March tea output falls on bad weather

Reuters: Sri Lanka’s tea production fell 22.6 per cent year-on-year in March, the state-run tea board said on Tuesday, with industry experts attributing the drop to adverse weather.

Sri Lanka’s March tea output was 27.21 million kg compared to 35.13 million kg in March 2011. Production in the first quarter dropped 6.7 per cent to 73.18 million kg from 78.40 million in the same period last year.

“Poor rain and a long dry period at higher elevations are reasons for this drop,” Anil Cooke, head of Asia Siyaka Commodities, told Reuters. “We had extraordinary output in March last year.”

High grown tea output fell as much as 38 per cent in March, Tea Board data showed.

The state-run body expects a marginal fall in the annual production this year, though it sees 2012 export revenue surpassing last year’s record $1.5 billion due to higher prices.

Revenue from the island-nation’s top agricultural export commodity fell 19.1 per cent to $103.9 million in January compared to a year ago, the latest central bank data showed.

Sri Lanka’s tea output fell 0.9 per cent to 328.37 million kg last year from a record 331.43 million kg in 2010, but higher prices helped 2011 earnings from the country’s top agricultural export rise 7.1 per cent.

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. Local banks have been reluctant to finance the industry fearing consequences from impending US sanctions on Tehran.

Other countries in the Middle East are also major buyers, but political turmoil 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.