Sri Lanka’s tea smallholders are facing severe challenges as fertilizer shortages and rising costs threaten production, compounding the impact of declining exports caused by global geopolitical tensions. These small-scale growers, who form the backbone of the industry, are increasingly under pressure as both domestic and international factors converge.
At the heart of the issue is limited access to affordable fertilizer. Reduced availability has led to lower yields and declining leaf quality, directly affecting the ability of smallholders to maintain consistent production. For many growers operating on narrow profit margins, this has resulted in falling incomes and growing financial strain.
These domestic difficulties are occurring alongside disruptions in global trade linked to tensions involving the United States, Israel, and Iran. Instability in the Strait of Hormuz has affected shipping routes, leading to delays, higher costs, and reduced demand in key export markets.
Although Sri Lanka has increased its focus on value-added tea products, the benefits have not been evenly distributed. Large exporters dominate these segments, while smallholders remain dependent on selling raw tea leaves. This leaves them vulnerable to price fluctuations and reduced demand in bulk tea markets.
Export trends illustrate this imbalance. Declining shipments to major markets such as the United Arab Emirates and Russia have weakened demand for bulk tea, directly impacting farmgate prices. As a result, smallholders are receiving lower returns for their produce.
At the same time, production costs continue to rise. Fertilizer, labor, and transport expenses have all increased, reducing profitability. While the depreciation of the Sri Lankan rupee has helped maintain export earnings in local currency terms, it has also made imported agricultural inputs more expensive, placing an additional burden on growers.
There are also broader structural challenges. The industry’s reliance on a limited number of export markets increases its exposure to geopolitical risks. Although exports to China and Japan have remained stable, these markets have not grown sufficiently to offset declines elsewhere.
For many smallholders, the situation is becoming increasingly unsustainable. Without reliable access to fertilizer and stable market conditions, some may be forced to reduce cultivation or exit the industry altogether. This could have long-term consequences for Sri Lanka’s overall tea production and export capacity.
Addressing these issues will require targeted policy measures, including improving fertilizer distribution, providing financial support, and integrating smallholders into higher-value segments of the industry. Strengthening market diversification and reducing dependence on volatile regions will also be critical.
Sri Lanka’s tea sector has shown resilience in the past, but the current combination of global conflict and domestic constraints presents a serious challenge. The future of the industry will depend on how effectively it supports its smallholders while adapting to a rapidly changing global environment.