Sri Lanka’s tea sector may have reported stronger production in June, but industry analysts warn that the country’s export prospects remain increasingly vulnerable as rising fertiliser costs, climate shocks and declining smallholder output continue to undermine long-term growth.
Fresh data from the Sri Lanka Tea Board indicates national tea production climbed four percent year-on-year in June to 22.5 million kilograms. At first glance, the figures suggest the industry is recovering from months of setbacks. However, closer examination reveals that the improvement masks deeper challenges affecting the country’s largest agricultural export.
According to Asia Siyaka Research, the June increase was concentrated in High and Medium Grown tea estates. High Grown production expanded by 18 percent while Medium Growns increased seven percent. In contrast, Low Grown tea production the backbone of Sri Lanka’s export sector fell to just 13.3 million kilograms, marking the lowest June output recorded in the past four years.
The decline is particularly significant because Low Grown teas account for a substantial share of exports to major overseas markets. Lower production could reduce export availability even as international demand for Ceylon Tea remains resilient.
Despite the encouraging June performance, total production during the first six months reached only 131.8 million kilograms. Analysts attribute this disappointing performance to a combination of prolonged adverse weather, the lingering impact of Cyclone Ditwah and escalating production costs that have placed unprecedented pressure on growers.
One of the industry’s biggest concerns is the dramatic increase in fertiliser prices following renewed conflict in the Gulf region. Smallholder farmers, responsible for producing most of Sri Lanka’s tea, have reportedly reduced fertiliser usage because of unaffordable prices. Industry experts caution that insufficient nutrient application not only affects current harvests but can reduce productivity over several future cropping cycles.
Production statistics reinforce the growing imbalance across elevation categories. High Grown tea produced by Regional Plantation Companies recorded a slight increase during the first half of the year. Meanwhile, Medium Growns declined five percent and Low Growns fell four percent, reversing improvements achieved in 2025.
Exporters fear that continued production weaknesses could affect Sri Lanka’s reputation as a reliable supplier in increasingly competitive international markets. While global tea prices may remain supportive if supplies tighten, reduced export volumes could ultimately limit foreign exchange earnings.
Industry representatives are urging the Government to introduce an immediate fertiliser subsidy targeted at smallholders. Such assistance, they argue, would encourage proper field management, improve yields and strengthen export capacity ahead of future demand growth.
Time is becoming an increasingly important factor. Meteorological forecasts indicating possible El Niño conditions during the final quarter of 2026 could bring further weather-related disruptions.
Without timely policy support and effective measures to ease production costs, Sri Lanka’s tea industry may struggle to fully capitalise on favourable global demand, leaving one of the country’s most valuable export sectors facing another year of uncertainty.