Sri Lanka’s tea crop heading for worst drop in recent history

report said adding that the withdrawal of fertiliser subsidies to plantation companies could compel those companies in financial difficulty to restrict application.

It said higher cost of fertiliser and restricted subsidy to smallholders will to a greater extent determine production of Ceylon tea in 2017. “On the other hand, if tea prices remain buoyant in 2017 we expect smallholder farmers and Re gional Plantat i o n Companies to be able to afford application of fertiliser.”

Asia said the full impact of ban on weedicide use is yet to be felt and implications in the short term are likely to be negative. “There is however a sliver of hope that the special committee appointed to consider a more gradual phasing out, might submit a positive report,” it said, adding that on wages while there seems to be agreement on wages between plantations and unions, “core issues however remain unresolved and could resurface later in 2017 when local govern- ment elections are held”.

Sri Lankan crop losses effectively commenced in H2 2015 and since then production deteriorated continually throughout 2016. Available data for the period Jan/ Nov 2016 indicates that the country lost 40 million kg by November against the relatively low 2015 figure; and is unlikely to improve significantly by December.

Discussing the global scenario, the Asia report says that over the past three years world production of tea grew 6 per cent from 5 billion kg in 2013 to 5.3 billion kg in 2015.

While available data for this year shows that Kenya will bounce back from a lower production scenario to a record crop of 450+ million kg, India will achieve a record 1.22+ billion kg and China a record of 2.2 billion kg.

Sri Lankan tea exports projected at around 290 million kg in 2016 will be lower than 300 million kg for the first time since 2009, the report added.