Sri Lanka records increase in local tea production in 2017 indicating recovery from seven year low hit - Opportunity Sri Lanka
Sri Lanka records increase in local tea production in 2017 indicating recovery from seven year low hit

Sri Lanka records increase in local tea production in 2017 indicating recovery from seven year low hit

Tea production in 2017 has been recorded at 307 Mnkg, which is up only 5 percent when compared with the previous year’s drought-affected figure of 292 Mnkg, brokers have been quoted as saying in local media reports.
However, it has been stated that the records indicate that the sector is recovering marginally from the seven year low hit in 2016.
Data of the Sri Lanka Tea Board has reportedly shown that production in December has fallen by 13.5 percent from a year earlier.
Asia Siyaka Commodities Plc, quoting Tea Board data, has stated that the 2017 figure of 307 Mnkg was the lowest since 2009 when total production crashed to 291 Mnkg. A collapse of the market in Q4 2008 following the global banking crisis and draft in 2009 restricted production.
“2017 crop losses were caused by a combination of circumstances; though the weather pattern did not settle after the previous year’s El-Nino condition.
Normal agricultural practices were disrupted by the banning of the only cost-effective weedicide in the market and higher cost of fertiliser,” Asia Siyaka has added.
“If weather holds, Sri Lanka could reach 320 million kilos (of production) in 2018.”
Tea output in 2016 dropped 11.1%, in its third straight yearly decline. Tea export volume dropped to a 14-year low in 2016, broker data showed.
Export earnings fell 5.3% to US$ 1.26 billion in 2016 from US$ 1.33 billion in 2015. Sri Lanka recorded its highest earnings of US $1.63 billion in 2014.
Low Grown production of 197.1 Mnkg is up 7% on the low 2016 figure of 183.6 Mnkg. However, it is the first time since 2011 that production has dropped below 200 Mnkg.
The High Grown figure of 64.3 Mnkg is the lowest since 1992 when production crashed to 53.7 Mnkg following a severe drought. The quantity is even lower than the 2016 drought-affected figure of 64.4 Mnkg. Production from this elevation has been in the region of 73-75 Mnkg in the previous five years.
Mediums at 45.5 Mnkg are marginally ahead of the 2016 quantity of 44.5 Mnkg. Over the past five years production of the elevation has been in the region of 49-56 Mnkg.

OSL take:

The gradual increase in the local tea production is a positive sign indicating the continuous growth in Sri Lanka’s tea industry. It is a confidence booster that could be considered as an opportunity to invest and push for a further growth in Ceylon Tea. One of Sri Lanka’s largest tea buyers, Russia has already expressed interest in increasing purchases of Sri Lankan tea from the island nation.

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Article Code : VBS/AT/20180117/Z_4

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