Feb. tea output slips marginally

Friday, 23 March 2012 00:01 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lanka's tea production edged down 0.6 percent in February due to high base in the same month last year, the state-run tea board said on Wednesday.

Sri Lanka's February tea output was 21.98 million kg compared to 22.13 million kg in February 2011. The production in the first two months has increased 4.7 percent to 45.31 million kg from 43.27 million in the same period last year.

"This is a normal output for February. The fall is due to the higher production recorded in the previous year," Sri Lanka Tea Board Director General H.D. Hemarathna told Reuters.

Sri Lanka's tea output fell 0.9 percent to 328.37 million kg last year from a 2010 record of 331.43 million kg, but higher prices helped 2011's earnings from the country's top agricultural export to hit a $1.5 billion with 7.1 percent rise.

Analysts say the earnings outlook for 2012 is still unclear due to a possible dip in exports to Iran, which buys a fifth of Sri Lanka's tea directly as local banks have been reluctant to finance the industry fearing consequence from impending U.S. sanctions on Tehran.

Other countries in the Middle East are also major buyers, but political turmoil and violence may limit their appetite for Sri Lankan tea, traders say.

Tea is one of the $59 billion economy's main foreign currency earners, along with remittances, garment exports and tourism.