Sri Lanka is targeting revenues of 1.5 billion US dollars from exports in 2023 and is expecting to finish 2022 with 1.2 billion US dollars, Niraj de Mel, Chairman of Sri Lanka Tea Board, the industry regulator and promotion body.
In 2023, the Tea Board expects a total production of 290 million kilos, and exports of 275 million kilos.
In the first 10 months of 2022, Sri Lanka has shipped 211 million kilos of tea and has earned an export revenue of 1.05 billion US dollars.
“When it comes to production there is a reduction of around 18.3 percent or 40 million kilos in the first 10 months from a year ago,” De Mel told reporters.
When it comes to exports, there is a 9.5 percent drop. But last year our exports increased and there was a higher carry over to this year. We have already shipped 211 million kilos so far in 2022.”
In 2020 De Mel said around 250 million Kilos were exported earning a total of 1.03 billion, while in 2021 236 million kilos were exported earning a total forex revenue of 1.1 billion US dollars.
Though the production has dropped, the prices of tea in auctions has gone up due to higher demand and the rupee depreciation.
Due to the low production, resulting mainly due to banning of chemical fertilizer by the ousted President Gotabaya Rajapaksa, De Mel said, the average amount weekly sold in the auction also went down by around 1-1.5 million kilos.
“But because of the production decrease the amount available for the international buyers to buy has decreased but they are trying their best to buy whatever there is, because Ceylon tea is a selling point of their own brands,” De Mel said.
“That is why the prices for our product have gone up. One is the name we have and the next is the high demand,”
“With the rupee depreciation since Mid-march the prices have gone up drastically. In October for the first time ever we got a FOB of 5.72 USD. In rupees that is more than 2,000. This is the first time in history. Those in the value chain benefit from this.”
De Mel said, the higher prices can be argued as a disadvantageous point by the marketers in the international market, but can be managed due to the higher demand.
“The rupee has depreciated around 70-76 pct. But the prices of tea have gone up by around 140 pct. That is why the small holders are getting more than 290-300 rupees per kilo,” De Mel said.
“And also some say we will have a hard time competing in the international market. That is correct. But as I said, the demand is high.”
In 2022 prices of most food commodities surged after the US Fed printed money. With the Fed tightening policy the dollar has started to strengthen weakening the prices of energy, metals and food.
Global coffee prices have fallen steeply over the past quarter.