World tea talks open amid boycott

World tea talks open amid boycott

COLOMBO (AFP): The first ever tea producer's meeting opened here yesterday with calls for unity to boost prices despite Kenya, a key exporter, boycotting the talks.

Sri Lanka is hosting the two-day meeting of India, China, Bangladesh, Indonesia, Malawi to finalize a constitution and agree on joint marketing and research sharing, Sri Lanka Tea Board chairman Clifford Ratwatte said.

He said it was disappointing that Kenya kept away despite confirming its participation. However, Iran, which is a major importer of tea, was attending the meeting.

Sri Lanka's deputy minister of plantations, Athauda Seneviratne, expressed the hope that other tea producers would join the association and "work jointly for the betterment of the industry of our countries."

"Let us consider this an opportunity to renew goodwill and commitment towards the unity of all tea producing countries," Seneviratne said.

"(This) will be the message the world receives from the tea producing countries at a time like this when a concrete step has been taken for the creation of the Association of Tea Producing countries," he said, adding ministerial meeting would be held later this year to ratify the grouping.

He said producers received only a fraction of the high prices consumers paid in the West for their daily cup of tea. The local auction prices have been steadily declining, seriously affecting growers, he said.

The price of a kilogram (2.2 pounds) of tea, around US$2.25 in the early 1970s, dropped to $1.25 last year despite the retail prices climbing to five-to-$10, Seneviratne told the meeting.

"I wish to emphasis the need to move ahead rapidly in achieving not only the consensus but also the clear commitment to the (tea) association among the producing countries before it is too late," he said.

Tea traders in Sri Lanka, the world's largest exporter of the leaf, said they hoped the association would eventually lead to the formation of a cartel to regulate prices by imposing export quotas.

The coming together of India and Sri Lanka, both major producers and consumers, could have a strong impact on prices and augur well for the industry, said Lallith Ramanayake, director at John Keells Ltd., a leading broking house.

He said Kenya may feel compelled to join if the association produces results by way of joint marketing strategies and sharing research results in the short term.

Brokers said Kenya, the key African producer, was unwilling to enter any forum which had the potential to eventually impose export quotas to regulate world tea prices.

Kenya, which has a highly productive tea industry, has been unaffected by falling international tea prices thanks to low production costs, unlike other producer countries.

Sri Lanka's tea industry, the country's main foreign exchange earner, has been in serious trouble with prices falling way below the cost of production.