Issues affecting tea industry in 2011 to continue this year

*Rupee devaluation just might have some positive implications

January 8, 2012, 6:58 pm 

By Steve A. Morrell

Asia Siyaka Tea market report last week indicated that negatives from 2011 will get carried over into 2012. Chairman of this company, Anil Cooke, said there could also be some positive repercussions affecting tea trading. He agreed market conditions could pose positive perspectives with Russian buying increasing because of their admittance to the World Trade Organisation (WTO). He did not disagree that the Ceylon Tea tag line ‘Ceylon Tea the best in the world’, was now outmoded and not a credible marketing ploy. There were alternative Tea choices on retail shelves. There was not much difference between, say, a CTC from Kenya, or a ‘Ceylon’.

Qualifying what he said an orthodox ‘Black’ Ceylon was still a commanding presence on market shelves.

Oil prices moving up could have telling impact on Tea . Some other Brokers too did not sound overly enthusiastic that this could have negative impacts on the market.

Reverting to value addition and image building for the beverage, he cited the recently launched ‘Heladiv’ Tea Choice, located in, literally, the heart of the business world, the Fort. And more so a tranquil haven for quick retreat to the Old Dutch hospital, opposite the World Trade Center, Twin Towers.

He agreed the market could have its ups and downs but positive options were that there was now an allocated sum of 10 million Dollars for Tea promotion through a cabinet decision. This sum was not at all adequate, but something to build on.

The Tea Board was pursuing marketing strategies targeting the United States, and China. Considering the allocated sum was barely sufficient, envisaged focus was on active participation of the private sector for joint promotion activity.

A Tea shop, here or there in some obscure international location was not dynamic marketing other brokering sources said. As already established this was a small beginning subject to expansion.

End 2011, the sales average was Rs. 359.80. In 2010, the average was Rs.370.61 indicating lower prices for the year by about Rs, 20 per kilo. This is substantially debilitating, these sources said.

Instability in the Plantation sector fuelled by lower prices would have negative effects on the industry. Our sources , who prefer to remain anonymous said that closure of one Estate in the Hatton planting district spelt some turn- around pointers that could lead to more closures. In that instance we are told the labour have now agreed to increase their intake to at least 16 kilos per day. ( In India the green leaf intake per plucker is 28 kilos. In Kenya each plucker brings in at least 45 kilos per day.) Disparity in harvest per plucker would need further examination.

Currently, cost of production in the formal Tea sector is around Rs. 450. With a selling price at Rs. 360. producers stomach a loss of around Rs. 100 per kilo.

Labour wages are about 63 % of the cost bill.