By Steve A. Morrell
Reduced quantities of tea in world auction centers would mean price increases would be sequential, were very nearly universal views of most brokers end last week.
They said price trends were better than the same period last year but reduced crop would mean less tea on retailer shelves and a counter productive phenomenon of increased costs would emerge nullifying the price pluses.
John Keells’ Tea Market Report quoting the Assam Tribune and Economic Times (of India) said heat and scanty rains spoiled cropping opportunities in Assam; similarly Nilgris, and Kenya as well.
Deficit crop variance of approximately 10 % to end March meant that irrespective of price increases at Colombo auctions, costs at production were high. Ultimately plantations would find it difficult to make ends meet, these sources said.
High growns and Westerns have recorded high deficit results while low growns and mediums were less stressed. Tea smallholders were affected, but not to the extent they could not manage their properties. There are now in excess of 400,000 tea smallholders supplying leaf to factories and although such bulk leaf is less than what it was last year, they said they could yet manage their land profitably.
Commenting on these remarks, Colombo sources said this was no surprise, because most smallholdings were family owned and overheads were minimal. Currently prices paid per kilo for bought leaf at approximately Rs. 95 per kilo was a good one.
The crop deficit recorded to end March was 8.1 million kilos. High growns lost 11 % from a year earlier. As revealed at a recent interview, CEO Watawala Plantations Dr. Dan Seevaratnam, said unless the prevailing model of plantations management is changed, plantations will continue to run at ‘thundering’ losses.
Crops harvested to end April 2014 was 73 . 5 milion kilos against 81.6 million kilos in the comparative period the previous year .
Meanwhile Brokers and the tea trade were reticent on increased prices. They agreed the industry did benefit from increased prices but such increase failed to translate to viability.
January to April prices were that low growns sold at an average of Rs. 508 per kilo, up about Rs. 64 per kilo a year earlier which was good by any standard, the brokers said.
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