Tea output in Lanka to miss target on dry weather
Friday, 25 September 2009
COLOMBO, Sept. 24 (Bloomberg): Tea production in Sri Lanka, the world's fourth-biggest grower, may drop as dry weather damaged the crop and a wage dispute disrupted supplies.
This year's output target of 300 million kilograms may be reduced, Lalith Hettiarachchi, chairman of the state-owned Sri Lanka Tea Board, said in a phone interview. Production was 318 million kilograms last year.
A global tea shortage may widen 10 per cent next year as droughts in Kenya, Sri Lanka and India, the biggest exporters, damage crops and propel prices to a record, according to McLeod Russel India Ltd., the world's biggest tea grower. A disruption in supplies by workers and an increase in daily wages will raise costs for Lankan producers including Maskeliya Plantations Ltd.
"Cash flows are being pushed to the maximum," said Malin Goonetileke, secretary general of the Planters' Association in Colombo. "Prices we are getting are keeping us afloat but we can't expect levels to keep rising for more than a few months."
Workers on Lanka's upcountry tea gardens blocked supplies to auctions in Colombo for two weeks earlier this month before winning a 40 per cent gain in wages to 405 rupees ($3.50). Higher pay will raise costs by 6 billion rupees, said Goonetileke.
Average prices at the Colombo tea auctions rose 18 per cent in the second quarter, according to the board. At auctions on Sept. 8 and 9, 5.2 million kilograms of tea sold for as much as 445.72 rupees a kilogram, the board said on its Web site. That compares with an average of 419.25 rupees a kilogram in August.
This year's output target of 300 million kilograms may be reduced, Lalith Hettiarachchi, chairman of the state-owned Sri Lanka Tea Board, said in a phone interview. Production was 318 million kilograms last year.
A global tea shortage may widen 10 per cent next year as droughts in Kenya, Sri Lanka and India, the biggest exporters, damage crops and propel prices to a record, according to McLeod Russel India Ltd., the world's biggest tea grower. A disruption in supplies by workers and an increase in daily wages will raise costs for Lankan producers including Maskeliya Plantations Ltd.
"Cash flows are being pushed to the maximum," said Malin Goonetileke, secretary general of the Planters' Association in Colombo. "Prices we are getting are keeping us afloat but we can't expect levels to keep rising for more than a few months."
Workers on Lanka's upcountry tea gardens blocked supplies to auctions in Colombo for two weeks earlier this month before winning a 40 per cent gain in wages to 405 rupees ($3.50). Higher pay will raise costs by 6 billion rupees, said Goonetileke.
Average prices at the Colombo tea auctions rose 18 per cent in the second quarter, according to the board. At auctions on Sept. 8 and 9, 5.2 million kilograms of tea sold for as much as 445.72 rupees a kilogram, the board said on its Web site. That compares with an average of 419.25 rupees a kilogram in August.