Sri Lanka’s tea industry has experienced a notable surge in production during September 2024, achieving its highest levels in seven years. Despite various challenges such as adverse weather conditions and higher costs, the tea sector has shown resilience, with marginal growth for the first nine months of the year.
September 2024: A 7-Year High for Tea Production
According to provisional data from the Sri Lanka Tea Board, tea production in September reached 24.13 million kilos, marking a significant 27.7% increase compared to the same month in 2023. Last year’s figure was notably lower, at 18.9 million kilos, making this year’s output a remarkable achievement.
The September boost in production can be seen across all elevation levels. High-grown, medium-grown, and low-grown teas all saw increased volumes compared to September 2023:
- High-grown teas produced 4.59 million kilos, reflecting a 10.57% year-on-year (YoY) increase.
- Medium-grown teas reached 4.10 million kilos, showing a substantial 38.04% YoY growth.
- Low-grown teas, which are the most dominant in Sri Lanka, surged by 31.75% to 15.29 million kilos.
While overall production grew, the output of green tea saw a slight decline of 6.82% YoY, amounting to 189,695 kilos. However, when compared to September 2022, green tea production showed a modest increase of 8.33%, though the overall contribution remained small.
Year-to-Date Performance: January to September 2024
From January to September 2024, Sri Lanka’s total tea production reached 196.22 million kilos. This represents a 1.41% increase compared to the same period in 2023, when production stood at 193.49 million kilos. This steady rise in output indicates a recovery for the tea industry, which faced significant setbacks due to poor weather and economic challenges in previous years.
Despite this year’s improvements, production levels have yet to reach the high achieved in 2021 when the country produced 234 million kilos in the first nine months. The current cumulative production of 196.22 million kilos still lags behind the pre-crisis figures, but the slight growth signals positive momentum.
Elevation-Based Production Trends in 2024
Forbes and Walkers Research highlighted that tea production trends vary by elevation in 2024:
- High-grown teas produced 40.53 million kilos, which was down by 8.43% YoY.
- Medium-grown teas showed a strong performance, producing 35.51 million kilos, up by 13.81% YoY.
- Low-grown teas remained steady, with a slight 1.86% increase, producing 118.47 million kilos.
- Green tea, while contributing less to overall production, reached 1.68 million kilos, down 1.07% YoY.
Industry Challenges: Rising Costs of Production
Despite the recent improvements in production volumes, the tea industry continues to face rising costs of production. Tea growers have expressed concerns over the steep increase in expenses for inputs such as fertilizer, electricity, labor, and packaging. According to industry experts, these rising costs have put additional pressure on tea growers, impacting profitability.
“The cost of production has significantly risen across the board. From fertilization to labor wages, everything has become more expensive,” commented a leading tea grower.
Wages have also seen an increase, contributing to the overall rise in production costs. The combination of higher input prices and increased wages is making it harder for growers to maintain profitability, even with the recent rise in tea volumes.
Historical Context and Future Outlook
Looking back, Sri Lanka’s total tea production in 2023 was 256.04 million kilos, a slight increase of 4.20 million kilos compared to 2022. The year 2022 marked a challenging period for the industry, with total production dropping to 251.84 million kilos – the lowest in 26 years. The sharp decline in 2022 was due in large part to a government-imposed ban on chemical fertilizers and agrochemicals, which severely impacted tea yields.
As of 2024, the tea industry is aiming to surpass last year’s production figures and possibly reach the 300-million-kilo mark, though this remains a challenging target. In 2021, the country’s total tea production was close to 300 million kilos, standing at 299.49 million kilos.
Conclusion: Positive Signs Amidst Challenges
The surge in tea production in September 2024, coupled with the steady increase in output during the first nine months of the year, offers hope for Sri Lanka‘s tea industry. However, the sector remains under pressure due to rising production costs and lingering effects from past policy decisions.
With the industry aiming to reach pre-crisis production levels, ongoing support from the government and better cost management strategies will be crucial to ensure long-term growth. Tea remains one of Sri Lanka’s most important exports, and the continued recovery of the sector is vital for the country’s economic stability.
As the tea industry navigates these challenges, it’s clear that the path to recovery will require a balance of increased production, cost control, and sustainable practices to maintain competitiveness on the global stage.
