Sri Lanka’s tea industry entered 2026 on visibly shaky ground, despite official assurances of recovery and growth. Market data from Forbes & Walker Research shows that tea prices have softened across all elevations, raising questions about whether government optimism aligns with ground realities faced by growers, factories, and exporters.
The National Sales Average (NSA) in January 2026 declined both month-on-month and year-on-year, settling at Rs. 1,164.54 per kilogram. This marked a notable drop from December 2025 and undershot January 2025 levels as well. More importantly, when measured in dollar terms, all elevations recorded negative year-on-year variances, reflecting pressure from global market conditions and currency dynamics.
High Grown teas averaged Rs. 1,143.12, recording a monthly decline though posting a modest rupee gain over last year. Medium Grown teas showed the steepest deterioration, falling sharply from December and registering declines on both rupee and dollar comparisons year-on-year. Low Grown teas, traditionally a strong performer, also recorded consistent declines across both metrics.
These price movements come against the backdrop of supply disruptions caused by cyclone Ditwah, which halted production for nearly a week in December 2025 and resulted in losses of over one million kilograms. Despite this, Sri Lanka Tea Board Chairperson Rajpal Obeyesekere maintains that the industry is on track to achieve between 290 and 300 million kilograms of production in 2026, provided weather patterns remain favourable and fertiliser subsidies continue.
Production figures show that Sri Lanka produced 264.12 million kilograms of tea in 2025, a modest increase from 2024 and a stronger rebound compared to 2023. However, the Department of Census and Statistics reported an 8.1% contraction in tea production volumes in the third quarter of 2025, citing rising input costs, labour shortages, and delayed replanting efforts structural challenges that predate cyclone impacts.
Export performance has offered some relief. Tea exports in 2025 rose by 11.65 million kilograms, while export earnings climbed 4.8% to $1.506 billion. The average Free On Board price remained largely unchanged, signalling that volume gains, rather than price improvements, drove revenue growth.
Authorities and industry bodies remain focused on long-term interventions such as replanting and mechanisation. While these initiatives are underway, their benefits will take years to materialise. Meanwhile, less than 7% of factories have adopted mechanisation, leaving labour shortages unresolved.
As prices soften and dollar earnings remain under strain, the contrast between market indicators and policy optimism suggests the sector’s recovery may be more fragile than official narratives imply.
