Sri Lanka’s 400 MnKg tea target overambitious, says industry veteran

• Ex-Tea Board Chairman questions feasibility of 2030 tea production goal
• Stresses achieving the target would require “huge investment” to resolve long-standing issues affecting growth, particularly in replanting
• Says current production levels are insufficient to meet rising demand, particularly from fast-growing markets in the Middle East
• Calls “serious dialogue” among government institutions and all stakeholders across the tea value chain

By Nishel Fernando

Sri Lanka’s plan to lift tea production to 400 million kilograms by 2030 faces steep challenges, from underinvestment to producer reluctance, according to Ceylon Tea Brokers PLC Chairman and former Tea Board chief Niraj De Mel, who cautioned that the target may be more aspirational than achievable.

De Mel cautioned that significant investment constraints and possible reluctance among producers could hinder progress towards the target.

He shared these views in his chairman’s message in the Ceylon Tea Brokers PLC Annual Report 2024/25.

The target, proposed by the Ministry of Plantation Industries in consultation with key industry bodies including the Sri Lanka Tea Board (SLTB), Tea Research Institute (TRI), and Tea Smallholdings Development Authority (TSHDA), marks a substantial increase from the 262.16 million kilograms produced in 2024.

While acknowledging that the goal is “doable”, De Mel questioned whether it had been set without adequate consultation with producers.

He stressed that achieving the 400 million kg target would require “huge investment” to resolve long-standing issues affecting growth, particularly in replanting. Regional Plantation Companies (RPCs), he noted, remain reluctant to replant due to the lengthy payback period, which often extends beyond their lease terms.

Some producers may also be unwilling to raise production volumes for fear that higher supply could depress prices, hurting revenues and profitability, de Mel added.

Compounding these challenges is a troubling trend in the high-grown sector, where production declined 5 percent year-on-year despite increased fertiliser use. De Mel called this a “serious concern” that warrants deeper investigation beyond commonly cited factors such as ageing bushes, climate change, and labour shortages.

His remarks come amid shifts in the global tea market. Sri Lanka’s tea export earnings hit a record Rs. 433 billion in 2024, driven by stronger auction prices and a record average FOB price of US$ 5.84 per kg. However, export volumes remain well below levels seen 15 years ago.

De Mel noted that export volumes have fallen by 79 million kilograms since 2010, while earnings in dollar terms have remained largely flat. Current production levels are insufficient to meet rising demand, particularly from fast-growing markets in the Middle East. This shortfall could trigger price spikes and push buyers towards cheaper tea origins, he said.

Kenya continues to dominate global tea exports, followed by China and India, which recently overtook Sri Lanka for third place. De Mel, however, suggested that Sri Lanka could regain the No. 3 position.

To boost foreign exchange earnings, De Mel said Sri Lanka must ensure a “larger availability of good-quality tea” to expand into affluent markets such as Japan, Western nations, Saudi Arabia, China, and Russia. He urged the adoption of “multiple strategies” involving bold and innovative measures to enhance the value of tea exports.

De Mel also called for “serious dialogue” among government institutions and all stakeholders across the tea value chain, including growers, manufacturers, RPCs, and exporters, to tackle the sector’s fundamental issues.

Balancing the government’s ambitious production targets with the realities of investment needs, producer concerns, and shifting global market dynamics, he said, will be critical to the future of Ceylon Tea.