Ceylon Tea demand slows down

Sri Lanka is currently facing a significant sales drop in Ceylon Tea to two of its key markets, Iran and Syria that are reeling from economic crises in their own countries.

Imperial Tea exports Managing Director and former Tea Exporters Association Chairman Jayantha Karunaratne told the Business Times that in some months there have been sales drops ranging between 30-50 per cent.

In fact, he explained that although they may have orders, shipments are delayed since these countries are finding it hard to make payments.

He noted that the situation in Iran is particularly grave since they have limited amounts of dollars and also their own local currency.

This situation has been observed for the past since the last 3-4 months and in both these countries exporters have noted a rising cost of living but incomes continue to remain stagnant as a result of which purchasing power of the people is limited.

Prices have been coming down although they are said to be still too high; Mr. Karunaratne said adding that the crop too has reduced by 20 per cent compared to last year.

In dollar terms prices surged to about 50 per cent higher than last year in September but this trend has been sliding with prices lowering to 22 per cent higher than last year’s figure.

In the meantime, the industry is also facing the increasing cost of production as electricity tariff hike has resulted in a 100 per cent or more increase in rates.

Former Factory Owners Association President Harith Ranasinghe said that the tariff hike on electricity has increased by nearly 100 per cent and this has added to the cost of the production that has spiked by almost 70 per cent.

Moreover, he noted that the packing material has significantly increased in price from the previous Rs.220 a bag to Rs.625 as a result of the currency depreciation and dollar price.

Mr. Ranasinghe also said that about 3-4 months back buyers have complained that prices were too high as a result of which they are unable to compete in the main markets.

As a result of this prices are now seeing a correction and are coming down at the moment, he explained.

In the meantime, the industry is also facing the increasing cost of production