Sri Lanka’s tea export industry witnessed modest progress in 2024, with total exports reaching 245.7 million kilograms, valued at $1.4 billion.
While the volume was only marginally higher than 2023’s 241.9 million kilograms, the export value hit a record high of Rs. 437 billion ($1.435 billion).
This achievement, despite challenges such as fluctuating production levels and currency appreciation, highlights the resilience of Sri Lanka’s tea sector.
The increased Free on Board (FOB) value of $5.83 per kilogram, compared to $5.35 in 2023, underscores the rising global demand for premium Ceylon Tea.
However, declining earnings for farmers and estates due to the appreciating Sri Lankan Rupee (LKR) pose a concern. As Sri Lanka seeks to regain its earlier export peaks, addressing production constraints and navigating global market dynamics will be key.
Performance Overview
The 2024 export figures reflect underperformance compared to historical standards. The country’s peak export volume was 327 million kilograms in 2014, generating $1.6 billion in revenue.
In contrast, the 2024 production stood at 262 million kilograms, with domestic consumption absorbing the remainder. Asia Siyaka Commodities PLC highlighted this low production as a significant factor limiting export growth.
Packaged tea exports declined by 6%, falling to 101 million kilograms from 108 million in 2023. Conversely, tea bag shipments rose by 10% to 25.5 million kilograms, marking a positive trend.
Green tea exports also grew by 4%, reaching 4.6 million kilograms, though instant tea shipments saw a slight decrease.
Key Export Markets
Iraq retained its position as the largest importer of Sri Lankan tea in 2024, with shipments increasing by 5% to 34.2 million kilograms.
However, this market remains low-value, with an average FOB of $4.41 per kilogram. Russia followed with a 10% increase, importing 24.9 million kilograms at an FOB of $5.81. The UAE demonstrated strong growth, with exports rising by 14% to 21.1 million kilograms.
Conversely, exports to Turkey dropped sharply from 30.4 million kilograms in 2023 to 17.7 million kilograms, reflecting market instability.
China recorded a slight decline of 6%, importing 11.5 million kilograms. Iran’s imports surged by 60% to 10.4 million kilograms, driven by the ongoing tea-for-oil debt agreement.
Other significant markets included Saudi Arabia, which increased imports by 30% to 9 million kilograms at a high FOB of $7.83, and Chile, which imported 8.3 million kilograms, up from 7.3 million in 2023.
Outlook for 2025
Asia Siyaka Commodities expressed optimism for 2025, citing improved geopolitical conditions in key markets.
The Middle East and North Africa, which accounted for 50% of exports, are expected to recover as political and economic stability improves. Syria, for example, imported 7.4 million kilograms in 2024 but has historically absorbed up to 30 million kilograms annually. Peace and stability could help this market rebound.
Libya’s economic prospects are tied to resolving political disputes and ensuring stable oil production. The country imported 10 million kilograms in 2024 at a low FOB of $3.96, but there is potential for both volume and value growth.
Similarly, Russia’s ongoing challenges could shift if the conflict with Ukraine ends, unlocking opportunities for increased exports to both Russia and Ukraine.
Overall, Sri Lanka’s tea industry faces both opportunities and challenges in 2025. Enhanced production, strategic market diversification, and effective responses to geopolitical developments will be critical for sustaining growth and maximizing export revenue.
