Friday, August 19, 2022

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Tea factory owners fear total closure with tea crop plunging to 23 year low

Tea factory owners fear total closure owing to the worsening fuel crisis and other shocks putting much needed foreign exchange earnings at risk amidst lowering of tea production after 23 years.

Sri Lanka Tea Factory Owner’s Association President Lionel Herath noted that there is a serious risk of all the tea factories in seven districts across the country coming to a standstill if sufficient fuel stocks are not received in the next few days.

“Right now, the factories are working three to four days per week as the rest of the days the employees are in fuel queues,” he added.

Tea production in June hit a 23-year low of 20.1 million kilos, Asia Siyaka Commodities PLC revealed yesterday.

It said the lowest crop for the month of June was 19.3 million kilos recorded in 1999. The June 2022 crop is also down 22% YoY from 2021 quantity of 26 million kilos.

Asia Siyaka said high grown tea production of 4.05 million kilos in June was lowest ever on record, with closest to this figure was 4.5 million kilos in 2004.

The Low Grown tea production amounted to 13.1 million kilos down 16% from a year ago. The 2022 June figure is the lowest since 2007 when 12.8 million kilos was produced.

Mid Grown crop of 2.9 million kilos was also the lowest in record and was down 44% from last year.

Asia Siyaka said tea production for the first half of the year has dropped by 18% to 132.9 million kilos from a year ago. High Grown production was 31.2 million kilos compared with 36.6 million kilos the year before.

“One has to go back to the El-Nino year of 1992 when a severe drought limited production in the first half to 29.1 million kilos to find similar production figures,” Asia Siyaka said.

Low Grown crop of 79 million kilos reflected an 18% drop from 1H of 2021.

Sri Lanka Tea Factory Owner’s Association President Lionel Herath claimed the Power and Energy Ministry’s support extended to one of the oldest and key export industries has been disappointing.

Some tea factory owners have paid money to get fuel and built necessary storage tanks, but the fuel has not been provided till now.

Three months ago, our main issue was fertilizer, now it is the shortage of fuel to operate the factories,” he added.

It was pointed out that in the seven tea-growing districts, 264 private tea factories and another 258 factories under the plantation companies and non-members operating across the country are operating with utmost difficulties.

As per him over 400,000 tea smallholders and nearly two million people or 10% of the total population are engaged in direct and indirect jobs related to the tea industry and are suffering from multiple issues.

Herath said they discussed with the Plantation Industries Minister to ensure a steady supply of fuel. SLTFOA Joint Treasurer Dr. W. Jinadasa said due to the shortage and price of fertilizer tea production and quality have dropped significantly.

“Tea production has dropped by 20% to 30% due to fertilizer, whilst the tea buds quality (two leaves and a bud) have dropped by 60% – 70%.

There is a good price for tea in the market, but the industry does not have sufficient quality quantities due to short-sighted policies the Government implemented and the cost across the board has increased by three to four folds,” he added.

He also pointed out that the use of fertilizer has dropped by 80%, given the high prices at present.

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