Tea Small Holders Hold Back Stocks

By Dinouk Colombage

Sri Lanka’s tea industry continues to flounder with falling tea prices and increasing sanctions on Sri Lanka’s largest tea importers.
The government has attempted to deflect attention from the worsening situation in the industry by insisting that the export of tea to the Middle East has continued despite these sanctions.
Lal Premanath, Head of the Federation of Tea Small Holders’ Associations, told The Sunday Leader that the farmers could be getting better prices for the tea leaves than what is currently being offered. ‘The increased cost of transport, labour hire and factory operations have seen the farmers get a reduced profit. On top of that the turmoil in the Middle East has seen the price of tea driven down,’ he explained.
Premanath accused the government of failing to help the farmers through the turbulent times in the industry. ‘The fertiliser subsidies that the government has provided is of a low quality, this means that only 65% of the total tea leaves plucked is export quality’, he added.
Premanath further stated that the government has not made any moves to alleviate the financial burden that has befallen the farmers.
Asked what measures the government should be taking, Premanath responded that financial assistance must be given to the farmers. He also urged the government to explore alternatives to the Middle East to continue the trade. ‘The government is relying on Iran and the rest of the Middle East to continue their trade with us, if the situation should arise where they cannot continue purchasing our tea we will have no alternative,’ Premanath said.
The head of the federation drew attention to a worrying sign which is seeing many small tea plantations holding back their stocks. ‘With the falling price of tea and increased cost of production these owners are reluctant to pluck their tea leaves,’ he said.
The Sri Lanka Tea Board told media on Wednesday that tea production for the month of February had dropped by 0.6% compared to February 2011. According to officials this fall is due to a higher than normal production recorded last year.
Premanath denied this was the case, explaining that the fall in tea production is a sign of plantations refusing to pluck their tea leaves.
High prices in 2011 saw the tea industry top the agricultural export list earnings at Rs. 195.2 billion. However, analysts have been unable to predict a potential figure for earnings this year due to the increasing uncertainty surrounding the industry in the Middle East.
The tea industry accounts for over 12% of Sri Lanka’s annual export earnings, a loss of this would greatly affect the already damaged economy.