• Endures challenging external market conditions
• Auction prices remain stable 

Sri Lanka’s tea industry has remained resilient in the face of adverse weather and challenging external market conditions, with auction prices holding up even as production and export earnings have declined, according to Sri Lanka Tea Board (SLTB) Chairman Rajpal Obeyesekere.

Speaking to The Sunday Morning Business, Obeyesekere said that auction prices remained at comparatively satisfactory levels, having improved slightly and avoiding a crash despite the current crisis in the Middle East.

However, he stated that crops had declined compared to the corresponding period in 2025. He attributed the decline mainly to the adverse weather patterns experienced from March to June, adding that exports had also been comparatively low. 

Obeyesekere expressed hope that there would be a recovery to a certain extent over the next two months.

“We hope there will be some recovery over the next two months, but production is down. Exports have declined comparatively as well,” he said. 

Commenting on the impact of the crisis in the Middle East, he pointed out that while shipments could still be made, exporters were paying substantially higher shipping costs, adding that consumption in the region could dip as it was one of Sri Lanka’s main markets. 

However, the SLTB Chairman was of the view that the market had demonstrated resilience.

Obeyesekere stated that there had been a dip in both revenue and volume when comparing the January–August period this year to the corresponding period in 2025. He further estimated that production had declined by approximately 3% Year-on-Year (YoY), amounting to around 4 million kg, and revenue by approximately 7% YoY.

Highlighting the resilience of the market, he pointed to the absence of large-scale auction withdrawals that had been feared, with concerns that tea offered for sale would remain unsold if exporters were unable to ship it. 

He stated that the tea offered at auction was continuing to be absorbed, adding that while the tea could be selling at a slightly lower price, it was still being purchased.

Obeyesekere stressed the importance of auction sales for the survival of smallholders. He noted that if a significant share of the tea offered at auction remained unsold, smallholders who had already produced the tea would be placed in a difficult position, unlike exporters who could choose not to buy and retain their funds.

He recalled that during a similar crisis several decades ago, the Government had stepped in through a State entity to purchase stocks and support prices. He further observed that no such intervention had been required this time, which signified that the industry had adapted and faced the crisis admirably. 

Commenting on overall performance, the SLTB Chairman stated that exporters had performed well given the prevailing conditions in order to reach the levels achieved thus far.  

– By Shenal Fernando