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Tea exports rise despite new wave

10 May 2021

  • 20 m kg increase in production from Jan-March

  • Rs. 65.62 b export revenue recorded from tea 

  Regardless of the disruptions caused by the new wave in Sri Lanka, tea exports so far this year are much better than that of the same period last year, according to the Tea Exporters’ Association (TEA). Speaking to The Morning Business, TEA President Sanjaya Herath, who is also in the management of UniWorld Teas, revealed that tea exports in the country have increased by 20 million kg compared to 2020. “Compared to the performance of January-March 2020, we have done better. This includes March and even April, which should have a good performance mainly because we had about 20 million kg of more tea exports compared to last year,” Herath stated. As per the statistics collected from TEA, the cumulative production of January to March in 2021 amounted to 74.03 million kg, in which a gain of 20.35 million kg was witnessed compared to the volume of 53.68 million kg during January-March 2020. According to statistics of tea exports, the cumulative tea exports of January-March 2021 amounted to 69.89 million kg, illustrating a gain of 10.31 million kg compared to 59.58 million kg during January-March seen in 2020. This is also parallel to the revenue of Rs. 65.62 billion generated from January-March in 2021, which illustrates an increase of Rs. 16.38 billion compared to the Rs. 49.23 billion generated within the months of January-March last year. In addition to this growing performance, Herath continued to note the rising challenges such as restrictions of operations, delays, and recent lockdowns affecting the tea export supply chain. “Due to the third wave, there are several issues from a few of the organisations. Starting from Customs, we have had problems due to the restricted hours the employees have to comply with,” he explained. The TEA President further spoke of the administration delays such as completing documentation. In addition, it was revealed that the tea exporters are facing a similar issue where there is a delay in receiving certain raw materials. “As far as the suppliers are concerned, they used to supply within three to four days. Now they are taking up to two weeks, which has an effect down the line,” Herath added. As per recent lockdowns that have affected operations, two estates were revealed to be situated under lockdown. However, it was mentioned that as workers abide by the health restrictions, the production has not been halted yet. “As of now, we are working with a lot of hardships. The main problem is the support services. When we delay our exports, our export proceedings also get delayed,” he expressed. On another note, Herath further stated that shipments that were due in June and July have been pushed to be shipped as soon as possible due to the publicity that portrays that “Sri Lanka is going through the worst Covid scenario”. Nevertheless, Herath evaluated an overall growing performance. Also, TEA statistics mentioned that with all the main categories of exports such as bulk tea, tea bags, and packeted tea, an increase compared to the corresponding period of 2020 can also be seen. Furthermore, the FOB (Total Free On Board, a shipment term used to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping) value of Rs. 938.97 also showed an increase of Rs. 112.58 when compared to the Rs. 826.39 during January-March 2020. Iran has also moved down to ninth position from the fourth position it occupied in 2020, recording a substantial decrease in imports during January-March 2021. Other importers were mentioned to be the UAE, Azerbaijan, Libya, and Syria. Meanwhile, destinations such as Saudi Arabia, Chile, and the US have recorded a fairly significant decrease in imports during the period under review. -- --BOX BEGINS-- Iran-SL barter deal put off due to Iranian election The tea-for-oil barter deal that the Sri Lankan Government was expected to sign with the Iranian Government and finally implement by April 2021 has been delayed due to the Iranian presidential election and other contributing factors. Speaking to The Morning Business, TEA President Sanjaya Herath noted a slight reluctance in going ahead with the barter deal, although the agreement has “principally” been approved by both parties. “It has been principally approved. However, now that they are going into the 2021 presidential election, there is a slight reluctance in signing the agreement. They might sign it after the election,” Herath commented. Herath revealed that Sri Lanka, therefore, suggested that Iranian Ambassador to Sri Lanka Hashem Aghazadeh officially sign the agreement and any ceremonial celebrations take place after the election. The TEA President also revealed that the demand from Iran for Sri Lankan tea has spiked due to two contributing factors. Firstly, the North Indian Tea production plummeting by 25% due to the prevailing surge of the Covid-19 virus has given Sri Lanka the competitive advantage in overtaking one of the biggest international black tea exports. Secondly, due to the 2021 Iranian presidential election (results in June 2021), Herath reported that the country has been having discussions with Jews and the rest of the world regarding the 2021 New Year Project. Due to these factors, the Iranian currency was reported to have been appreciating, making SL tea exports become cheaper for the country, which influences a rise in demand as well. “Therefore, the ball is currently on Iran’s side. The Iranian Ambassador to Sri Lanka is expected to get back to us soon. Nevertheless, we have seen a lot of demand from Iran,” Herath stated. In elaboration, the Sri Lankan Government would be exporting tea under this barter deal in order to offset large sums of payments owed to the Iranian Government by the Ceylon Petroleum Corporation (CPC) for fuel it exported to Sri Lanka a couple of years ago. As Sri Lanka was unable to settle obligations with liquid cash due to sanctions placed on Iran by the US, the Sri Lankan Government, in agreement with TEA, has evaluated the debt to be paid through exportation of Ceylon tea. Accordingly, the Government and the Sri Lanka Tea Board agreed to settle the fuel debt obligations of $ 250 million, which has been due for several years, through equal instalments over 48 months. Thereby, $ 5 million worth of tea, which is an estimated 800-900 metric tonnes, would be exported to Iran per month. --BOX ENDS--


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