Revenue from tea exports, January to November 2015, declined by Rs 27.3 bn


By Steve A. Morrell

John Keels PLC, Tea Market Report, 22 December Sale, indicated declined revenue of Rs. 27.3 billion from tea from January to November 2015. Following declining crops and depressed market conditions, tea featured poorly in revenue projections this year.

Early this year we consulted two brokers who correctly forecast declining tea prices. The alarming situations were real and required immediate attention.

The Middle East oil crisis and the Russian ruble were among causes for the market debacle, which did not see any rejuvenation of prices. Losses per kilo were in excess of Rs. 59.76. Continuous losses were not arrested, but declining prices continued to plague the industry.

Tea Board on their input to seek solutions to the problem, early February this year said they were seeking new markets. Then Director General Tea Board Anura Siriwardena informed us at that time that they were seeking new markets and they assured that consequent to such new markets being opened, the crisis would ease. He further confirmed when we consulted him later that seeking new markets was positively forthcoming.

What could be expected is that effective April 2016, the Tea Board would move into 12 new markets. In consequence the pricing position would improve. Traditionally, Ceylon Tea and its profit or loss position was dependent on prices realized and eventual viability of the industry.

However , subject to Russia’s winter buying, price average was Rs. 430 per kilo. Previously, Colombo prices were Rs. 370.

The John Keels Holdings Tea Report further indicated tea production for November was 16 percent lower than the same period last year. High grown decreases were 19 %, less, Mid, 18 % and low growns were 14 % less than last year. Russia continued to be the largest buyer of Ceylon Tea, followed by Turkey, Iraq, and the UAE.

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