Adverse weather dampens tea production: Planters

Prolonged heavy showers and strong gale force winds have drastically impacted tea production with some estates having recorded only 40 percent of their estimated average yield in the past two months, Planters' Association said in a statement.

Regional Plantation Companies (RPCs) say that with crops declining, the coming months will be critical for the plantations with regard to the bottom line. The adverse weather conditions with rainfall being the highest in 47 years has severely impacted Cost of Production (COP) which has escalated to more than double, averaging around Rs.700 among some estates, particularly in the Nuwara Eliya regions.

Severely affected are estates in and around the Nuwara Eliya, Hatton, Dickoya, Agrapatna and Talawakelle areas from which some of the best upcountry teas are harvested. At present, crop yields are only 40 to 45 percent of the average, thus sending alarm signals to producers.

“Buyers must take note of this critical situation that is prevailing,” said Senarath Pahathkumbura, General Manager, Elpitiya Plantations PLC and a veteran planter.

“Present COP due to the bad wet weather is between Rs.700/- and Rs.730/- per kilogram while Net Sale Averages (NSA) are around Rs.325/thus incurring a severe loss to the producers,” he explained.

Pahathkumbura went on to note that buyers should consider the situation and pay the producers a reasonable price per kilogram of tea. “A low yield means low productivity and therefore, very high cost of production, irrespective of productivity parameters.” The decline in crops is dealing a further blow to the tea and rubber industry which is already reeling from the impact of the wage hike to workers on cost of production.

Sri Lanka’s cost of production of tea is the highest in the world with 65 percent of the cost attributed to labour.

“Our most important asset on the estate is human resource and while we had taken steps to control the escalating COP in the aftermath of the April 2013 wage hike by incentivizing our human resource cadre, the horrible weather has been a huge set back,” lamented Pahathkumbura.

According to officials, some plantation companies have recorded a loss of Rs.100 million in the last month, a trend that cannot be sustained if it continues and will be detrimental to the future of the industry.