Tea Sippers

It appears the economic woes affecting the global economies has hit Sri Lanka tea factories as well. Private tea factory owners are asking for their own bailout package as the prices for tea have crashed and they have run out of cash. They also want a moratorium on repayments of existing loans.

Low grown teas from Sri Lanka at the Colombo auctions are fetching sharply reduced prices when selling at all. Half of the tea auctioned is not being sold as their biggest consumers in Middle Eastern countries and Russia have reduce their purchases. These countries are having problems financing the buys due to the economic turmoil. Have you see how the markets in Asia and around the world are reacting today?

Due to the failures in the market, the tea owners cannot repay existing loans and have run out of money. This is affecting thousands of the small tea holders who sell their green leaf tea to the factory owners. Prices for them have fallen almost by half and the factory owners don’t have the money to pay the small holders.

Who knows where this will end? However, Herman Gunaratne, one of the factory owners says more regulatory controls are needed to prevent oversupply. Seems like if the tea is not selling, they already have an oversupply. But he’s right in that there could be “unhealthy competition”.

Source: http://www.lankabusinessonline.com/fullstory.php?nid=613239177

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