October 19, Colombo (LNW) Sri Lanka’s tea producers have been badly hit by previous government’s order to increase wages by 70%, although the industry recorded froth this year.
The US $1.3 billion industry produces popular Ceylon Tea and employs about 615,000 workers. The island annually exports about 95% of the 250 million kilos of tea it produces.
The previous government has ordered worker salaries be increased to 1,700 rupees ($5.66) per day from 1,000 rupeesa nd later revise dto Rs.1350 , which the industry says will increase tea production costs by 45%.
Sri Lanka’s tea crop has experienced a notable increase in production, despite facing adverse weather and other challenges.
According to preliminary data from the Sri Lanka Tea Board, tea production in September reached a seven-year peak of 24.13 million kilos, marking a substantial 27.7% rise compared to last year’s figure of 18.9 million kilos.
During the first nine months of 2024, the tea crop saw a modest increase of 1.79% compared to the same period in 2022, indicating a gradual recovery following adverse policy impacts. Analysis by Forbes and Walker Research showed consistent growth across all elevations in September when compared to the same period in 2023.
High-grown tea production rose by 10.57% year-on-year to 4.59 million kilos, while medium-elevation tea increased by 38.04% to 4.10 million kilos. Low-grown tea also showed a significant rise of 31.75%, reaching 15.29 million kilos. However, green tea production fell by 6.82% year-on-year to 189,695 kilos, despite a slight improvement of 8.33% from September 2022.
According to Asia Siyaka Commodities PLC, the low-grown tea figure for this year is the highest since 2017. The cumulative tea production for January to September 2024 totaled 196.22 million kilos, an increase of 2.73 million kilos compared to the same period last year.
In a broader comparison, Forbes and Walker Research indicated that while most tea segments showed growth in 2024, high-grown and green tea production faced a decline. High-grown tea dropped by 8.43% year-on-year to 40.53 million kilos, while green tea saw a slight decrease of 1.07% to 1.68 million kilos.
Industry growers have noted a significant rise in production costs, driven by increased prices for fertilizers, electricity, labor, and packaging. Despite these challenges, the Sri Lanka Tea Board reported that the total national production for 2023 was 256.04 million kilos, a modest increase from 251.84 million kilos in 2022.
The tea industry aims to maintain production levels above 250 million kilos this year, as it continues to recover from previous lows and strives for stability.
