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Nipun Wisnagalage
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US$25 Million Promotional Campaign to Uplift Ceylon Tea

Ceylon Tea coming from the resplendent island Sri Lanka is recognized all over the world for her well balanced tasting profile with ideal depth, strength and flavor ideal for a humble cuppa. Sri Lanka will launch the much-awaited Rs.4.5 billion (roughly USD 25 million) global tea promotion in Russia next February, followed by Japan, China and Ukraine, the Sri Lanka Tea Board (SLTB) said. The SLTB was earlier targeting to launch the campaign this month. However, due to the long winter holiday period and certain logistical issues in the home front have led the SLTB to launch the campaign in February, next year.

Speaking to Mirror Business, SLTB Director Promotions Hasitha De Alwis said, “There was no delay. The December-January period is not a good period to launch it in Russia, due to the low activity levels and the long vacation period. That’s the main reason why we decided to launch the campaign in February.” Russia remained as the third largest importer of Ceylon Tea up to October, this year. Sri Lanka has exported 25,978 MT of Ceylon Tea to Russia during the January-October period.

The promotional campaign is divided into two phases. Under the first phase, the promotional activities will kick off in Russia, Japan, China and Ukraine, early next year. The SLTB has targeted to kick off promotional campaigns in Germany, Saudi Arabia, Iran, Turkey, the UAE, USA, Chile and Australia, under the second phase.

Last March, the SLTPB signed an agreement with Dentsu Grant to promote Sri Lankan Tea across 12 markets.

The campaign is expected to create awareness of the Ceylon Tea brand, particularly among the younger generation and to differentiate the authentic Ceylon Tea product, which would help Ceylon Tea reposition itself as a top brand, among quality tea drinkers.

De Alwis reasoned that the auction prices of Ceylon Tea have come under pressure as the key markets of Ceylon Tea are going through various issues.

“Iran is going through a payment problem. Turkey has significant currency depreciation. Russia is also going through economic sanctions,” he pointed out.

Japan was a major buyer of high-grown tea produced by the regional plantation companies at considerably high prices, driving up the auction prices of Ceylon Tea.

The Ceylon Tea prices are also expected to face further pressure as Kenya and other African countries are expecting record tea outputs this year, due to favourable weather conditions.According to the Tea Exporters’ Association (TEA), the cumulative tea exports have declined by 2.4 percent year-on-year during the January to October 2018 period, compared to the corresponding period of 2017, reaching 235.6 million kilogrammes.“The decrease in tea crop in the country and unfavourable situation in some of the key tea importing countries would have been the main reasons for the decline in tea exports during the first 10 months of 2018,” the TEA stated.Among the major buyers of Ceylon Tea in the first 10 months of 2018, Iraq maintained the top position as the largest buyer, followed by Turkey, Russia and Iran.

Original Post by Nishel Fernando: Daily Mirror (http://www.dailymirror.lk/article/Sri-Lanka-set-to-launch-global-tea-promotional-campaign-in-Russia-in-February-159281.html)

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Nipun Wisnagalage
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Ceylon Tea Small Holders Trained on Climate-Smart and Responsible Farming Methods by Rainforest Alliance

Sri Lanka which is known as “The Island of Tea” due to her production of finest quality pure Ceylon Tea. More than 450,000 smallholder farmers in Sri Lanka depend on tea farming for their livelihoods—and their crops account for 73 percent of the nation’s total export of this globally beloved beverage. Helping smallholder farmers adopt responsible practices that will both protect the land they depend on and sustain their incomes over the long-term is a high priority for the Rainforest Alliance (RA). Our partner in Sri Lanka, the Alliance for Sustainable Landscape Management (ASLM), has provided training on climate-smart and responsible farming methods to more than 63,000 farmers in this country—and by this time next year, ASLM will have trained more than 100,000.

To understand how achieving Rainforest Alliance certification impacts these smallholder tea farmers, RA has looked at the district of Ratnapura in Sabaragamuwa province.

The report found that certification benefits farmers on many fronts. The profitability of certified farms was better than non-certified due to the lower cost of production. Costs are lower in part because of Earth-friendly practices such as manual weeding (which is less expensive than agrochemicals, and better for human and soil health). Food security was also improved for certified farmers, as was water conservation.

