Mixed bag of fortunes for Lankan tea in 2012

Sri Lanka’s tea industry concluded 2012 with mixed fortunes with higher rupee values being obtained at auctions despite notably lowered volumes on the supply side, according to Executive Director, Ceylon Tea Brokers, Waruna de Silva.

The national sale average for 2012 stood at Rs.391.46 per kilo in 2012, against Rs.359.68, largely as a consequence of the rupee depreciation which commenced in February last year.

Meanwhile, Sri Lanka tea production up to the end November 2012 stood at 299.63 million kilos, compared to 301.82 million kilos for the same period in 2011

“The rupee turnover in 2012 for auctioned teas ended up higher than the year 2011.Though the rupee value for the year 2012 stood higher when converted to USD terms, the sale average for the year 2011 was USD 3.26 as against USD 3.08 in 2012; which indicates that the 2012 dollar average ended lower in comparison to 2011.”

“The uncertainty in the Middle Eastern sector, the tightening of sanctions by the European Union and the United States on Iran could create a challenging environment for the Ceylon tea industry. However, the market is expected to remain strong in the first quarter in 2013. While a lower tea production is usually witnessed during this period of the year, the western quality season and lower global tea production which was witnessed in 2012 will have a spill-over in the first quarter of 2013; thereby contributing towards a stronger market,” De Silva noted.

High grown varieties of tea recorded the most drastic declines in production, followed by Medium Grown teas. However Low Grown teas actually recorded higher production levels than in 2011.

Based on the Sri Lanka’s tea export statistics up to November 2012, the total tea exported including re-exports with imported tea stood at 289 million kgs whilst cumulative export earnings were recorded at Rs. 162.68 billion, up by 8.7% Yearon-Year (YoY).

The country-wise analysis of exports shows that CIS countries including Russia continues as the largest export destination for Sri Lankan tea, followed by Iran and Syria. A noteworthy feature is Iran and Libya substantially increasing their imports of Sri Lanka tea by 9.22%, 9.21% respectively vis-à-vis 2011.