Sri Lankan tea growers are raising the alarm over the drastic drop in prices they receive for a kilo of tea, which has plunged over the past several months. The sharp decline in income has created severe financial strain, particularly among small- and medium-scale tea planters, prompting concerns about the future of the country’s tea industry.
L. Premaratne, a medium-scale tea planter from Galle, voiced his concerns to The Sunday Morning, stating: “I have seen a huge drop in my income over the past several months. It has become increasingly difficult to manage operational costs, pay workers, and maintain the estate. Many of us are now borrowing to survive and there is no clear end in sight.”
Samitha Herath, another tea smallholder from Hatton, explained the day-to-day struggles faced by growers in the hills.
“The prices we get at the auctions are not enough to cover the cost of fertiliser, let alone the wages of our workers. We are forced to cut corners by delaying maintenance or skipping vital treatments for the plants. Many of us are thinking of giving up tea altogether if this continues. What used to be a source of pride is now a burden.”
Adding his concerns, Rasika Wijesinghe, who manages a family-owned estate in Matara, spoke of the ripple effects on rural communities. “We have been in this business for decades, but I have never experienced a situation this bad. Every month, our earnings drop and it’s affecting an entire village that depends on this estate. Families can’t pay for their children’s schooling and some workers are leaving for daily wage jobs elsewhere. It’s heartbreaking to watch.”
The situation in Badulla is no different to that of other parts of the country, as Manjula Dilani, a young tea grower from Badulla, voiced her concerns about the future of the industry and the younger generation’s disillusionment.
“Many young people are leaving the plantations because there’s no future here. My father and grandfather dedicated their lives to these lands, but now, with costs so high and returns so low, it feels hopeless. Without fair prices and proper Government support, tea growing will die with our generation.”
For generations, tea has been one of Sri Lanka’s primary export commodities and a vital source of livelihood for thousands of families. However, the recent downward trend in prices has left many questioning whether the nation is beginning to lose its foothold in the global tea market.
Growers attribute the crisis to a combination of global market fluctuations, rising production costs, and local policy challenges. Many are urging authorities to take swift action to stabilise the market, regulate input costs, and promote the struggling tea industry before more smallholders are forced to abandon their livelihoods.
Need for immediate measures
Against such a backdrop, industry stakeholders warn that unless immediate, coordinated measures are implemented to address these issues and reposition Sri Lankan tea competitively in international markets, the nation’s longstanding reputation as a premium tea producer could soon be in jeopardy.
Tea Small Holdings Development Authority Chairman Nimal Udugampola acknowledged the serious challenges faced by the tea industry and outlined the authority’s ongoing efforts to address them through a new initiative.
“We have launched a programme called the Pure Tea Leaf Operation (‘Pivithuru The Dalu Kriyanwithaya’). This is not just a programme, it’s also an operational drive aimed at improving both the standard and quantity of tea leaf produced in the country,” he explained.
“Right now, the industry is facing a serious shortage of green leaf, and more importantly, a decline in leaf quality. These issues have had a direct impact on the overall productivity and the health of the tea bushes.”
He further noted that soil degradation was one of the major factors contributing to declining yields, adding: “Our tea soils have deteriorated over time and this has affected the growth and resilience of the tea bushes. Poor leaf standards lead to weak bushes, and when combined with degraded soils, it creates a chain reaction resulting in lower productivity.”
According to Udugampola, addressing these interconnected problems is essential if Sri Lanka is to meet its ambitious national target of producing 400 million kilogrammes of made black tea by 2030.
“Smallholders contribute about 75% of the country’s tea production. To achieve our target, we need to produce around 1,400 million kilos of green leaf per year. This is why we have already launched this programme to improve both the quantity and quality of leaf, rejuvenate our soils, and ensure the sustainability of the industry for the future,” Udugampola said.
A challenging landscape
Sri Lanka’s tea export sector demonstrated resilience in 2024, recording a 9.6% increase in revenue to $ 1.43 billion and a modest rise in export volume to 245.78 million kg.
Strong demand from markets like Iraq and Libya sustained growth, although the country’s presence in European markets has waned due to competition from Kenya’s cost-effective CTC teas. The United States showed promise with a 22% increase in tea imports from Sri Lanka.
Despite these gains, the industry faces challenges including rising production costs driven by a 70% plantation wage hike, soil degradation, and declining yields. In response, authorities introduced the Pure Tea Leaf Operation programme to improve leaf quality and boost productivity, with Sri Lanka targeting 400 million kilos of made tea by 2030.
However, when contacted, Sri Lanka Tea Board (SLTB) Chairman Raj Obeyesekere explained the dynamics behind the recent fluctuations in tea prices, pointing out that the market was heavily influenced by global supply and demand.
“The situation is closely tied to basic market forces,” he said. “In the first four months of this year alone, Sri Lanka’s tea crop has increased by around 8.6 million kilos compared to the same period last year. When supply rises, especially during rainy seasons where leaf quality tends to deteriorate, prices naturally respond.”
Obeyesekere noted that while demand for Sri Lankan tea remained strong in traditional markets like the Middle East and North Africa, particularly in Iraq and Libya, the island faced growing competition in other regions. “The demand for well-produced, orthodox teas continues, but we can’t expect these markets to increase their intake overnight. It’s a steady process,” he said.
Addressing the European market, he acknowledged that Sri Lanka’s presence had waned in recent years.
“Europe has largely shifted to tea bags, and in this category, Kenya’s CTC teas dominate because their product yields more cups per gramme,” he explained. “While we still have potential in the loose tea segment with premium brands like Twinings and some packers, it’s a challenging landscape.”
Regarding competitors, Obeyesekere highlighted Kenya as Sri Lanka’s main rival, with Vietnam steadily gaining ground in the orthodox tea market. “We have to be prepared for these shifts,” he warned.
However, he expressed cautious optimism about Sri Lanka’s production outlook. “In recent years, due to the fertiliser crisis, our crop dropped sharply from 330 million kilos to 240 million kilos. Last year, we managed 262 million kilos and this year we’re projecting close to 290 million kilos. It’s a significant recovery in a relatively short time,” he stated.
The SLTB, he confirmed, would continue offering subsidies on fertiliser to support growers, with an ambitious goal of surpassing 300 million kilos within the next two years.
“When volumes rise, there will inevitably be some price adjustments, but our focus is on boosting overall income for the country,” Obeyesekere said. “By the end of this year, we are hoping to increase tea export revenue by $ 100-125 million over last year’s figures.”