Sri Lanka’s plantation industry is facing a defining moment as geopolitical tensions in West Asia disrupt one of its most critical export corridors. The Planters’ Association of Ceylon (PA) has raised alarm over the escalating crisis surrounding the Strait of Hormuz, warning that the ripple effects could destabilize an industry already burdened by years of structural strain.
Nearly 45% of Sri Lanka’s tea export revenue estimated at around $680 million out of a total $1.5 billion is derived from Middle Eastern markets, including Iran, Iraq, the UAE, and Saudi Arabia. These destinations have long served as the backbone of demand for Pure Ceylon Tea. However, ongoing instability threatens both shipping routes and consumer demand, creating a dual shock to supply chains and export earnings.
The industry’s vulnerability is compounded by rising production costs. Wages alone account for almost 70% of the cost of production in tea and rubber, leaving little flexibility for producers already grappling with thin margins. The latest wage increase, implemented in January 2026, pushed daily earnings to Rs. 1,750, partly subsidized by the Government. While the move improved worker welfare, it has intensified financial pressure on Regional Plantation Companies (RPCs), many of which are struggling to remain viable.
This crisis arrives on top of a decade marked by policy inconsistencies and external shocks. The controversial fertiliser bans of previous years, the COVID-19 pandemic, Sri Lanka’s 2022 economic collapse, and extreme weather events like Cyclone Ditwah have all eroded productivity and resilience. Output targets—such as the ambitious 300 million kilograms of tea projected for 2026 now appear increasingly uncertain.
A critical concern is fertiliser availability. With global supply chains under threat due to the Gulf conflict, Sri Lanka risks shortages that could further depress yields in the coming seasons. Industry leaders stress that without immediate intervention to secure inputs, production declines could become inevitable.
The PA is urging a coordinated national response, including emergency fertiliser procurement, financial support for smallholders, and improved management of unsold tea stocks. Equally important is the push to diversify export markets beyond the Middle East, targeting regions where Ceylon Tea can command premium prices.
The unfolding situation underscores a harsh reality: Sri Lanka’s plantation sector remains deeply exposed to external shocks. Without swift and strategic action, the current crisis could mark a turning point not just for tea exports, but for the livelihoods of hundreds of thousands who depend on the industry.
By a Special Correspondent