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Bought Leaf

14 June 2007 08:52:42

Sri Lanka's small tea-grower factory profits up despite high leaf prices

June 14, 2007 (LBO) – Strong tea prices in the fourth quarter helped Sri Lanka's Tea Smallholder Factories to increase after tax profit by 38 percent to 68.8 million rupees in the financial year ended March 31, 2007.

Turnover in the firm, which makes low grown tea, was up 3.3 percent to 1.5 billion rupees.

Tea Smallholder Factories chairman Susantha Ratnayake said a strong focus on quality enabled the firm to earn higher margins despite stiff competition for green leaf.

Factory capacities exceed availability of small holder leaf, he told shareholders in the firm's annual report.

"Competition for green leaf is immense with the proliferation of factories," Ratnayake said.

The company, in which conglomerate John Keells Holdings and tea exporter Akbar Brothers have big stakes, buys tea from a network of 15,300 bought leaf suppliers, of whom 9,000 are direct suppliers.

Sri Lanka's tea exports were hit late last year as strikes in the big plantations crippled production, but small holders own their plots.

A shortage of tea at the Colombo auctions, because of the estate strike late last year and drought in the central hills, drove auction prices higher in the fourth quarter of the financial year.

Tea Smallholder Factories produced 6.6 million kg of tea last year, marginally lower than the year before because of the effects of drought.

Ratnayake said most teas made by the firm fetched prices above the national low grown elevational average.

The general sales average of Tea Smallholder Factories at 213.19 rupees a kilo was the highest among all plantation companies and co-operatives.

The company paid a maximum of 43.08 rupees a kilo of green leaf to its suppliers, compared with the average of 32.58 rupees.

It paid over a billion rupees to its suppliers of green leaf in the financial year.

Small holders now produce over half the island's tea crop and most of them own less than one acre.

Uppdaterad 2007-06-15

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