Brokers mixed over tea industry’s prospects in 2012

Two leading brokers expressed mixed sentiments over the tea industry’s prospects for 2012.

Forbes and Walker Tea Brokers opted to describe its sentiments as “cautiously optimistic” with regards to the market scenario for 2012 whilst Asia Siyaka said 2012 will be a challenging and a decisive year for Sri Lanka tea industry. 

“The Colombo Auction averages should move up from the low levels decreased to during the last quarter of 2011, whilst it may be over optimistic to predict the dizzy heights that we reached during the first quarter of 2011 at this point of time,” Forbes said. “It is also important that the cautious optimism for the tea market in 2012 be linked with the accent on maintaining reasonable and consistent quality throughout the year,” it added in its initial review of tea industry performance 2011 and outlook for 2012.

Asia Siyaka reasoned that the global economic downturn and the fall of the commodity prices which is evident could have a great impact of Sri Lanka Tea Industry.

“The high production cost which could hardly be brought down has a great impact on the plantation industries profitability. The black tea production in China for Export and Major investments on tea production in Vietnam,Tanzania and Uganda the improvement of quality of the Kenyan teas and the lower production cost in the mentioned  countries could be a severe threat to the competitiveness of the Sri Lanka Tea in the world market,” Asia said.

“If the prices do not increase especially in the high grown rotorvane teas the plantation companies would have to necessarily look at other crops as well as other areas of business in this sector which is already evident,” Asia Siyaka added.

See Page 4 for the full report on Forbes and Walker Tea Brokers’ Review.