Sri Lankan tea output fell 9.6 percent in November as the state Tea Board urged producers to cut production on low global prices and reduced demand from buyers, officials said on Wednesday. Tea output fell to 24.64 million kg from 27.27 million kg in November 2007.
The board, which expected a maximum of $1.5 billion in export revenue from tea this year, said on December 26 the country would only reach the lower end of its target of $1.2 billion due to the global price dip. The industry will slow in 2009, hit by reduced demand from the global downturn, a lack of fertiliser use and high labour costs, Hettiarachchi told Reuters earlier this month.
The $32 billion economy would produce at least 300 million kg in 2009 but revenue could be less than $1 billion, he said. Sri Lanka's tea exports to the Middle East and Russia, which buy 75 percent of the island's total production, have been increasingly slow due to the global recession.
Small tea holders who produce more than 60 percent of green tea leaves have started protests across the country since early this month, demanding government intervention to ensure fair prices, at least to cover the cost of production. The government, in its $141 million stimulus package has said it had decided to provide fertiliser subsidy to reduce the burden faced by tea producers.
Output from January to November rose 8.4 percent to 299 million kg from 275.7 million a year earlier, but was off a low base in 2007 due to an industry strike. Output fell 2 percent to 304.6 million kg last year from 310.8 million kg in 2006, with officials citing inadequate fertiliser use due to high prices, unfavourable weather and the fallout from an industry strike.
Sri Lanka exported 309.8 million kg of tea last year, including re-exports of 15.6 million kg in imports that tea companies purchased from overseas to meet client orders. Sri Lanka's record 2005 harvest of 317.2 million kg made it the world's fourth-biggest black tea producer after China, India and Kenya and second only in exports to Kenya in that year.
Tea, which recorded export earnings of more than $1 billion for the first time in 2007, is one of Sri Lanka's main foreign currency revenue earners, after garment exports and remittances.