Sri Lanka’s tea industry set for cautious growth in 2025: Forbes and Walker Tea Brokers
- 5opn1
- January 11, 2025
- Business News
- Sri Lanka’s tea industry set for cautious growth in 2025: Forbes and Walker Tea Brokers
- 0 Comments
Sri Lanka’s tea industry is set for a year of modest growth in 2025, despite facing several challenges and uncertainties, an analysis by Forbes and Walker Tea Brokers showed.
After a few years of declining production, the country is likely to experience a tight supply of Orthodox Large Leaf teas, following a production shortfall in India in 2024.
The first quarter of 2025 (1Q25) is expected to bring some stability, with the tea prices remaining buoyant, as Sri Lanka enters its Western quality season, which typically sees better crop yields.
“We could predict the tea prices to remain buoyant during 1Q and perhaps even in the first half of 2Q,” the report suggests.
However, the second half of the year would depend largely on how the global supply dynamics unfold, Forbes and Walker Tea Brokers said.
The Sri Lankan rupee’s exchange rate against the US dollar will also play a crucial role in determining the tea prices. As the government prepares to relax some import restrictions, including those on vehicles, the effect on the rupee tea prices is expected to be noticeable.
Despite the volatility, the forecast for tea production in 2025 remains cautiously optimistic. The country is projected to produce 280 million kilogrammes of tea, with challenges such as climate change, rising input costs, wages, mechanisation, government policies and fertiliser use all influencing the final output.
“Factors such as climate change, input costs, mechanisation and wages, government policies and use of fertiliser etc., affecting tea production in Sri Lanka would enable us to project with cautious optimism an annual 280 million kilogrammes for the year 2025,” the analysis pointed out.
Looking beyond Sri Lanka’s shores, the key markets such as India and China are set to present significant opportunities for growth.
However, the research arm of the tea broker cautioned that economic instability and unpredictable weather conditions could disrupt the balance of demand and supply. Commenting on the 2024 performance, Forbes and Walker Tea Brokers said Sri Lanka’s tea sector showed encouraging signs of recovery, marking what could be called ‘The Year of Reclaiming Change’.
Strong demand for quality teas, particularly from the Western and Uva regions, supported the market, while the appreciation of the rupee provided some relief.
The momentum in tea value, which began building in the latter part of the previous year, was evident across all elevations, the report stated.
While the high-quality teas continued to perform well, the Low Grown teas also saw steady demand, contributing to the overall positive outlook for Sri Lanka’s tea exports.
dailymirror
