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High Tea prices soar 40 percent to record high

3 December 2007

By Vathsala Yatagamag

Buoyed by demand from oil producing demand in the Middle East and Russia, tea prices at the weekly auctions in Colombo went up by over 40 percent from last year which is a record high. During the 12 months to September average tea prices climbed 42 percent to a new height.

“The rising oil prices, that has strengthened our main buyers, that’s Middle East countries and Russia,” says Rasika Perera, Head of Marketing at Finlays a tea broking company.“ Their buying power has increased and basically for these people its not the price that matters it’s the quality and what we produce that matters to them.”

“If Sri Lankan teas are having high prices due to other various factors buyers will turn to other sources.” Falling production also contributed to rising prices, in the first 9 months this year tea production dipped 7 percent compared to the same time last year.

One of the main reasons for low production being the adverse weather conditions in the high grown tea plantations specially in areas like Nuwara Eliya, Kandy and Bandarawela, but the prices of low grown tea, which is preferred by Middle Eastern countries due to its stronger taste, hit 350 rupees a kilogram.

Perera: the rising oil prices have strengthened our main buyers. “This year in particular, we have been experiencing erratic weather patterns that have prompted this deficit,” says Perera. Experts are closely watching the increasing prices, worried that the current Ceylon tea buyers will look at low cost markets like India and Vietnam instead as these countries also produce orthodox black tea, which is consumed by over 70 percent of the tea drinkers worldwide.

“Our tea bushes are over 50 years old especially in the high grown areas and over 90 percent of the area is covered by old tea bushes”

“If Sri Lankan teas are having high prices due to other various factors, buyers will turn to other sources, several other countries are involved in producing orthodox tea,” says H. D. Premaratne, the Director General of the Tea Board.

Tea brokers and buyers are optimistic about the current prices, which according to them will remain at this high range even during the coming year. But seasonal fluctuations are unavoidable during the months of April and May, due to low purchasing in the world market.

“It has now come to a level where the prices have been accepted by the markets and there can be seasonal fluctuations but I think these price levels should hold,” according to Dinal Fernando, the Vice President of tea brokerage Asia Siyaka.

Currently there is over 212 thousand hectares of tea plantations in the island. They’re either owned or managed by private plantation companies, many of these plantations date back hundreds of years to the time of the English occupation of the island. Most plantations are struggling with 50 year old tea plants, which have reached its maturity levels affecting the yield and the quality, but re planting for plantations companies is a costly and time consuming processes, since it takes over 7 years a tea bush to flourish.

“our tea bushes are over 50 years old especially in the high grown areas and over 90 percent of the area is covered by old tea bushes.” according to Premaratne, while adding that lack of re planting is having an impact on the production levels.

The government has been on a campaign to promote the re planting strategy since the island needs to maintain its image as a high quality tea manufacturer.

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Uppdaterad 2007-12-04

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