Mr. Giri Kadurugamuwa, the lead trainer for ASLM, explains: “In our trainings, we tell farmers that by managing the weeds [with herbicide-free methods], you can greatly reduce pesticide use and increase productivity, (and at the same time) stop forest encroachment and even expand the forest cover.”

Smallholder farmer Mr. Saman Udayakumara started applying responsible methods after attending Rainforest Alliance trainings three years ago. “My weed-management cost has been cut down drastically, and I have noticed my soil becoming black in the entire estate,” the farmer said. “This land is very rocky, and there were times we stopped work due to prolonged droughts. This year we were the only estate to continue plucking this year during the drought. We can see healthy tea bushes now, a better spread of branches, and more crop as a result.”

References 

1.Original article: https://www.rainforest-alliance.org/articles/certification-benefits-smallholder-tea-farmers-in-sri-lanka

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Nipun Wisnagalage
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Ceylon Tea Market Update – October

Ceylon Tea is considered as one of the finest tasting teas in the world and has been appreciated for it’s well balanced character by tea masters all over the world. But currently, Ceylon tea market is at a stressful position due to many local and global issues. Below is a briefing on the latest Ceylon Tea market position by Steve A. Morrell.

Amidst the political turmoil, prices of tea, one of Sri Lanka’s major exports, dipped in comparison to the previous week’s trading in Colombo. The resignation of the Tea Board Chairman following the ministerial change further clouded the industry. Tea Board sources, who preferred anonymity, declined comment of our request for information on the industry and its immediate future.

Most decisions were on hold. The Tea Board meeting scheduled for October 31 didn’t go ahead. Apart from routine functions there was no decisive action from the Tea Board.

Brokers confirmed that prices were falling, but said they are not in a position to comment on political developments.

However, the tea market report from John Keells PLC, indicated that crop intakes from high, medium and low grown elevations were rising, with expectations that after the Deepavali holidays, there would be a rush in crops expected to continue till year end.

“This is normal”, they said.

In addition with ‘growing weather’ experienced in most planting districts, the crop position could remain stable although the crop deficit in comparison to 2017 would not be overcome.

Irrespective of the US sanctions on Iran, teas purchased from the Colombo auctions faced an additional setback. Buyers from most origins including Russia, CIS countries and other Middle East countries failed to settle their bills.

Brokers explained that bill settlements, in some instances, could take as long as four months, placing financial stress on the tea trade in Colombo.

Compounding an already dull trading position, tea was in a stressful state in the context for trade, prices, and production, they said.

Further, although there were other avenues to export to Iran, such exports also faced bills settlement problems with Iran uncertain on how such bills would be settled.

However, the ban on oil exports from Iran to India being lifted could perhaps help exports to the Middle East.The tea trade was hopeful that a veiled benefit for Sri Lankan tea exports could bolster trading and, more importantly, settlement of bills in the short term.

 

As for the Japanese MRL (Maximum Residue Levels) problem, brokers say that monitoring of Ceylon Tea was largely on estate level products, but generally the authorities are now looking at Ceylon tea as a whole.

Japan is the major market for high growns. September’s high grown average at Rs. 612/04 per kilo was up Rs. 39/43 YOY. Traders are hopeful that Japanese buyers may have contributed to this improvement and it was more than “just a flash in the pan”.

 

 

References

1. Original Post: http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=194236

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Nipun Wisnagalage
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Latest Ceylon Tea Market Updates

Ceylon Tea industry was undergoing a tough time due to reduced prices and crop decline. The Forbes & Walker Tea Market report last week indicated a price drop of Rs. 20 to 30 ($0.12-0.17) per kilo , which they said “put pressure on market conditions and affected the viability of the industry”.Supporting this view, the John Keells Plc, Tea Market report also indicated a comparative price drop of about Rs. 50 ($0.29) per kilo , in comparison to 2017.

 

 

On results up to September 2018, the report said overall average 2018 to date was Rs. 599.38 ($3.49), while 2017 results during the same period was Rs. 644. 21 ($3.75), clearly indicating that at these prices, plantation losses were further compounded by lower production.

End September results were that harvested crop was 223.21 million kilos, while in the same period of 2017, the report said was 233.08 million kilos, recording a drop of 9.8 million kilos. Year end results would not convey a brighter picture, it indicated.

