Tea production posts: 8.1% volume contraction in Q3

Sri Lanka’s tea production segment saw a 8.1% contraction in volumes in the third quarter of this year due to supply-side disruptions such as increasing input costs, long-running inabilities to recultivate plantations, and labour shortages, the Department of Census and Statistics’ Gross Domestic Product by Production report for Q3 of 2025 said.

“The ‘Growing of tea’ sector presented a complex scenario in the third quarter of 2025. The sector recorded a significant negative growth rate of 8.1%, a continued struggle compared to the positive 16.9% growth reported in the same quarter of the previous year,” the report said, noting the production drop during the months July to September. 

“This slump is primarily due to supply-side issues including a continuous increase in input costs (like fertilizer prices) leading to poor plantation maintenance, compounded by an inability to conduct proper cultivation due to consistent labour shortages.”

Between January to October this year, Sri Lanka saw cumulative tea production reach 220.97 million/kg, a 2.82 million/kg increase from the 218.15 million/kg posted between January to October in 2024, according to data collected by the Tea Exporters Association (TEA).

In 2024, Sri Lanka exported 245.7 million/kg of tea worth $ 1.4 billion, marginally above the 241.9 million/kg exported in 2023.

However in 2024, Sri Lanka saw its export revenue see an all-time high of Rs. 437 billion, which was roughly around $ 1.435 billion in earnings.

“This volume contraction was mirrored by a 8.1% decrease in ‘Made tea’ production, with the largest segment, low grown tea (62.4% market share), falling by 7.5%,” the report continued.

Notably, the average price per kilogram of ‘Made tea’ at the Colombo auction decreased by 3.6%, from Rs. 1,207.94 to Rs.1,164.21 per kilogram during the quarter, owing to global price fluctuations. 

“Counter-intuitively, despite the production decline, tea exports surged by 13.1%, increasing from 63.2 million kilos to 71.5 million kilos, driven by strong international demand, notably with exports to Iraq and Turkey increasing by 20% and 54%, respectively,” the report said.

Source: The morning