The Tea Exporters Association has highlighted that Sri Lanka’s tea export sector is incurring losses of between $10 million and $15 million per week due to the ongoing military conflict in the Middle East involving Iran.
The association stated that the country’s ability to supply tea to several Middle Eastern nations has been severely restricted, as shipping activities have been disrupted and the risk of war has escalated.
“If this situation continues, it will have a significant impact on the country’s foreign exchange earnings,” the association warned.
Nearly half of Sri Lanka’s total tea exports are purchased by Middle Eastern countries, with $530 million of the $1.5 billion annual revenue from tea exports coming from this region.
In light of the current challenges, the Tea Estate Owners Association has submitted a proposal to the government to mitigate the unexpected risks facing the tea industry.
The proposal recommends several measures, including:
Implementing a transparent pricing formula to ensure that foreign exchange gains from rupee depreciation benefit tea landowners.
Providing concessional government storage facilities to safely store unsold tea stocks amid war risks.
Introducing a special state-led tea purchase program to stabilize growers’ incomes.
Immediately halting the imposition of excessive costs resulting from rising international insurance and shipping fees due to the conflict, and ensuring these do not affect the pricing of raw tea leaves.
Offering concessional working capital loans to ease financial pressures on landowners, particularly during the upcoming Sinhala and Tamil New Year season.
Direct government intervention to import fertilizer at concessional prices to reduce production costs.
Expanding the export market beyond war-risk zones to tap into new potential markets.
Allocating 15 percent of export cess revenue to establish an independent fund that secures landowners’ financial stability against unforeseen market fluctuations, such as war risks, climate change, and price declines.
The associations emphasize that prompt government action is essential to safeguard Sri Lanka’s tea industry from the immediate and long-term impacts of international conflict.
