Auction centers world wide reported strong demand for tea over the past few weeks. Colombo, Chittagong, Mombasa, Kolkata, London, Jakarta have all reported extremely healthy market trends.
Universal good prices for Tea was influenced by bad weather in most producing countries. Reverting to the AS report last week indications were ‘Dry conditions, poor rains, frost, hit Tea production in Kenya. India and Sri Lanka, two other major exporters, were subject to failed monsoons. The report further said high quality black Tea surged 41 % selling at $ 5 . 45, such price levels seen only once before in 2009.
Purportedly good news at sales centers, but producers, in this instance locally, were ‘chewing their finger nails’. Pointers that the Tea Trade ( In Colombo), continued to rake in profits, totally heedless of trauma faced at plantation levels, and at Tea small holder locations. Although there was some comment that quality was good, Brokers’ concentration was on strong market conditions.
Secretary, Intergovernmental group on Tea at the UN Food and Agriculture Organisation ( FAO), Kaison Chang, (Who was in Colombo in March this year for the Tea Conference) quoted in the AS report, said prices would go up further more aptly influenced by increasing demand in China and India.
Accordingly Ceylon Tea Brokers Plc., reported dwindling demand in Japan because of high prices. By volume China remained Japan’s main supplier marketing over 50% Japan’s consumption. Sri lanka’s exports to Japan remained low at about 1 to 2 %. Brokers conceded that Japan was looking for cheaper Tea. China and Kenya supplied Japan’s requirements at competitive prices.
As reported at the Planters’ Association Annual general meeting, Last Friday the Secretary Ministry of Finance Dr. P.B.Jayasinghe, is reported to have said at the CTTA, AGM, that Ceylon Tea should be selling at $15 per kilo. Whether Ceylon Tea could be sold at that price is left to be seen. But the trend now, as evidenced in our lost markets, is that these countries are looking for cheaper teas.
However there was also some bad news. Coffee continued to dominate the hot beverage industry. Coffee averaged at around $ 4 .90 where as Tea was in the upper end of $3. 80 and cocoa continued to maintain steady prices at around $ 2 . 50 per kilo. Broker’s comment was that naturally these comparative prices would influence demand, and consequently end user preferences. ( AS report).
Locally too, irrespective tea being the cheaper drink, Coffee notably had more snob value; with coffee centers springing up in more swank areas of the city. Additionally there was also some discussion between the Tea Board and Sri Lanka Tourism late last year that Tea and Tourism could strengthen their strategies to enhance value addition to both entities. We were informed at that time that Dr. Godahewa, former Chairman Sri Lanka Tourism, and former Chairman Sri Lanka Tea Board, Susantha Ratnayake , were actively considering numerous cost effective measures to augment the image of both industries. Since they left, we have had no further intimation that there was any tangible expansion of such discussions, let alone positive action.
Tea sources in the central hills said recouping lost crop was now not possible. All they could hope for was a successful North East monsoon to minimize their losses and put a bad year behind them. Prices were good, but costs were high caused by minimal production because of erratic weather patterns.
Chief Guest at the PA AGM Mahendra Amarasuriya, last Friday conceding losses at plantation level said new thinking had to be in place which was lacking. The Research Institutes were roundly criticized for their inactivity.