Sri Lankan tea prices rocket on short supply
The Sri Lankan tea industry has seen an increase in the price of tea fetched at the auctions however owing to a short supply scenario amidst developments where regional plantation companies (RPCs) barring three, pick up a share of the Rs.1 billion loan to help pay wages to the workers.
Figures indicate that the production has dropped over the years since 2013 when the industry had produced 340 million kg, sliding to 338 million kg in 2014 and 328.8 million kg in 2015. Last year production dropped further to 292.6 million kg.
Production for January to March 2017 likewise fell to 66.5 million kg from 70 million during the same period last year.
Owing to a short supply, average prices over the years have continued to pick up at the Colombo auctions from Rs.444 per kg in 2013 to Rs.461 in 2014 while easing to Rs.402 in 2015. In December last year the prices soared to Rs.579 and then in April 2017 surged to Rs.653.
On the other hand, cost of production as well continues to increase as the industry has indicated that in 2013 cost of production was Rs.423 per kg and in 2014 it was Rs.475 in 2014. A marginal drop was noted in 2015 at Rs.458 per kg.
Export earnings in 2016 were recorded at US$ 1.26 billion compared to US$1.34 billion in 2015.
Meanwhile on Friday the RPCs have collected their loans approved by the Sri Lanka Tea Board (SLTB) amounting to a total of Rs.1 billion, except for four out of 23 companies.
Since the plantation companies were unwilling to negotiate a higher wage the government had offered to give a 3-year loan with payments due to start from next month.
SLTB Chairman Rohan Pethiyagoda had not approved the loans for three plantations. “I have not approved it on the basis that these are public funds for which we are accountable and if I have the slightest doubt that they will not be properly repaid I should not approve the loan,” he told the Business Times on Friday. It was noted that these companies are alleged to have “habitually delayed payment” for loans given previously by the government.
The allocation of Rs.1 billion was made from the Promotional levy fund that had accumulated to Rs.5.8 billion to date following Cabinet approval in this regard.