EconomyNext – Unseasonal rains have badly affected the quality and quantity of Sri Lanka’s recent harvests of tea which partly rely on changes in weather to yield the subtle flavours that make them sought after, officials said.
The industry’s woes have been compounded by economic and political troubles in key markets like Russia and Iran, the biggest and third biggest buyers of Ceylon tea.
The bad weather would likely mean a bad quarter for regional plantations companies.
"The crop intakes have dropped drastically because the weather is not conducive for growth," said a senior official at a tea brokerage.
"The ideal weather is morning sunshine with a few showers in the evening. But since it’s been raining, the crop intakes are rather low. And you won’t see seasonal bright teas unless there is morning sunshine."
Dan Seevaratnam, Chief Executive Officer of Watawala Plantations, which is partly owned by India’s Tata Beverages, said the last three months would be a disappointing quarter for RPCs.
"October, November and December are usually excellent months for crops," Seevaratnam said.
But this year unseasonal and incessant rain has reduced crop volumes with the October crop down, the November crop expected to be worse than last year and lower in December too.
"Normally, the October – December period has a well-balanced climate and estates get good crops coming as well as good quality in tea – a very profitable quarter for the plantation sector," said Seevaratnam.
"But this year the quality of tea itself is affected. You can’t make top quality tea with this kind of rainfall. But come next year and if the drought gets prolonged, definitely the flavour profile will get improved."
John Keells tea brokers said in their latest auction report that overall quality of teas coming to the Colombo auctions from the Western Planting districts showed a slight decline and the poorer types were less sought after.
Prices fell not only because of lower quality but because of trouble in buying countries, such as the uncertainty caused by the Russian currency crisis, reduced demand at the auctions.
"In the recent past, prices of tea on supermarket shelves in Russia has increased sharply hence, the lower demand," the report said.
"There was limited inquiry from Russia, whilst Iranian buyers too was subdued, Iraq, Libya, Syria and Turkey lent fair support."
Ceylon Tea Brokers said that with the decline of oil prices from the previous 100 dollars a barrel to less than 60 dollars today, Russia and Iranian economies have been adversely hit as their main income earners are crude oil and natural gas exports.
"Russia and Iran being two of the top export destinations for the Sri Lanka teas, the decline of oil prices and the rouble devaluation would have a direct impact on the auction prices."