Sri Lanka is embracing a digital future for the Colombo Tea Auction, according to Sri Lanka Tea Board Chair Jayampathy Molligoda. The country's first three electronic auctions in April resulted in sales of 16.5 million kilos of tea.
The familiar sound of the auctioneer’s gavel concluded in-person transactions dating back to 1883. Efforts to switch from outcry to electronic bidding span 20 years, according to Jayantha Karunaratne, chair of the Colombo Tea Traders’ Association. “Changing the mindset of some players is not an easy task,” said Karunaratne, adding, “Our vision is to go online because it provides advantages such as lower cost, greater efficiency, and more transparency.”
Eight brokers and 300 buyers participated in the first digital auction on April 4, while a curfew closed Sri Lanka’s open-floor stock exchange through April 27. Core activities of the stock exchange will soon convert to digital.
As soon as the tea auction opened, demand from Russia, Turkey, and the Middle East drove record prices. An Uvakellie from Vellapatna Estate, owned by Madulsima Plantations, sold for SLRs810 ($4.21) per kilo and an Uva High from Finlays Oodoowerre Estate sold for SLRs980 ($5.10) per kilo, a record for FBOPF1 grade tea at auction. Akbar Brothers purchased the lot. Dickwella Estate then broke the SLRs980 mark at SLRs1000 ($5.20) per kilo for an FBOPF1 bought by Ceylon Tea Marketing.
“The response from industry stakeholders has been fantastic. The Sri Lankan tea industry has once again proven its resilience to upheavals,” said Dhammike Wedande, senior vice president of Asia Siyaka Commodities, a leading tea broker.
Exports generate $1.5 billion annually, but the bottom fell out of Sri Lanka’s generally robust tea export market in March following dismal yields in February. Tea export volume and value each declined by half compared to March 2019. Tea in packets dipped to 6.3mn kgs from 12.7mn kgs in 2019. Production of teabags dropped more than 1 million kilos from 2.4mn kgs in 2019 to 1.3mn kgs in March 2020. Revenue for all categories of tea was SLRs11.6 billion ($60.1 million) in March 2020 compared to SLRs22.5 billion ($116.7 million) in March 2019, as reported by the Daily News. Anil Cooke, managing director at Asia Siyaka brokers, explained that export activity came to a virtual halt before the government agreed that growing and processing tea is an essential industry.
China, India, Kenya, Sri Lanka, and Vietnam account for 82% of global tea exports.