Sri Lanka tea sector resorts to firewood

Sri Lanka’s tea sector is absorbing the Middle East conflict through two channels at once: energy and exports. Reuters reported on May 21 that higher fuel costs have pushed tea workers and factories toward firewood, while shipping disruption has hit one of the industry’s biggest overseas markets. The pressure matters because tea is one of Sri Lanka’s main export earners. (ft.lk) The Sri Lanka Tea Board describes Ceylon Tea as the country’s principal export crop, and Reuters said the industry generates about $1.5 billion a year and supports about 2.4 million people. (straitstimes.com) ### Why does a war in the Middle East hit tea factories in Sri Lanka? Middle Eastern buyers account for a large share of Sri Lanka’s tea trade. The Planters’ Association of Ceylon said about 45% of annual tea exports — roughly $680 million of the country’s $1.5 billion tea export revenue — comes from markets including Iran, Iraq, the United Arab Emirates and Saudi Arabia. (straitstimes.com) Reuters said the conflict also pushed up energy costs across Sri Lanka. In its May 21 report, Reuters said the government had raised fuel prices by 40%, rationed supplies and declared Wednesdays a public holiday to conserve energy. (srilankateaboard.lk) ### Why are producers using firewood? Firewood is not new to Sri Lanka’s tea industry, but its role becomes more visible when other energy inputs get more expensive. A Tea Research Institute presentation says specific fuel consumption in tea processing runs at about 0.60 to 0.65 kilograms of firewood per kilogram of made tea. (ft.lk) The cost structure shows why fuel matters. Sri Lanka’s Department of Census and Statistics said provisional manufacturing costs for made tea rose to 149.42 rupees per kilogram in 2024/25 from 144.28 rupees a year earlier, while total cost per kilogram rose to 1,043.38 rupees from 963.83 rupees. (straitstimes.com) ### Where is the export damage showing up first? March data already showed a drop in earnings and shipments to key buyers. Reuters, citing the state-run Export Development Board, said tea export earnings fell 17.3% year on year in March to $114.75 million. Exports to Iraq, Sri Lanka’s largest buyer, fell 38%, while shipments to the UAE dropped 93%, Reuters said. (tri.lk) Iran also matters to the higher-value end of the trade. Reuters said Iran imports 8 million to 10 million kilograms of premium Sri Lankan tea annually. (statistics.gov.lk) ### How is this reaching workers and companies? Plantation wages remain low relative to rising living costs. Reuters said tea plantation workers usually earn 1,350 to 1,750 Sri Lankan rupees a day, compared with a national daily minimum wage of 1,200 rupees, and quoted labor advocate Thangawel Ganeshalingam saying workers were cutting meals and some were leaving plantations. (straitstimes.com) Dilmah Tea said the disruption is also changing company strategy. Reuters quoted Chairman and Chief Executive Dilhan Fernando as saying the company, which sells in 108 countries and gets about 30% of its business from the Middle East, is accelerating expansion in Canada, South America and the United States. (straitstimes.com) ### What should readers watch next? The next hard signals will come from Sri Lanka’s Export Development Board and tea-industry bodies. Monthly export data for Iraq, the UAE and Iran will show whether the March declines deepen, while the Sri Lanka Tea Board and planter groups are likely to remain the main public sources for production, auction and cost updates. (straitstimes.com)