Export Tea Estates

Sri Lankan tea trade does not anticipate any immediate threats to its operations

"Sri Lankan tea trade does not anticipate any immediate threats to its operations (1)"

The Sri Lankan tea trade does not anticipate any immediate threats to its operations.

The Sri Lankan tea trade does not anticipate any immediate threats to its operations as a result of the island nation’s economic difficulties. It has downplayed large tea purchases from South Indian auctions by global purchasers, claiming that the country’s tea varietals are difficult to replicate.

‘We do not expect to face significant competition from tea-producing countries.’ Around 62% of Sri Lanka’s low elevation tea is exceptionally unique, difficult to imitate, and highly sought by West Asian countries and Russia. ‘No other producing country could produce such a consistent volume all year round,’ said Niraj de Mel, Chairman of the Colombo Brokers’ Association, which includes all eight tea broker firms that participate in the Colombo auctions.

Also Read | Tea firms refuse to pick orders due to high chemical content beyond FSSAI regulations.

Vietnam is a potential threat

Vietnam may be a rival, but it cannot compete with a cup of Ceylon tea, he told. In times of potential disruptions or uncertainty, each importer seeks adequate supply from multiple sources to assure a regular and stable supply. Some purchasers might look to South Indian auctions with this goal, he said.

There are currently some logistics problems, but the Sri Lankan authorities have begun to resolve the concerns, and supply is likely to normalize soon, he said.

He also mentioned that prices of high-grown teas, which typically fall at this time of year, have begun to rise, indicating a resurgence in demand. This was obvious in the most recent auctions, where the product commanded higher prices.

When asked if the current challenges will affect production, he suggested there could be a 1-2% decline from the 299 million kg reached last year. However, the government has taken steps to ensure enough fertiliser applications in tea gardens, allowing for good production in the latter half of this year. According to him, production was 18 million kg lower in the first four months of the year ending in April.

The average realization has increased

The average price realized in May auctions is also up at around $3.66 per kilogram, which is more than last year, he added. Also Read | Sri Lanka’s Economic crisis severely impacted Plantation daily-wage workers.

Meanwhile, the orthodox leaf market in Cochin auctions continues to see great buoyancy in offshore buying, with 90% of the offered quantity of 4,03,821 kg sold.

Exporters, particularly from West Asian markets and CIS countries, took part actively. Prices for various classes increased by 5-10% or more. Arrivals at auctions have also increased as a result of rising export demand, according to dealers.

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