Sri Lanka’s tea industry is entering a dangerous phase in which the traditional formula of production, Middle Eastern demand and established shipping routes is becoming increasingly unreliable.
The September tea figures provide only part of the warning. The deeper crisis is the industry’s growing exposure to geopolitical disruption, rising production costs, climate-related damage and declining dollar-denominated returns.
Forbes & Walker Research reported that Sri Lanka’s National Sales Average rose to Rs.1,202.74 per kilogram in September, compared with Rs.1,174.46 in August and Rs.1,191.62 a year earlier. But the corresponding dollar value was only $3.65, compared with $3.94 in September 2025.
The January-September figures are even more revealing. Although the rupee average increased by Rs.9.64 year-on-year to Rs.1,170.20, the dollar average declined by 25 cents to $3.63.
That contradiction should concern policymakers because tea’s ultimate contribution to Sri Lanka’s balance of payments is measured in foreign exchange, not rupee accounting.
Three elevations, three different warnings
Low Grown tea is currently keeping the industry afloat. Its September average reached Rs.1,310.05, the highest among the three categories, and recorded the only year-on-year rupee improvement.
High Grown tea, traditionally associated with Sri Lanka’s premium identity, presents a much more disturbing picture. Its September average of Rs.1,070.05 was Rs.85.71 below the corresponding 2025 level, while its dollar value dropped 57 cents.
Medium Grown tea remained the weakest performer, averaging Rs.956.96. Its year-on-year decline was Rs.70.58 and 50 cents in dollar terms.
On a year-to-date basis, all three elevations recorded lower dollar averages: High Grown by 20 cents, Medium Grown by 39 cents and Low Grown by 24 cents.
Middle East dependence becomes vulnerability The industry’s logistical exposure compounds the pricing problem.
Tea exporters have warned that geopolitical tensions in West Asia have disrupted traditional shipping routes, with vessels forced to undertake longer journeys around the Cape of Good Hope rather than relying on the Suez route. This is particularly damaging because Middle Eastern markets account for a substantial share of Sri Lankan tea demand.
The consequence is not merely higher freight. Longer shipping routes raise insurance, fuel and inventory costs while creating uncertainty for exporters and buyers. Meanwhile, overall tea export volume has reportedly fallen by about five percent year-to-date.
Production is also under pressure. Climate shocks and the reported impact of Cyclone Ditwah have affected High and Medium Grown districts, while factory owners face higher fuel costs and quality-control challenges.
Government intervention must move beyond subsidies
The NPP administration has begun responding through an additional Rs.2.5 billion fertilizer subsidy, providing Rs.5,000 per grower, alongside efforts to strengthen factory standards and prevent adulteration.
But subsidies alone cannot solve a structural export problem.
The government’s strategy of targeting Europe, North America and Turkey is therefore crucial. Digital monitoring of factories, replanting programmes, stronger quality assurance and premium-market positioning must accompany market diversification.
Sri Lanka cannot afford to treat tea as merely another plantation crop. Its survival is directly linked to foreign-exchange earnings, rural incomes and the country’s international brand.
The immediate danger is that Sri Lanka could continue producing large quantities of tea while receiving progressively less dollar value for it. That would transform a temporary industry shock into a structural national economic problem.