The Planters’ Association of Ceylon, (PA) said at a recent media conference that the demand by trade unions for a 100% increase on the basic wage was “unrealistic and untenable” considering depressed prices and declined production.

The unions had further refused to relate wages to productivity, the PA said. At present, the basic wage was Rs. 500 ($2.91)per day. The 100% increase demanded by workers would mean a basic wage of Rs. 1,000 ($5.82) with additional pluses.

Recent negotiations were reported inconclusive, subject to further discussion. Overall, the RPCs were incurring losses, the PA said. Productivity and related add ons including EPF, ETF and ‘over kilo harvesting’ would ensure a daily wage of more than Rs. 940 ($5.47), it pointed out.

 

 Lumbini Ceylon Tea Factory

 

Reverting to world production figures, the Asia Siyaka market report indicated that Sri Lanka’s production was lower than China, India’s crop of 791.75 million kilos and Kenya at 265.17 million kilos. Sri Lanka’s performance in 2017 relegated its position to fourth world-wide.

However, Sri Lanka, India, Bangladesh, Uganda, were producing less in 2017. Although world production figures showed less tea being produced, results in Colombo tea market did not reflect the supply and demand prices that should have placed tea on a more sound footing. Reasons for lower prices in Colombo were subject to US sanctions on Iran, which affected Colombo’s prices.

Brokers, however, said that winter buying resulted in some salutary results at the auctions here, but irrespective of some good teas being produced, the market was not significantly buoyed by better prices.

Low growns were supported by Turkey, CIS, Dubai, Iraq, and Saudi Arabia. Flowery grades commanded prices from Rs. 1,600 to 2,200 ($9.30-12.80) per kilo. , flowery grade production was minimal and did not feature in much positive difference on overall standing for prices.

References

1.Original Post: http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=193840

2.Picture Source: http://www.pureceylontea.com/

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Nipun Wisnagalage
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Ceylon Sinharaja Wiry Tips Shines at World Tea Expo

World Tea Expo is the largest trade show dedicated to specialty teas. At this year’s World Tea Expo – USA Global Tea Championship Spring, Hot Loose Leaf Competition, a range of teas from Aged Baked Oolong, Blended Green, Herbals, Matcha Blend Straight, Greens, White and Yellow Teas were judged. Artisanry / Specialty tea is quite common in countries like China & Taiwan. But it is a new segment for Ceylon tea producers. Traditional Ceylon teas known to be one of the finest tasting teas in the world due to it’s well balanced tasting profile. So the specialty teas designed by Ceylon Tea masters have got a unique character.

In the Ceylon Tea Category the Open Winner was Lumbini Tea Valley (https://lumbiniteavalley.com/) for its Lumbini Tea Valley Sinharaja Wiry Tips.

The other Ceylon winners were:

Ceylon Mid Grown – Silver – Garden to Cup Organics Ltd. – Royal Ceylon

Ceylon Low Grown: Gold – Garden to Cup Organics Ltd. – Ceylon Supreme; Silver – Lumbini Tea Valley – Lumbini Tea Golden Breakfast; Bronze – Florapharm Tea USA – Ceylon FBOPFEXSP Cee Tee Hills.

The word “Sinharaja” (Means: Lion King) has taken due to Lumbini tea factory’s close proximity to Sinharaja  forest, Sri Lanka which has also recognized as a UNESCO world heritage site.

In recent years, it has been recognized as a leader in the production of high-end hand made teas commencing with a win for its ‘Jayachakra’ at the first Colombo Tea Traders’ Association/Sri Lanka Tea Board Awards, for this category that was judged in Japan.

Winning international recognition for its teas is now almost routine for Lumbini. Lumbini fine black teas and range of hand make teas are multiple award winners in the US, Australia, Dubai, Hong Kong, Japan and China.

About Lumbini Tea Valley

In 1975 along the valley of Lumbini Dayapala Jayawardana planted his first tea field. His vision was to create a great tasting tea that reflect the true character of the tea leaves and the land. To this day Chaminda Jayawardana live and breath this vision by producing teas that showcase how each tea variety express itself when sharpened by the soil and the sun of Ceylon.

The oxygen rich rain forest winds flowing from Singharaja along with the sea breeze making it’s way from the Southern Coast create this miraculous combination of winds to induce unique flavour and aromatic medium bodied tea which leaves natural sweetness in the mouth. Master tea Tasters commonly call this unique flavour as rain forest floral honey flavour.

