TEA PRODUCTION

Tea production during this year is expected to drop by 8% compared to-the-record production of 318 million kg in 2008.
Droughts in the Tea growing region played havoc with the numbers and in the first quarter of 2009, tea production dropped by 40% which improved to 24% in the second quarter and 18% in the third quarter. However, monthly figures in October indicated an increase with production at 25.9 million kg for the month this year compared to 24.3 million kg last year. Total tea production however from January to October stands at 234.78 million kg last year, a cumulative drop of 14.5%.
Speaking to Daily FT, Tea Board Chairman Lalith Hettiarachchi said that total production would be around 295 million kg at the end of the year compared to the record production of 318 million kg in 2008. He added that the labour strike in September which resulted in a loss of production by at least 2.5 million kilograms.
The global tea shortage in 2010 is expected to increase to 110 million kilograms compared to 100 million kg this year and in the wake of falling supply global prices are also expected to increase by 15%.
While global analysts predict the world wide tea shortage of 10% due to droughts in Kenya and India, two of the largest producers in the world, analysts told the Daily FT, that if the current monsoon continues, tea production in the first quarter of 2010 would be higher than the yield this year.
TEA EXPORTS
Sri Lanka is the second largest exporter of tea in the world after Kenya with 320 million kg
leaving the island last year. In 2008 export earnings struck a record high of 123 billion dollars 0
for the year, up from 1.02 billion dollars in 2007 but for 2009, the estimate is cautious.
Tea Traders' Association President Jayantha Keragala said that till September 2008, the total exports was USD.991 million compared to the USd.874 million recorded this year, a drop of 12%. However he pointed out that the recession took place in the -last quarter of the year. "We experienced a major decline during that period but this year, we see no decline and at least, value wise, we hope to catch up", he said. Sri Lanka exported 245 million kgs of tea in the first nine months till September, 2008, compared to the 221 million kg this yea, a drop of 24%. "Overall, we expect a deficit of around 40 million kg for the year but because of the increase in the prices, we hope to earn close to USD.1.2 billion by the end of the year", be concluded.
Meanwhile, in October 2009 the rupee value of exports reached a record high of Rs.13.3 billion 17% higher than the export earnings of October 2008 when the crisis hit the industry.
December 9, 2009

TEA PRODUCTION TO GO DOWN DUE TO WEATHER: TEA BOARD CHIEF

Tea production in India will be marginally lower this year than in the year before due to erratic weather, says Tea Board of India chairman Basudeb Banerjee.
"This year our production has been slightly lower than last year. We will be marginally down by 10-15 million kilograms this year (by the end of the season -- first week of December)," Banerjee told IANS.
The production last year was 981 million kg.
"There were times during the season when unseasonal rains or lack of it hampered the crop. Erratic weather played a crucial role," he said.
On the spiralling tea prices, Banerjee said overall prices are up by 30 percent over last year's average.
"Average prices of South Indian tea, which was Rs.60-70 per kilogram last year are now around Rs.100 per kg. Average prices of north Indian (Darjeeling, Assam) tea that was around Rs.100 per kg is now around Rs.130 per kg," Banerjee said.
The rising prices can be attributed to the behaviour of the international traders on demand-supply pull and secondly the higher wages paid to the labourers.
He traced the origin of the all-round price rise to the drought and political problem in Kenya two-three years ago, and added this year the traders expected there could not possibly be two droughts in a row.
Production cut in Kenya and Sri Lanka due to drought and a drought-like situation in India to a limited extent led to the overall shrinkage of tea availability.
"International traders were probably a little confident that tea stock availability would not be low this year. But eventually their stocks ran low. Now when stocks are low and the supply pipeline is drying up (due to drought) there is a demand-supply mismatch," Banerjee said.
Talking about tea consumption in the country, he said it is growing satisfactorily.
"In India, consumption has gone up. Till last year tea consumption growth rate was more than three percent, as against 1.8-2.4 percent in the last few years of the 21st century."
The tea industry has remained largely insulated-from the global economic meltdown as internationally people consume more tea during a recession since this is a cheaper beverage, he said.
"Nevertheless, higher end tea has suffered due to the meltdown."
Out of the 981 million kg produced last year, around 200 million kg were exported. But at present the export market is not doing too well.
"The export market is not doing too well in terms of physical quantity. A five-six percent decline has happened in export, but we have made up as the unit cost has increased," he said.
Total global supply of tea was 3,749.78 million kg in 2008
lcbl Market Report
2009.12.02

