Sri Lankan Tea Industry-Case Study

An overview of the Sri Lankan Tea industry -an exploratory case study

Research Paper Writing Help in an exploratory case study- Sri Lanka Tea industry

The tea industry is of paramount importance to Sri Lanka’s economy. This industry also forms a significant part of British history and is still central to British culture and tradition. Using the Sri Lanka-UK relationship, this paper explores the declining competitiveness of Sri Lanka’s tea industry as an example of shifting competitive advantage in agribusiness. Increasing competition from countries such as Kenya, India and Indonesia has resulted in reduced market share and low prices in the international market. This paper identifies the shortcomings in the existing market strategies used by Sri Lanka and explores options available for such commodity producers to become globally more competitive through means other than just increased volumes and low prices.

The general long-term trend in tea prices has been downward since 1954 except for odd periods of increase which have not been sustained. Willsmer (1982) suggests that the demand for tea, at least in the main consuming countries, is relatively inelastic. Thus, increases in the quantity of tea entering world trade have been subject to more than proportionate falls in price. However in 2004, the Food and Agriculture Organisation’s composite price, as a world price indicator for tea, increased by 2%. Prices in 2004 opened
at US$ 1.56 per kg in January and closed at US$ 1.73 per kg in December (Kasturisinghe 2005).

World tea production continued to reach new highs in 2004 with output growing by 2% to reach an estimated 3.2 million tonnes. The expansion was due mainly to the increases recorded in Turkey, China, Kenya, Malawi, Sri Lanka and Indonesia (Kasturisinghe 2005).

World tea exports increased by 4.4% in 2004 to 1.47 million tonnes with all major exporters registering a rise, according to a report released ahead of the meeting of the IGG on Tea in Bali in July 2005. Sri Lanka is expected to increase exports by 1.2% annually to reach 330,000 tonnes by 2014 and continue to account for 25% of the global total (The Island 2005).

The importance of the tea industry to Sri Lanka

The Sri Lankan tea industry is of paramount importance to the country’s economy. It contributes about 13% to the total export earnings of the country and is the highest net foreign exchange generator. In 2004, tea accounted for 13% of Sri Lanka’s merchandise exports and earned US$ 810 million. Tea is the third largest agricultural industry in Sri Lanka and represented 2% of overall GDP in 2005. The industry also generates direct and indirect employment for over 1 million people (Central Bank of Sri Lanka 2005; SLTB
2005a)

The global position

Sri Lanka is the world’s second largest tea exporter with a 19.2 percent global export market share in 2005. In 2004 Kenya, which produces mainly CTC1 tea surpassed Sri Lanka as the largest exporter, and held 22.5 percent of the global export market in 2005. Total world production in 2004 was 3.2 million tonnes with Sri Lanka’s share as the fourth largest producer being 10%. About 44% of world production is CTC tea and 31% Orthodox tea, with green tea making up the balance. Sri Lanka competes mainly in the
orthodox tea market where it has a 32% market share and is the leading producer (SLTB 2005a).

Ceylon tea

Sri Lanka produces tea throughout the year. The six regions (Nuwara Eliya, Uda Pussellawa, Uva, Dimbulla, Ruhuna, Kandy) of differing agro-climatic conditions in the country offer a range of diversified speciality teas to suit a range of consumer tastes and lifestyles. The growing areas are mainly concentrated in the central highlands and southern inland areas of the island nurtured by excellent basic factor conditions for tea  production. These areas are broadly grouped under three elevations, with “high growns” ranging from 1200m upwards, “medium growns” covering between 600m to 1200m and “low growns” from sea level up to 600m. Teas grown in these elevations are different from one another in their liquoring properties and the appearance of leaf. The diversity in specialities has been the power and strength of the tea industry in Sri Lanka. Like other food and beverage categories (Poole, Martinez & Gimenez 2007), the tea “category” need not be regarded as a commodity, but as a range of distinct products amenable to differentiation in the market. This diversity is not exploited adequately to its advantage.

If you want PhD Writing Help in Management, Dissertations with Abstract, Introduction, Literature Review, Research Methodology, Data Analysis, Conclusion, References, Questionnaire, Custom Writing Help in PhD, Thesis, Case Studies on Tea Industry, Research Proposals, Term Papers,  Project Report on Tea Industry in Sri Lanka,  Research Projects, Assignments, Coursework, Essays, Articles, PowerPoint Presentations SWOT Analysis Reports , and Synopsis, than contact Mahasagar Publications, Mumbai, India by calling +91 9819650213 or +91 8081344446  or visit website www.projectspapers.com