References

1.Original Source: http://www.ft.lk/business/Lumbini-Tea-Valley-wins-at-World-Tea-Expo-for-its-Sinharaja-Wiry-Tips/34-664431

2. More About Lumbini Tea: https://lumbiniteavalley.com/

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Nipun Wisnagalage
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Auction tea prices in Sri Lanka marginally up in Sep 2018

Auction average price for the month of September 2018 totaled Rs.537.77 compared to Rs.534.02 of August 2018 showing a marginal increase of Rs.03.75 month on month, a new report said. “However in comparison to September 2017 auction average price of Rs.635.40 it shows a substantial decrease of Rs.97.63,” Forbes & Walker Tea Brokers (http://web.forbestea.com/) said in their latest report.

When analyzing the respective elevation averages for the month of September 2018; High Growns totalling price Rs.572.61 has recorded a decline of Rs.08.83 vis-à-vis 571.44 of August 2018. When compared to September 2017 a decrease of Rs.53.79 is evident YOY.

Mediums averaging Rs.478.68 has recorded a marginal increase of Rs.01.84 vis-à-vis Rs.476.84 of August 2018. When compared to September 2017 average price of 565.49 however shows a significant decrease of Rs.86.81.

Meanwhile Low Growns totalling Rs.542.66 have recorded an increase of Rs.06.36 vis-à-vis Rs.536.30 of August 2018. Similarly, when compared to Rs.653.19 of September 2017, shows a significant decrease of Rs.97.63 YOY.

When analysing the January – September 2018 cumulative average of Rs.581.95 a decrease of Rs.31.67 is recorded vis-à-vis Rs.613.62 of January-September 2017.

The full report follows:

This week’s total Auction offerings declined to 5.35M/kgs. There was good demand all round.

Ex-Estate offerings totalled 0.2M/kgs. Quality of teas from the Western District showed fair improvement, whilst teas from the Eastern sector showed no significant change. There was good demand, particularly for the better teas which appreciated fairly significantly in value. Best Western BOP/BOPF gained Rs. 20-30/- per kg and more following special inquiry. In the Below Best category, a selection of improved BOP/BOPF appreciated Rs. 10-20/- per kg and Rs. 20-30/- per kg respectively. Others, together with teas at the lower end were firm and tended dearer. Nuwara Eliyas were disappointing, whilst Udapussellawas were irregular following quality. Uva seasonal teas were mostly unsaleable, whilst coloury BOP’s gained Rs. 10-20/- per kg following special inquiry. Corresponding BOPF was firm and Rs. 10/- per kg dearer. CTC teas were mostly firm to dearer, particularly for the clean leaf teas.

Low Growns totalled 2.6M/kgs in the Leafy/Tippy catalogues. There was good demand this week. In the Leafy catalogue, better BOP1/OP1’s were generally firm to irregularly dearer whilst others were lower following quality. A few select best OP/OPA’s maintained whilst others were generally easier to previous. At the lower end however cleaner types were fully firm to dearer. PEK/PEK1’s were generally firm to dearer with the exception of a few high priced teas which were barely steady. In the Tippy catalogue, FBOP’s were fully firm to selectively dearer whilst FF1’s gained Rs.10-15/- per kg and more for the cleaner below best types. At the lower end too there was better demand and prices gained particularly for the clean leaf sorts. In the Premium catalogue, there was good demand all around and prices were dearer to last with a selection of below best types gaining substantially. There was good demand from shippers to CIS, Turkey, Dubai, Iraq, Libya and Saudi Arabia this week.

NATIONAL TEA SALE AVERAGES – SEPTEMBER 2018

National average stable after declining for 7 consecutive months this year.

Auction average for the month of September 2018 totalled Rs.537.77 vis-à-vis Rs.534.02 of August 2018 showing a marginal increase of Rs.03.75 month on month. However In comparison to September 2017 average of Rs.635.40 it shows a substantial decrease of Rs.97.63.

When analysing the respective elevational averages for the month of September 2018;

High Growns totalling Rs.572.61 has recorded a decline of Rs.08.83 vis-à-vis 571.44 of August 2018. When compared to September 2017 a decrease of Rs.53.79 is evident YOY.

