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Asia Drought Strains Tea Producers, Stirs Talk of Price Hikes

A long dry season has left Asia's premier tea-growing regions parched and could lead to a rise in tea prices, analysts say.
NBC NEWS -- A long dry season has left Asia's premier tea-growing regions parched and could lead to a rise in tea prices, analysts say.

The drought across Sri Lanka in the first three months of 2014 has contributed to a 50-percent fall in tea production, industry sources said. "Sri Lanka is the second largest exporter of tea at 300 million tonnes," said Standard Chartered analyst Nirgunan Tiruchelvam.

"In a context where tea prices have been falling - last year tea prices fell 40 percent which was the most precipitous fall in the history of the commodity - it's conceivable that tea prices are going to ascend."

Tea producers in Malaysia have also been hit by the drought. At the Boh Plantations in the Cameron Highlands, February's crop was down 50 percent.

Caroline Russell, CEO of Boh's Cameron Highlands, says there's evidence to suggest weather patterns are becoming more volatile. "In the dry periods, we would see crop yields fall but the concern in very wet periods is that we would see slope instability because we are growing tea on quite steep terrain."

She believes agricultural over-development in the Cameron Highlands could also have a lasting impact on the flavor of Boh Tea. "There's been a lot of land clearance for agriculture.

"This undoubtedly is impacting temperatures. Ultimately one could anticipate that your flavors would be impacted," she said.

But as consumption increasingly shifts to instant tea and tea mixes at the expense of traditional brews, such subtle changes in flavor are becoming less obvious. "Consumer lifestyles are changing so much that people don't have the same downtime. So, quite a lot of the growth areas in the tea market are in arenas of convenience," Russell said.



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