Sri Lanka's tea production in 2015 has declined to a three year low of 328.96 Mn kg, down nine Mn kg (-3%) on the 2014 figure of 338.03 Mn kg.
The highest annual production was 340 Mnkg recorded in 2013. Since 2010 national production has hovered around these levels.
According to published data by the Sri Lanka Tea Board (SLTB) analyzed by Siyaka Research, both High and Low Growns declined year on year with the latter elevation accounting for almost 85% of the national crop loss in 2015.
Medium production figures however were maintained, likely through movement of tea from other elevations. In the Low country sub districts Galle accounted for 50% of the production loss in 2015 YoY 2014. Deniyaya and Ratnapura too recorded losses, but were around a third of the Galle figure.
Amongst the higher elevations Demodara / Hali Ella / Badulla recorded the sharpest losts. Other districts recorded nominal crop losses on the 2014 figures. A key factor would be the dry conditions projected for Q1 2016 and this could play a significant part in Q2 as well. Reduced fertilizer subsidy and banning of cost effective weedicide would place both Estate and SmallHolders under pressure considering the added restriction of lower prices.
Continuing uncertainty over wage negotiations could trigger disruption of work on estates. On the other hand, any negotiated wage increase would further pressurize the Regional Plantation Companies and will have a domino effect of increasing costs for Small Holders; struggling with low green leaf prices.
Overall the country would need exceptional growing conditions and revival in the market at least through a depreciation of the Rupee; if 2016 annual production figure is to reach a 330 + Mnkg level.
The El Nino Phenomenon could cause extremes of weather ranging from drought to excessive rain and storms.
www.dailynews.lk
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