Sri Lanka’s tea export sector is losing between US$10 million and US$15 million each week due to the ongoing military situation in the Middle East involving Iran, according to the Tea Exporters Association. The industry body states that escalating tensions and security risks in the region have significantly disrupted shipping operations, limiting the country’s ability to supply tea to several Middle Eastern markets.
Exporters report that the conflict has created severe logistical challenges, including disruptions to shipping routes and heightened risks associated with maritime transport. These conditions have made it increasingly difficult for exporters to maintain regular deliveries to buyers in the Middle East, a region that accounts for nearly half of Sri Lanka’s tea exports. As a result, the industry is facing mounting financial losses and growing uncertainty over future trade flows.
The Middle East remains a crucial market for Sri Lanka’s tea industry. Out of the approximately US$1.5 billion generated annually from tea exports, around US$530 million comes from Middle Eastern countries. Industry representatives warn that if the conflict and related shipping disruptions continue, the impact on the country’s foreign exchange earnings could become severe.
In response to the crisis, the Tea Plantation Owners Association has submitted a series of proposals to the government aimed at managing the unexpected risks currently faced by the tea industry. Among the key measures proposed is the introduction of a transparent pricing formula that would ensure foreign exchange gains resulting from the depreciation of the Sri Lankan rupee are passed on to tea landowners.
The association has also requested that the government provide storage facilities at concessional rates so that unsold tea stocks affected by the risk of war can be safely stored. Additionally, it has proposed a special government intervention program to purchase tea in order to stabilize the income of growers during the period of market disruption.
Further recommendations include immediately preventing the transfer of additional costs arising from increased international insurance and shipping charges onto tea landowners. The association has emphasized that these costs should not influence the calculation of raw leaf prices paid to producers. It has also called for concessional working capital loan facilities to ease the financial pressure faced by plantation owners during the upcoming Sinhala and Tamil New Year season.
The proposals further urge the government to directly intervene in importing fertilizer at subsidized prices in order to reduce production costs. At the same time, the industry has recommended expanding export strategies to reach new markets beyond conflict-affected regions in order to reduce dependence on the Middle East.
In addition, the association has suggested allocating 15 percent of the export cess tax to establish an independent financial stability fund. Such a fund, they say, would help protect plantation owners against unforeseen market shocks caused by factors such as war risks, climate change, and sudden declines in global tea prices.
