Tea revenue to hit record $ 1.4 billion

COLOMBO: - Sri Lanka’s tea revenues should hit a record US $1.4 billion in 2008, buoyed by the world’s highest average auction price, a lack of labour problems and increased production, Sri Lanka Tea Board officials said yesterday.

The Tea Board earlier this year predicted a range of between $1.2 billion and $1.5 billion. Based on the latest production and auction data, Tea Board Promotions Director Hasitha de Alwis said earnings would hit the upper end of the spectrum. “If we are lucky, we will hit $1.5 billion, but $1.4 billion is looking very reasonable,” de Alwis told Reuters. “We had $615 million in the first half of the year and usually in the second half, revenue is a little higher.” Sri Lanka’s tea exports earned $1.02 billion last year.

Tea Board Chairman Lalith Hettiarachchi said the production target of 315 million to 320 million kg of tea remained on track.

“That’s quite possible. We don’t expect much problems as at this hour,” he said. “Normally, production targets get puckered due to labour problems, which haven’t arisen this year.” Hettiarachchi said fertiliser use had been satisfactory this year, despite its high cost, which was partially offset by a 79 per cent increase in subsidies approved by Parliament last month.Tea output fell 2 per cent to 304.6 million kg last year from 310.7 million kg in 2006, and most of the drop was blamed on inadequate fertiliser use, owing to its high cost.

Tea is Sri Lanka’s largest agricultural export, and its third highest foreign exchange earner after garments and remittances from Sri Lankans working abroad.

According to tea board data, the Colombo tea auction fetched the highest average price worldwide among tea auctions in the period from January to July at $3.06 a kg, a leap of 31.3 percent.

Kenya’s Mombasa auction was second at an average price of $2.24.

For July alone, the Colombo average price was $3.17 a kg. Through July, India led the world in production with 345,680 metric tonnes (MT), followed by Sri Lanka with 171,300 MT and Kenya with 157,389, according to tea board figures that exclude China because its production data is not available.

Year on year, Sri Lankan production leapt 19.2 percent through July, against a rise of 3.2 percent for India and drop of 20.8 percent for Kenya caused by drought and frost.

In terms of exports, Kenya led with 157 million kg, followed by China with 151 million kg and Sri Lanka with 147 million kg, according to tea board and Reuters data. Reuters