Tea Prices

Many people have been surprised at the rapid rise in tea prices recently. There are several reasons for this.

The main reason is due to weather conditions being unsuitable for tea production As a result Sri Lanka's tea production for January - July 2009 is 42.6 Million Kgs below the production for the same period in 2008. Weather conditions continue to be erratic and current projections are that the year will end with a larger shortfall in production. The shortfall is not only confined to Sri Lanka as a number of other tea producing countries have also seen shortages in production for the same period. For example Kenya's production is 20.8 Million Kgs down while India's production is 14.9 Million Kgs down.

The total shortfall for this period for worldwide tea production is around 100 Million Kgs.

In addition to the shortfall in production there has been a marked increase in demand for tea. There are two reasons for this.

Firstly, more and more people are convinced of the health benefits of tea. Since one's health and wellbeing are becoming more and more important, more and more people are interested in a healthy life style. All studies so far prove that a regular intake of tea contributes to a healthy life style. This has resulted in an increase in demand particularly for the better quality teas.

Secondly, as a result of the world wide recession more and more people are in a situation where they need to cut down on their regular expenses. Even at current prices, tea is still a very cheap beverage that refreshes and revives. As a result there is an increase in demand for tea particularly for the cheaper varieties. Therefore, there is an increase in demand for all types.

For the above reasons there has been a sharp increase in tea prices and this increase is expected to continue into the foreseeable future.