Sri Lanka’s regional plantation companies facing cash flow problems – Tea broker

Sri Lanka’s Regional plantation companies and privately owned tea factories are facing a serious cash flow problem as the tea prices are experiencing a downturn, a tea broker report said.

John Keells Tea Brokers says, apart from the downturn in prices, the production cost which has increased due to the recent wage hike and increases in electricity and fuel charges also have resulted in this situation.

The Tea broker predicts that the prices which started to decline since the second half of 2011 is expected to continue in the near foreseeable future.

“In the two months of 2012, Sale Averages at all elevations continue to show negative variances as political turmoil and economic sanctions in the Middle East” John Keells tea broker in its weekly tea report added.

According to the broker, countries such as Iraq, Iran, Syria and Libya which are undergoing political turbulence import 55% of the Ceylon teas.

The Broker points out that the recent International trade sanctions imposed on Iran and Syria are beginning to take effect due to restricted access to international financial systems.

“It is reported that Iranian importers are unable to guarantee payments, for imports of Rice, Wheat, Tea, Corn, and Palm Oil among others and will soon ground to a halt”, added the broker report.

Meanwhile reports coming from the plantation sector has suggested that this years March crop will fall short of the record crop of 33.2 Million kilograms achieved during last years same month.

Sri Lanka’s Tea Production for February 2012 stood at 21.9 million kilograms, a marginal drop of 1% compared to last year.