By: Staff Writer
January 12, Colombo (LNW): Sri Lanka’s tea industry is expected to see modest growth in 2025, despite facing a range of challenges.
According to a report from Forbes and Walker Tea Brokers, the country’s tea production is set to stabilize after several years of decline. However, the industry will still confront significant uncertainties, particularly related to global supply dynamics and the Sri Lankan rupee’s exchange rate.
After experiencing a drop in production in previous years, Sri Lanka’s tea industry is poised to face a shortage in Orthodox Large Leaf teas, largely due to a production shortfall in India in 2024.
The first quarter of 2025 is expected to bring some stability, with tea prices likely to remain buoyant as the country enters its Western quality season.
This period traditionally offers better crop yields, which should help maintain a positive outlook for the first quarter and possibly into the first half of the second quarter of 2025.
However, much of the year’s performance will depend on global supply conditions, as well as factors such as the exchange rate of the Sri Lankan rupee against the US dollar.
The government’s plans to ease import restrictions, including those on vehicles, could have a notable impact on the rupee, potentially influencing tea prices.
Despite these uncertainties, Forbes and Walker Tea Brokers have cautiously forecasted that Sri Lanka’s tea production in 2025 will reach approximately 280 million kilograms.
This projection considers challenges like climate change, rising costs for inputs and wages, as well as the effects of government policies and mechanization. These variables are expected to influence production levels, though the overall forecast remains optimistic, albeit cautious.
On the global stage, Sri Lanka’s key tea markets in India and China present potential for growth. However, factors such as economic instability and unpredictable weather conditions in these regions could disrupt the supply-demand balance and impact growth opportunities.
Reflecting on 2024, Forbes and Walker Tea Brokers highlighted a positive recovery in Sri Lanka’s tea industry, dubbing it “The Year of Reclaiming Change.” Strong demand for high-quality teas, particularly from the Western and Uva regions, contributed to this recovery.
Additionally, the appreciation of the Sri Lankan rupee provided some relief, while increased momentum in tea value, which started to build in late 2023, was evident across all elevations. Both high-quality and Low Grown teas saw steady demand, contributing to the overall positive outlook for the country’s tea exports.
In conclusion, while 2025 holds promise for Sri Lanka’s tea industry, it will be influenced by multiple factors, including global market conditions, climate change, and domestic economic policies. The industry’s cautious optimism reflects both the challenges and the opportunities ahead.
