Apr 14, Colombo: The prolonged drought in Sri Lanka's tea growing regions may raise tea prices globally, tea industry analysts predict.
The drought across Sri Lanka in the first three months of this year has contributed to a 50 percent fall in tea production on previously corresponding period, according to industry sources, a CNBC report said.
"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 in this context," a Standard Chartered analyst Nirgunan Tiruchelvam has told CNBC.
According to the Sri Lanka Tea Board some 400,000 small tea holders in Ratnapura, Kalutara, Galle and Matara districts are among the worst affected.
Out of the island's 206,104 hectares of tea plantations 70 percent are small holdings which are cultivated by 397,223 small holders who produce 1.5 million kilos of tea. The small holdings are spread over 14 districts including Ratnapura, Matara and Galle.
The tea production fell 9.7 percent to 22.5 million kilograms in February this year from 24.9 million kilograms in the same period of 2013.
Sri Lanka is the second largest exporter of tea. Last year Sri Lanka's tea production rose to 339 million kilograms.