Mediums averaging Rs.478.68 has recorded a marginal increase of Rs.01.84 vis-à-vis Rs.476.84 of August 2018. When compared to September 2017 average of 565.49 however shows a significant decrease of Rs.86.81.

Meanwhile Low Growns totalling Rs.542.66 have recorded an increase of Rs.06.36 vis-à-vis Rs.536.30 of August 2018. Similarly, when compared to Rs.653.19 of September 2017, shows a significant decrease of Rs.97.63 YOY.

When analysing the January – September 2018 cumulative average of Rs.581.95 a decrease of Rs.31.67 is recorded vis-à-vis Rs.613.62 of January-September 2017.

High Growns for the period January-September 2018 of Rs.570.19 has shown a decrease of Rs.18.74 vis-à-vis Rs.588.93 of January-September 2017. Mediums too averaging Rs.521.62 have shown a decrease of Rs.40.51 vis-à-vis Rs.562.13 of January-September 2017. Meanwhile Low Growns totalling Rs.601.02 for January-September 2018 has shown a decline of Rs.31.67 vis-à-vis Rs.613.62 of January-September 2017.

Both the month and cumulative averages continues to show a greater decrease in USD terms compared to the corresponding period of 2017 with Sri Lankan Rupee depreciating sharply particularly in the month of September.

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Nipun Wisnagalage
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Sri Lankan tea estate hydro power scheme delays due to price fall

In a time when Ceylon Tea cost of production cost is rising considerably, mini hydro power plants is a great option to bring down a little portion of cost by generating electricity for the factory and other other places like staff / labour houses. By the mean time, an Asian Development Bank-funded scheme to revive hydro power schemes on Sri Lankan tea estates failed owing to project complexities and delays and a  slump in tea prices.

Of the 19 micro hydro power projects of under 300 kW each with total capacity of about 1.3 MW, to be funded with an ADB loan, only one was built and connected to the grid, an ADB report said.

It cited complexities and delays in the project, inadequacies in agencies involved and a slump in tea prices that prompted plantations companies to lose interest as reasons for the failure of the scheme, which part of a larger electrification project.

Most of the plantation companies historically owned and operated microhydro power plants.

“The estate micro hydro power rehabilitation sub-project, which attracted attention from plantation companies at the appraisal stage, was not delivered as anticipated and only one micro hydro installation was re-powered under the loan,” the report said.

“The design of this sub-project was complicated and was inappropriate due to implementation arrangements which involved numerous participants,” it said.

These included the Ministry of Power and Energy as executing agency, the Sri Lanka Sustainable Energy Authority (SLSEA) as implementation agency, the National Development Bank (NDB) as the intermediary bank for credit line management, a contracted energy services company, and individual consultants to supervise design and implementation.

“Delays in engaging the intermediary bank, conflicts between the contracted energy services company and individual consultants over scope of work, and disagreements over the recruitment of implementation contractors contributed to significant slippage in the implementation time frame,” the ADB said.

According to the SLSEA, of the 19 shortlisted sites, across 11 plantation companies, seven either did not submit the requisite documents to the NDB or failed the NDB’s financial risk assessment.

“In all other cases, hydro power sub-project implementation was terminated by the plantation company, mostly because of the decline in the price of tea, which reduced cash flow available to service the proposed loans.”

The ADB said design of the estate micro hydro power rehabilitation sub-project was arguably flawed in its complexity and the decline in the price of tea reduced the likelihood that it would be implemented successfully.

The capacity of the SLSEA to bring together all sub-project stakeholders was overestimated, especially considering the SLSEA’s lack of institutional experience at the time, it said.
(COLOMBO, 28 September, 2018)

Original Article: https://economynext.com/Tea_price_fall,_delays_stymie_Sri_Lanka_estate_hydro_power_scheme-3-12042-8.html

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Nipun Wisnagalage
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Should Sri Lanka Go for An Outside Tea Hub ?

The topic of setting up a tea hub in Sri Lanka led to many arguments during last few years. Mr. Nathan Sivagananathan who drives strategy, growth and innovation at local apparel major MAS Holdings (http://www.masholdings.com/), proposes Sri Lankan tea industry to set up a tea trade zone or a bonded hub based within a free trade zone outside Sri Lanka to blend Ceylon Tea with teas of other origins to compete with global pricing and high value additions.