RAINS LOOK TO BOOST SUPPLIES OF TEA FROM AFRICAN ORIGINS

TEA supply from Africa's major origins is expected to show an increase towards the end of his year, as growing areas in Kenya and Uganda are now experiencing favorable weather conditions. According to trading sources who spoke to The Public Ledger, the anticipated increase in supply at the Mombasa auction was, however, only likely to be seen later in December and was unlikely to have much effect on the price levels at the auction. "We have already started experiencing an increase in availability of the crop because of good rains. Kabarole, Bushenyi and the Bunyoro area are all reporting more availability as a result of the rains," said the acting head of the Uganda Tea Association. However, Uganda's hopes of producing up to 57,000 tonnes of tea, up from 45,000 tonnes produced last year, had already been' shattered by the effects of drought. Traders said that in Kenya the crop had started to increase in the East Usambara area where the weather was favorable. The crop was also improving in the Nandi area and other growing regions particularly west of the Rift Valley. Peter Kanyago, a board member of the Kenya Tea Development Authority, said in mid-November that tea prices in the country could fall as a result of the boost in production arising from the good rains being experienced. The average price at Mombasa in the week ending November 13 was $2.85 per kg compared with $1.79 per kg at the same time last year. The average price for 2009 is $2.43 per kg, up from $2.27 per kg for a similar period in 2008. African tea sales volumes for the first nine months of this year fell by nearly 7 mkg from the same period last year to 212.9 mkg, but prices have continued to improve amidst the low offerings at the Mombasa auction. Although the statistics from Africa Tea Brokers showed the overall fall in sales to be low, some countries actually had large declines in the volumes exported. For instance, Kenya's sales between January and September this year fell to 153.6 mkg from 163 mkg in the same period last year. Tanzania's sales eased to 8.98 mkg from 9.4 mkg previously while Malawi's eased to 1.1 mkg from 1.8 mkg before. Malawi, which is Africa's second largest producer, sells most of its tea through the local auction.


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CEYLON TEA SECTOR PLANS OWN CERTIFICATION

The Sri Lanka Tea Board plans to issue its own internationally recognized quality certification for factories and exporters, to enable them to meet stringent standards in key markets such as Japan and the EU at a much lower cost. H.D. Hemaratna, Director General of the Sri Lanka Tea Board, told The Public Ledger the certification would be issued jointly by the Tea Board and the Sri Lanka Standards Institution (SLSI).SLSI will get accreditation from foreign standards institutions to issue internationally recognized certification. "The costs of issuing certification would be much lower than foreign certification like the SGS," Mr. Hemaratna said. "It is a voluntary scheme and we might perhaps introduce a subsidy later on by making use of the cess funds (collected from a tax on exports)."The certification will include ISO 22000 and ISO 9000 and Hazard Analysis and Critical Control Points (HACCP). Standards like HACCP are now mandatory in certain markets such as the EU and Japan. Exporters, factory owners, tea packers and warehouses having to renew the certification and those seeking it and will soon be able to get it from the SLTB and SLSI, whose charges will be much lower than that of foreign institutions. About 60 Sri Lankan, tea factories have got HACCP certification from foreign institutions with the cost being subsidized under an Asian Development Bank-funded project, which has now ended. Exporters said they are aware that other importing countries could insist on tough food safety certification in future. The scheme will also cover the requirements of maximum residue levels of pesticides in tea.