Sri Lanka govt intervenes to prop up tea prices: report
ECONOMYNEXT – The Sri Lanka Tea Board is to intervene at Colombo’s tea auctions for the first tie in seven years to prop up prices which have been in a prolonged slump owing to weak demand in key overseas markets, a news report said.
The government has decided to release funds up to one billion rupees to buy at the auctions to bail out the tea industry, the Sunday Times newspaper quoted Plantation Industries Minister Naveen Dissanayake as saying.
He said the Tea Board would buy only premium quality tea and market it according to the demand.
This was the first time since 2008 the Tea Board was buying at the auctions in a bid to boost the tea prices, he said.
Dissanayake said he believed this would benefit tea smallholders better than a government tea subsidy.
The newspaper quoted Plantation Industries Ministry Secretary Upali Marasinghe as saying the Tea Board hoped to buy 2.2 million kilograms of tea.
“Our aim is to increase price of tea to 450 rupees a kilo,” the paper quoted him as saying.
A proposal to offer a subsidy and buy raw leaf at a guaranteed price was also considered, the Sunday Times said.
But the government eventually decided that it was difficult to maintain a guaranteed price for a prolonged period and buying at the auction would be a better option. (Colombo/November 01 2015)