Sri Lanka Free On Board prices for black tea is highest in the world
Sri Lanka’s Free On Board (FOB) prices for black tea are the highest in the world, according to Asia Siyaka Commodities PLC.
It has reportedly said by June 2021 Sri Lanka had exported 137 million kilograms of tea compared with 124 million kilograms in 1H 2020 and has earned US$ 651 million from these shipments compared with US$ 571 million a year ago.
“If weather conditions hold true and agricultural inputs are available as and when needed, the country could easily more than double 1H earnings and move towards the national target of US$ 1.5 billion for the year,” Asia Siyaka has been quoted saying in the local media. In 2020 the country exported a low quantity of 266 million kilograms, earning US$ 1.24 billion.
This sharp drop in export quantity resulted from a drought in the first quarter and reduced application of fertiliser in Q4 2019 and throughout 2020.
According to Asia Siyaka, earnings recorded in 2020 were made possible by the high prices paid for Ceylon Tea at the Colombo Tea Auctions, as well as the nation’s strong marketing sector adding value to exports under very difficult conditions in the midst of a local and global lockdown.
“FOB value per kilogram for all tea shipped in 2020 was US$ 4.67 compared with US$ 4.61 in 2019. By June 2021 the average FOB value of tea per kilogram had risen to US$ 4.75.”
Customs data analysed by Siyaka Research has reportedly confirmed that Turkey was the prime destination for Ceylon tea exports in 2020. The country had absorbed 38.8 million kilograms with an average FOB per kg of US$ 4.29. Actual exports to Turkey do realise a much higher FOB value, but the country is a major transit point for shipments to other destinations.
Iraq, which is the number two quantity in terms of destination, has an extremely low FOB value of US$ 3.10. Russia has followed with 29.6 million kilograms and US$ 4.45, with Iran 15.1 million kilograms and US$ 4.93, and China 14.1 million kilograms and US$ 4.07. China is the fasted growing market, but most exports are in bulk, hence the relatively low FOB, the Daily FT reported.
Asia Siyaka has further stated that some important countries that had exceeded the national average FOB per kilogram of US$ 4.67 were Azerbaijan (10.3 million kilograms, US$ 4.90), Syria (9.5 million kilograms, US$ 4.74), Saudi Arabia (which is listed as 11th in quantity at 6.8 million kilograms, and has a very high FOB value of US$ 6.89 – this converts to an absolute dollar value of 46.8 million, well above countries that have taken up higher quantity), Germany (6.4 million kilograms, US$ 5), USA (5.7 million kilograms, US$ 5.62), Japan (5.6 million kilograms, US$ 5.42), Jordan (4.6 million kilograms, US$ 5.41), and Ukraine (4.5 million kilograms, US$ 5.25), all of whom have realised figures above the national average.
Asia Siyaka has added that there were some key markets that had achieved an FOB in excess of US$ 6 per kilogram. Poland (with a quantity of 2.9 million kilograms and an FOB of US$ 6.79), Netherlands (2.8 million kilograms, US$ 7.43), Ireland (2.2 million kilograms, US$ 8.32), Kuwait (US$ 6.23), Australia (US$ 8.72), New Zealand (US$ 8.42), and UK (US$ 8.38) are the markets that had imported more than a million kilograms of Ceylon tea in 2020.
OSL take:
Sri Lanka’s overall tea exports have shown a growth momentum despite challenges posed by the global Covid 19 pandemic. The country is also in the process of further developing and strengthening the local tea industry. The many trade agreements as well as trade concessions enjoyed by the country have further helped in Sri Lanka’s tea exports. Given the growth momentum despite pandemic challenges, Sri Lanka’s tea industry poses a potential business/investment opportunity in the country. Sri Lanka is also in the process of becoming a business hub in the South Asian region. Foreign businesses/investors could therefore explore business/investment opportunities in Sri Lanka’s tea industry.
| Article Code : | VBS/AT/03072021/Z_2 |