Sri Lanka slips to world’s 4th largest tea exporter as India takes 3rd spot

Sri Lanka has been displaced as the world’s third-largest tea exporter, falling to the fourth position, as India expanded its production to capture a larger share of the global market in 2024, according to the latest annual report from Agarapatana Plantations PLC. 

The shift in global rankings comes despite an increase in Sri Lanka’s own tea export earnings and volumes, highlighting the intensifying competition and deep-seated domestic challenges facing the island’s iconic Ceylon Tea industry.

In 2024, India’s tea production grew to account for 14 percent of global tea exports, pushing it into the third spot. Meanwhile, Ceylon Tea exports remained static at 13 percent, making it the fourth-largest tea exporter globally. The country also ranked as the fourth-largest producer of tea, trailing behind China, India and Kenya. This change occurred even as Sri Lanka’s total tea exports increased from 242 million kilogrammes in 2023 to 246 million kilogrammes in 2024, with the export value rising from US $ 1.31 billion to US $ 1.436 billion over the same period.

While the topline numbers for Sri Lankan tea exports show growth, the industry is grappling with a host of critical issues that threaten its long-term viability.

A significant concern casting a shadow over the sector’s future is policy uncertainty regarding the plantation land leases. With only 20 years remaining on the 53-year leases granted to the Regional Plantation Companies, the industry leaders are calling for urgent government action. 

“It will be to the benefit of all stakeholders if the government extends the lease agreement quickly and defines the government policy for the future of tea plantations,” stated Agarapatana Plantations Chairman S.D.R. Arudpragasam. 

This lack of clarity introduces “uncertainty into long-term strategic planning” for companies in the sector.

The industry faces increasing internal pressures, including rising costs, due to a 35 percent increase in plantation workers’ basic daily wages. Labour shortages persist, with “large-scale labour outmigration” impacting harvesting and productivity. Climate change also plays a significant role, as adverse and unseasonal weather patterns directly affect production. High-grown tea production, crucial for APL, saw a national decrease from 59 million kilogrammes in 2023 to 56 million kilogrammes in 2024, largely attributed to weather anomalies. 

Furthermore, aging infrastructure contributes to the challenges, as the “traditional plantation model is disintegrating” under the combined stress of aging crops, reduced soil fertility and escalating costs.

On the international front, geopolitical instability continues to pose a significant risk. The ongoing conflicts in the Middle East and the Russia-Ukraine war—both primary destinations for Ceylon Tea—threaten to increase shipping costs and cause unpredictable fluctuations in demand and prices. This is compounded by increasing competition from the African nations, which have continued to raise their tea output.

As Sri Lanka’s tea industry navigates these headwinds, plantation companies are increasingly focusing on strategies such as mechanisation, diversification into tourism and a shift towards sustainable and value-added products like organic tea to maintain profitability and secure their position in a fiercely competitive global market. 

(NF)