Sri Lanka’s tea industry is confronting a critical export challenge as declining shipment volumes, rising freight and insurance costs, market disruptions and weakening US dollar earnings threaten he country’s traditional position in the global tea trade. At the same time, the industry is increasingly dependent on value-added teas to protect export revenues and create greater long-term competitiveness.
The warning comes at a time when value-added tea exports accounted for more than 50% of Sri Lanka’s total tea export volumes in 2025. Investments in matcha, green tea and artisanal teas have also created an emerging high-value segment that could become increasingly important to the future of the industry.
Planters’ Association of Ceylon Chairperson Shanaka Samaradiwakara has called on the Sri Lanka Tea Board and other authorities to protect this developing segment. He pointed out that significant quantities of green tea and other high-value teas remain unsold at auctions while similar products continue to enter the country.
He urged authorities to review the situation and introduce measures capable of supporting domestic production and value addition.
The warning assumes greater significance against the backdrop of weakening export performance in 2026. According to Asia Siyaka Commodities PLC Research, Sri Lanka exported 166.3 million kilograms of tea during the first eight months of 2026, compared with 174.2 million kilograms during the corresponding period of 2025—a decline of approximately 5%.
August exports alone fell 4%, from 23.7 million kilograms to 22.8 million kilograms.
Although rupee earnings remained relatively stable at Rs.305.6 billion against Rs.306.5 billion previously, this performance was partly supported by currency depreciation. In US dollar terms, earnings fell to approximately US$948 million from US$1.026 billion.
The average FOB value also declined 3%, from US$5.88 per kilogram to US$5.70.
Higher freight and insurance costs have further squeezed the industry, while disruptions in important markets and traditional transit routes have complicated the export environment.
Turkey has emerged as a major destination, with exports almost doubling to 24.7 million kilograms. But several established markets have moved in the opposite direction. Shipments to Iraq fell 45%, Russia declined 10%, China dropped 18%, and Libya contracted 62%.
The UAE, historically an important transit hub, recorded a particularly sharp 65% decline in volumes, falling from 12.7 million kilograms to 4.4 million kilograms.
Against this backdrop, the industry’s future cannot depend solely on increasing bulk tea volumes.
Central Bank Governor Dr Nandalal Weerasinghe told planters that the fundamental question was no longer simply how much tea Sri Lanka produces, but how efficiently it produces, what value it creates and how competitive the industry will remain over the next 10 or 20 years.
That warning points directly toward value addition.
With more than 50% of export volumes already represented by value-added teas in 2025, Sri Lanka has an opportunity to shift from dependence on traditional bulk exports towards products capable of generating higher returns, strengthening brands and reducing vulnerability to international commodity-price pressures.
But unless domestic producers are protected from unfair competitive pressures and supported by research, investment, technology and market access, the emerging value-added revolution could remain an unrealised opportunity.