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Droughts mean bad news for Brit builders

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The United Nations’ Food and Agriculture Organisation has warned the price of tea will "jump to a record high" following droughts in India, Kenya and Sri Lanka, which have hit production hard.

According to the Financial Times, the loss of yield will exacerbate a 2008 deficit which saw demand at 3.85m tonnes, while production trailed at 3.78m tonnes.

The biggest threat to Brit builders' pockets comes from the biggest exporter Sri Lanka, where output will fall to an estimated seven-year low. The effects of the drought are compounded by producers "cutting the use of expensive fertiliser".

In Kenya, meanwhile, a delayed “long rains” season - which normally begins in March and runs to May - has provoked a 15 per cent rise in prices since December. Tea at the weekly auctions in Mombasa now goes for $3.40 a kilogram, amid a Tea Board of Kenya forecast that the country's 2009 production would fall five per cent over 2008.

The latest Kenyan price hike follows last year's rise to $3.10 a kilogram, "almost 11 per cent higher than in 2007", and representing "the highest annual average since at least 1993".

To complete the gloomy picture, the Financial Times notes that Indian production crashed by around 35 per cent in the first quarter of 2009, compared with Q1 2008. Droughts in Karnataka, Kerala and Tamil Nadu are to blame, the paper concludes. ®

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