Sri Lankan tea production drops

Colombo, April 25 (IANS) Sri Lanka's tea production fell 22.6 percent in March compared with the same period of 2011, said the state-run Tea Board Wednesday, fueling fears that the industry is heading for tough times.

Tea brokers blame fewer rainfalls and longer dry periods in the higher elevations where most tea is grown for the drop in production.

Sri Lanka's highest foreign exchange earning crop fell to 27.21 million kg last month compared with 35.13 million kg the previous March, according to latest data released by the Tea Board.

Overall production for the first quarter also declined by 6.7 percent to 73.18 million kg from 78.40 million kg in 2011, reported Xinhua.

Tea trades are also hampered by a possible drop in exports to the Middle East, especially Iran as sanctions tighten next month.

Iran buys 5 percent of Sri Lanka's tea production while the Middle East is the market for 55 percent of the island's exports.

However, the Tea Board in its statement insisted that tea prices still have the capacity to surpass 2011 revenue of $1.5 billion due to higher global prices.

Nonetheless, the Central Bank data shows a 19.1 percent drop in tea earnings in January compared with last year, which is $103.9 million.

Tea is one of Sri Lanka's top foreign exchange earners besides garments, tourism and remittances.