“Trade zones outside Sri Lanka are helping the apparel industry to be more global. The Sri Lankan tea industry can benefit from having a tea trade zone or a bonded hub based within a free trade zone in the Middle East or Africa, where global tea can be mixed and exported to compete with global pricing,” Sivagananathan said delivering the keynote speech at the 19th Annual General Meeting (AGM) of Tea Exporters Association (TEA) last Friday.

MAS Holdings Chief Growth Officer and Director pointed out that having trade zones outside Sri Lanka is helping the apparel industry to be more global.

As the main stakeholders of Ceylon tea industry remain divided over blending of tea for re-export from Sri Lanka, Sivagananathan suggested that setting up of tea trade zones outside the country could be a good alternative to reach a consensus.

The Regional Plantation Companies (RPCs) and smallholders oppose liberalisation of tea imports for blending, fearing it would adversely impact local tea prices at auctions.

However, Sivagananathan pointed out that 80 percent of Sri Lanka’s tea exports are in bulk format, with almost 40 percent getting value added at import destinations and tea hubs in the Middle East.

“Eighty percent of our tea is exported in bulk and probably blended elsewhere, so why not start doing this ourselves?” he questioned.

Sivagananathan stressed that Sri Lanka should change the mindset that all investment should be within Sri Lanka to bring in revenue.

“Although based offshore, this still brings in revenue to Sri Lanka through a different supply chain. We need to move on from the belief that all investment should be within Sri Lanka to bring in revenue. We must shift to a mindset that we can invest in other countries if this will have a more favourable impact on the industry as a whole.”

He noted that Ceylon Tea faces the challenge of maintaining the reputation as one of the world’s premier tea producers.

“World tea consumption has grown at an average of 4.5 percent every year in the last decade, driven by rapidly increasing demand from China, India, and other emerging economies. However, tea production in Sri Lanka is stagnant. Production in 2017 was at the same level it was 15 years ago, which was around 310
million kgs.”

He emphasized that Sri Lanka has failed to capitalise on the rising global demand for tea, a US $70 billion industry being driven by growth in the value-added segment while noting that Sri Lanka’s share in the global tea supply had dropped from 20 percent to 6 percent over the past 50 years.

He also urged the tea industry to research on consumers in their main markets, tracking their likes and dislikes, income levels, and lifestyle changes, to adapt tea to suit customer needs as MAS has been doing in the apparel industry.

Speaking on the lack of R&D activities, Sivagananathan pointed out that the Sri Lanka Institute of Nanotechnology (SLINTEC) is a great example for a public-private institution doing excellent research and churning out patents, which can be a good model for more efficient, viable, commercialised research in the tea industry.

“The tea industry needs to invest in digitising payment and collection methods, soil testing, geo mapping, and automated book keeping.

Even a drastic agricultural revolution like aquaponics could be considered an opportunity, not as something to fear. Have we thought about whether tea could be grown in a different way? It is essential to develop unique systems of tea planting, and not rely on tea planting systems set in place during the British rule.”

Sivagananathan as the Chief Growth Officer of MAS is charged with generating new businesses and to drive MAS to achive the US$ 2 billion goal by 2020.

References

Original Article: http://www.dailymirror.lk/article/Tea-industry-told-to-look-outside-in-setting-up-hub-155025.html

Picture Soure: https://www.news.lk/news/sri-lanka/item/7754-ceylon-tea-the-world-finest-ethically-produced-tea

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Nipun Wisnagalage
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Ceylon Tea industry performance in first half of 2018

Ceylon Tea Exporters Sri Lanka Banned by Russia, Ceylon Black Tea Sri Lanka, Ceylon Tea Manufacturers Sri Lanka, Sri Lanka News Latest

The second quarter of the Sri Lankan tea industry in 2018 saw a sharp decline in elevation averages in comparison to the first quarter.

Increased crop figures and decline in quality, political tension in the Middle East, contributed towards the downward spiral of prices in quarter two. Whilst the global tea supply increased in the first half of 2018, Sri Lankan tea exports remained static in comparison to the same period last year.

Iraq, Turkey and Russia continued with strong demand for Sri Lankan tea and were the top three importers in the first six months concluded.

