- Major loan restructuring plan in the offing
- Loan write-offs and moratorium on loan payments planned
- Rs. 25 b accumulated loans in sector
- Rs. 500 m from Tea Promotions Fund earmarked to give loans to factory owners via banks
- Cabinet gives approval to proposed scheme
The Government will implement a major loan restructuring plan for the tea sector which could include a moratorium on loan repayments and the write-off on interest in some cases.
A senior Plantation Industries Ministry official said relief would be given for the factory owners whose accumulated loans and interest payments stand at around Rs. 25 billion. According him the drop in tea price in the past few years had resulted in their inability to repay loans.
The relief measures for the tea sector was approved by Cabinet last week with the modalities on how the proposed measures are to be implemented to be finalised in the weeks ahead.
“We will be holding talks with the Central Bank to write off 20 to 30% of the due amounts taken by those in the sector as well as with other banks on giving a moratorium between six months to a year on repayment of loans,” Co-Cabinet spokesman Minister Ramesh Pathirana said.
Also under discussion is the introduction of laws by which the auctioning of mortgaged properties of those on the sector can be delayed by a year.
The Government will also take Rs. 500 million from the Tea Promotions Fund to give loans to factory owners via a scheme to be implemented through the banks.
“Those in the tea sector are facing many financial problems while the entire sector too is suffering economically. The Government is keen to assist the sector to overcome these obstacles and make a speedy recovery,” he said.
The National Sales Average (NSA) for tea during January-November is Rs. 542.34, down Rs. 40.21 from Rs. 582.55 in the corresponding period of last year.
High Growns NSA was Rs. 506.40 down by Rs. 65.55, Medium Growns NSA was Rs. 467.51 lower by Rs. 55.41 and Low Growns NSA was down by Rs. 24.78 to Rs. 573.84.
The dip was despite the NSA for November improving by Rs. 44.24 per kg to Rs. 569.67 from October but lower by Rs. 14.91 from November last year.
Both, the month and cumulative averages, show a greater decrease in dollar terms compared to the corresponding period of 2018 due to the devaluation of the rupee.
In October earnings from tea exports declined by 1.5% to $ 113.8 million due to lower average export prices in line with the fall in international market prices despite an increase in export volumes. In the first 10 months of 2019, tea exports were down by 5.7% to $ 1.14 billion.
In terms of production, January-October tea crop amounted to 253.7 m/kgs recording a marginal gain of 0.98 m/kgs vis-à-vis 252.7 m/kgs of January-October 2018. On a cumulative basis, Mediums and Low Growns have shown a growth, whilst High Growns have shown a decrease YOY.
In October crop totalled 20.8 m/kgs down by 8.9 m/kgs from a year earlier. All elevations have recorded a decrease YOY, with High and Low Grown elevations showing a fairly significant decline.