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The lifting of the ban on the use of Glyphosate (weedicide) and allowing a more liberal policy on fertiliser would bring positive results to the tea industry in 2019, Forbes & Walker (Pvt) Ltd said in a tea industry analysis report.
Predicting market outlook for 2019 at this juncture amidst much uncertainty, seems a hard task.
“Nonetheless, a logical approach would be to analyse the supply/demand scenarios that exist and project possible market scenarios based on the most recent developments in importer countries. In analysing the supply situation, it would be relevant to segregate CTC and orthodox tea production. Yet another factor that needs due consideration is the growing demand for tea in producer countries, which may leave lesser exportable volumes,” the report stated.
Global production, in all probability, may show growth in 2018 once statistical data has been tabulated - which would essentially be of CTC origin. Orthodox tea could be considered in short supply considering the decline in Sri Lankan tea production commencing 2016, it said.
Sri Lanka’s tea production in 2019, consequent to the Government’s decision to lift the ban on the use of Glyphosate is likely to give much relief to the producers and in particular, to the large-scale plantations which would be able to carry-out the required agricultural practices to achieve the full potential of the plantations.
The Government’s recent decision to allow a more liberal policy on fertiliser – should contribute favourably (needless to say, subject to extreme weather conditions not being a reality). However, aging tea bushes and low productivity levels would be a downside.
Similarly, India with its aged plantations is unlikely to show any significant improvement in its output. On the other hand, Kenya with its steady growth in production in the past several years is poised to achieve 500 Mn/kgs in 2018 and is likely to play a significant role when assessing the total global supply situation.
Demand growth in China and India, considering the magnitude of these two markets, is likely to influence prices, and consumption is expected to outstrip production.
USA too could be singled out as a fast-growing market, particularly for instant tea and iced tea segments, whilst imports from Sri Lanka to the US have shown quite a significant growth in 2018.
Other factors that are likely to impact Sri Lankan tea prices include;
“These factors would enable us to predict an upward movement in prices, particularly in the first half, for most varieties of orthodox teas. The market demand for teas thereafter would greatly depend on how the global tea industry would progress during the first half. As we have periodically highlighted, market demand for good quality teas would command a premium, consistently throughout the year,” the report stated.
Source - http://www.sundayobserver.lk/2018/12/23/business/whither-tea-industry-outlook-2019
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