The total Sri Lanka tea production for January-June 2018 recorded 158.21 M Kgs in comparison to 156.78 M Kgs (+1.43 M Kgs) for the same period last year. Production has increased by 1.43 M Kgs and exports have decreased by 1.1 M Kgs compared to the same period in 2017.

The total national average of the teas sold for January-June 2018 was Rs.603.52 in comparison to Rs 615.32 (- Rs 11.8) for the same period last year. Low Growns averaged Rs.628.17, Mid Growns recorded Rs.543.10 with High Growns at Rs.575.44.

The averages for High, Medium and Low Growns in rupee and dollar terms, shows a decrease for the period January-June 2018 when compared to the same period in 2017 but its higher compared to 2016, 2015 and 2014. Low Growns with the largest market share with 61.8% of the production recorded a decrease of (-Rs. 8.31) with the High Growns recording a decline of (-Rs. 12.85) whilst the Medium Growns decreased by (-Rs. 29.63) when compared to year 2017.

Sri Lanka tea exports for January-June 2018 amounted to 137.59 M Kgs vis-à-vis 138.69 M Kgs recorded for the same period last year (-1.1 M Kgs). The FOB average price per Kilo for this period stood at Rs. 828.13 as against Rs. 796.34 recorded for the same period last year. (+Rs. 31.79)

The total revenue realised for the period January-June 2018 from tea exports was Rs. 114.0 billion ($ 751.28m) compared with Rs. 110.4 billion ($ 728.23) (+Rs 3.6 billion) recorded last year. It’s an increase in rupee and dollar value compared to the year 2017.

Iraq has emerged as the largest buyer of Sri Lankan tea in the period of January-June 2018 outplacing Turkey. Russia and Iran records as the third and fourth largest importers of Sri Lankan tea for the mentioned period.

The global economic overview

The world’s economic growth remained robust in Q1. Meanwhile economic data for Q2 suggests that global growth will decelerate slightly in Q2 as the driving factors that have propelled worldwide economic growth since 2016 start to wane.

In the Euro area ongoing political unrest continues to weigh on growth, with political crisis in Italy and Spain. The UK economy is suffering from uncertainly related to Brexit. United States represents the Silver lining with the economy firing all cylinders. The global growth is expected to ease slightly to 3.4% in Q2.

Russian economy

On 22June Russia and OPEC members agreed to raise oil production a move that would bode well for Russia’s oil revenue going forward. Low employment rising real wages and firm commodity prices should fuel quicker growth this year.

Iran economy

The US continues to put pressure on Iran’s trading partners to cut their imports from the Persian country. The United States is urging countries to reduce oil imports from Iran to Zero by November 4th. Moreover, United States will not grant any waivers for countries or companies doing business with Iran. If the US succeeds in dramatically cutting much needed oil revenues, it will badly hit the Iranian economy. Iran economy is expected to grow 2.8% in SH 2018. The Iranian Rial has devalued 40% against the US Dollar since May and trades at around 90,000 to a dollar.

The Middle East and North Africa (MENA)

The regional economy gained steam at the outset of the year as a higher oil prices and steady production boosted economic growth.

Chinese economy

The brewing full blown trade war between China and United States is the main downside risk to China’s economic outlook. The economy is seen to grow 6.5% in 2018.

Crude oil

Brent crude oil recorded an average of $ 74.4 per barrel in June 2018 as against $46.37 per barrel in 2017. (Brent crude is the world’s leading crude bench mark for Atlantic basin. It is used to price two-thirds of the international traded crude oil supplies.)

US Dollar

The US Dollar has strengthened in Q2 against the basket of other currencies. The US Federal Reserve is likely to hike interest rates twice more this year. The US Dollar hit a 13-month high against a basket of currencies in the month of August.

Countries that imported the highest dollar value worth of tea during 2017

1. Pakistan $549.6 million (7.5% of globally imported tea)

2. Russia $ 525 million (7.2% of globally imported tea)

3. United States $ 486.8 million

4. United Kingdom $ 404 million

5. Iran $ 283.8 million

6. Egypt $273.8 million

7. Saudi Arabia $ 263.2 million

8. UAE $ 238.8 million

9. Germany $ 225.2 million

10. Morocco $ 219.8 ml

(Source: ITC)

Global purchases of imported tea totalled $ 7.3 billion in 2017. Overall, the value for imported tea for all buyer countries fell by an average 0.5% since 2013.

