Likely five per cent drop in SL’s tea production for 2022

Sri Lanka’s tea production this year is estimated to fall by five per cent to around 285-288 million kg from a projected 300 million kg last year, largely due a fertiliser shortage which has hampered agricultural crops in the country, a leading commodities broker said. Production in 2020 was 278.9 million kg.

The Government has allowed limited imports of chemical fertiliser for crops other than paddy but fertiliser importers say import quantities could be lower due to high global prices.

Asia Siyaka Commodities Plc said in a report on tea production trends, that even if weather conditions remain stable throughout the year, significantly reduced use of fertiliser in Q3 and Q4 2021 will have a negative impact on tea production during Q1 and possibly Q2 of 2022.

"If fertiliser is made available in volumes and composition required at a reasonable price to the tea grower, we could see a better 2H in 2022," the report said.

Tea production has seen a sharp drop in recent years after rising to a record 340 million kg in 2013.

However the report said 2021 production saw a welcome recovery of production following three bad years; when key policy changes interfered with the steady growth.

“Both farmers and estates have had to contend with these disruptions that led to the supply of fertiliser and agro chemicals not always being available when required,” the report said.

It also said the country was blessed with better weather conditions last year and if agricultural imputes were permitted to go in as and when needed, there was potential for national crop last year to go up to more than 310 million kg.

On the international scene where Ceylon Tea is a big competitor, the report said that the exit of Unilever from a cluster of tea brands including Lipton and PG Tips while divesting industry investments, had been the talk of the global tea industry for much of 2021 and its ramifications will be watched closely in 2022 and beyond.

“Lipton needed a fresh outlook; but based on comments made by the new leadership of Ekatera, the successor organisation, we are optimistic that the long awaited advancements will come sooner than later and that others will follow,” the report said.

“Stakeholders in Sri Lanka, the home of Ceylon Tea, which played a major role in the launch and growth of many successful brands around the world have watched with dismay, the erasing of its identity by these brands that owe their current status in great measure to Ceylon Tea. The misplaced confidence of these brands, that their relationship with the consumer has evolved to a point, where they trust only in promoting the brand at the expense of product excellence, is being proven to be unsustainable,” it said.