S Lanka tea earnings hit record high

COLOMBO: Sri Lanka’s tea production and export earnings hit a record high in 2008 due to high world prices prior to the global recession and strong demand, its tea board said on Thursday.

Production reached 318.5 million kgs, surpassing the previous record of 317.2 million kgs in 2005. Earnings from tea exports also hit a record high of $1.22 billion rupees from $1.02 billion in 2007, Sri Lanka Tea Board officials said. Tea is one of Sri Lanka’s main foreign currency revenue earners, after garment exports and remittances.

“This is mainly due to better tea prices prevailing in the world market, coupled with increased demand for Sri Lankan tea up to September last year,” Lalith Hettiarachchi, chairman of the Tea Board, told Reuters.

The industry is expected to slow down in 2009, hit by reduced demand from the global downturn, a lack of fertilizer use and high labour costs, Hettiarachchi told Reuters in December.

The $32 billion economy should produce at least 300 million kgs in 2009 but revenue could be less than $1 billion, he said. Tea output in December fell 34.9 percent to 19.19 million kgs from 29.46 million kgs a year earlier, tea board data showed. “After tea prices plummeted due to global recession in September, we asked the producers to cut production and produce only quality tea leaves,” Hettiarachchi said.

The board had expected a maximum of $1.5 billion in export revenue from tea this year, but later said it would not be possible due to the global price dip. Sri Lanka’s tea exports to the Middle East and Russia, which buy 75 percent of its total production, have increasingly slowed due to the recession.

However, low-interest loans and fertiliser subsidies for tea farmers given as part of a $141 million government economic stimulus package, is expected to boost Sri Lanka’s number one agricultural product. reuters

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