good real earnings did not represent euphoria at the auctions.
JKH said that drought conditions had set in. The Uva drought was expected at around this time of year which was normal. But what was not expected was failure of the South West Monsoon that affected the Western slopes; further compounding on already bad situation.
The JKH report said there was little hope that the South West Monsoon would re-activate. Dwindling crop would further contribute to increasing cost of production. Reportedly the plantation were loosing at the rate of approximately Rs. 100. Per kilo.