Recurrent price hikes push Ceylon Tea to niche category
Ceylon Tea has shifted to the niche category, which is less that 20 percent of the global tea trade, due to recurrent price hikes at the Colombo tea auctions owing to short supply, the head of a listed tea exporting company in the country said.
According to HVA Foods Chairman Rohan Fernando, vacillation in implementing constructive trade policies coupled with crop shortages resulted in price hikes to an all-time high at the Colombo tea auctions.
The quantity of tea offered at the Colombo tea auctions recorded gradual decline due to a multitude of reasons.
Among them, the drought, floods, banning of the weedicide glyphosate were pointed out as the causes.
“This situation was not conducive to the brand marketers as the shelf prices for the end consumer could not be increased simultaneously.
Restrictive import policies on orthodox teas meant, pure Ceylon tea emerging as the most expensive tea brand, driving the consumers to less expensive teas,” Fernando said.
Sri Lanka’s tea exporters have long been calling for the liberalization of the industry, i.e. mainly to allow them to import to teas of other origins to mix with Ceylon teas for exports and in the process make Sri Lanka a tea hub in the Asian regions.
However, some tea industry stalwarts have shown stiff opposition towards the idea as they believe such a move will destroy the pure Ceylon Tea identity in the international tea market.
Sri Lanka received U S$ 1.3 billion from tea exports in 2016 and the industry has been given a target to achieve US $ 5 billion 2020.
However, the Sri Lanka’s tea industry is currently going through a very rough patch due to drastic climatic changes, ad-hoc policy decisions and higher cost of production.
Sri Lanka crossed the 300 million kilogram mark in tea production in the year 2000 and even after 16 years the country has not been able to reach the 350 million kg mark as yet.
Tea is still the widest spread agricultural commodity providing sustenance to over a million Sri Lankans directly and indirectly.