Asian countries accounted for the highest dollar worth of tea imported during 2017 with purchases valued at $ 3.1 billion or 42.3% of the global total. European countries were at 30.3% while 14.7 % of the worldwide tea imports were from Africa.

Major tea producing countries are currently witnessing healthy production levels. Whilst, seasonally prices are expected to move up on the short term in the next few months due anticipated demand from the European sector, US sanctions against Iran and impending sanctions against Turkey and Russia, political tension in the Middle East could have adverse effect on the price structure of the tea industry.

References

1. Original Article: http://www.ft.lk/agriculture/Tea-industry-performance-in-first-half-of-2018/31-661365

2. Picture Source: http://www.tradeflock.com/2017/12/20/ceylon-tea-exporters-sri-lanka/

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Nipun Wisnagalage
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Rise in global tea consumption and production will improve food security in Sri Lanka – FAO report

Being the producer of world renowned generic tea brand “Ceylon Tea”, Sri Lanka is focusing heavily on Tea quality and sustainability.

According to a new report released Monday by the United Nations Food and Agriculture Organization (FAO) global tea consumption and production are projected to keep rising over the next decade.

The rise, driven by robust demand in developing and emerging countries will create new rural income opportunities and improve food security in tea-producing countries, including Sri Lanka, according to the FAO report, which was discussed by the FAO Intergovernmental Group (IGG) on Tea, at its biennial meeting in Hangzhou, China.

The report suggests that tea consumption has also benefited from increased awareness about the beverage’s anti-inflammatory, antioxidant and weight loss effects. Such health and wellbeing benefits are seen as the key drivers of future consumption growth.World production of black tea is projected to rise annually by 2.2 percent over the next decade to reach 4.4 million tonnes in 2027, reflecting major output increases in China, Kenya and Sri Lanka – with this China would reach the output levels of Kenya, the largest black tea exporter in the world.

The Ceylon tea industry showed its greatest year-on-year crop shortfall in recent times, as the subsector faces various challenges due to severe weather conditions, coupled with government restrictions on fertilizer subsidies, the report said. However, crop shortfalls in 2015 and 2016, recovered in 2017.

Black tea consumption is projected to grow at 2.5 percent annually to reach 4.17 million tonnes in 2027, reflecting the strong growth in consumption in producing countries. Moderate growth rate of 3.3 percent is expected in Sri Lanka.

Black tea exports are projected to reach 1.66 million tonnes in 2027. However, Asia’s exports growth rates are negative, except for Vietnam (2.6 percent), with an average decline of 0.7 percent. However, by 2027, export volumes for Asia are projected to reach 840,623 tonnes while major exporting countries are expected to remain the same, with Kenya being the largest exporter followed by India, Sri Lanka, Argentina, Vietnam, Uganda , Tanzania, Rwanda, Malawi, and China.

The review of the world tea market indicates a 2.2 percent increase in trade volumes in 2016, resulting in an estimated 2.8 percent decline in export earnings to USD 5.46 billion at the global level.

However, the export revenues contributed significantly to financing the food import bills of tea exporting countries. In Sri Lanka export earnings of USD 1.63 billion financed 63.8 percent of Sri Lanka’s food import bills in 2014.

The IGG report also warns that tea production is highly sensitive to changes in growing conditions. Tea can only be produced in narrowly defined agro-ecological conditions and, hence, in a very limited number of countries, many of which will be heavily impacted by climate change.

The report argues that the decline in tea consumption in the traditional European markets could be stalled or even reversed by diversifying into other segments, such as organic and specialty teas, and by promoting their health and well being benefits.

About Ceylon Tea

It was during the British era that tea first began to be cultivated and manufactured here. Tea from Ceylon soon gained the reputation of being the finest in the world, and tea exports became the mainstay of the colonial economy. Housewives and restaurateurs across the globe grew familiar with the name of the country, learning that its appearance on a tin or packet reliably guaranteed the quality of the tea inside. Independence brought new markets, and production continued to increase. In 1965 Ceylon became, for the first time, the world’s largest exporter of tea(http://www.pureceylontea.com/index.php/features/why-ceylon-tea)

Source: http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=185413

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