Sri Lanka tea needs urgent investment as smallholder yields decline, threatening long-term growth and the government’s ambitious target of 400 million kilograms in production and $2.5 billion in export revenue by 2030, industry leaders warned.
Smallholder tea faces falling yields as industry targets $2.5B exports by 2030
Sri Lanka tea needs urgent investment to protect the future of its smallholder planters, who produce nearly 70% of the country’s tea output. At the Tea Exporters Association’s 26th Annual General Meeting, Chairperson Huzefa Akrabally stressed that without immediate replantation and block-in-filling, the industry’s ability to meet the government’s production and export targets will be at risk.
He noted that smallholder yields have already declined, and unless addressed with proper financial and technical support, the projected target of 400 million kilograms of production and $2.5 billion in export revenue by 2030 will remain out of reach. Despite these challenges, Sri Lanka’s tea exports are expected to rise to 270 million kilograms in 2025, generating more than $1.5 billion in revenue, a 10% increase compared to last year. This growth reflects the resilience of smallholder farmers but also underscores the urgent need for reinvestment in the sector.
Akrabally highlighted that strengthening smallholders through modern technology, sustainable practices, and resilience-building initiatives is vital to unlocking record levels of growth. Industry and Entrepreneurship Development Minister Sunil Handunneththi also emphasized that protecting the global reputation of Ceylon Tea requires moving beyond bulk exports. He called for investment in branding, packaging, and value addition, while also addressing fertilizer supply challenges and rising international competition.
The IMF’s Resident Representative for Sri Lanka, Martha Tesfaye Woldemichael, described the tea sector as a symbol of resilience, noting that more than 90% of Sri Lanka’s tea is exported, sustaining two million livelihoods. She highlighted that sustainability, competitiveness, and innovation will keep the industry central to Sri Lanka’s economic renewal, as international reserves grow and investor confidence gradually returns under the ongoing IMF program.
However, she also cautioned that the country’s recovery remains fragile, with global trade tensions and geopolitical risks adding uncertainty. To safeguard long-term stability, Woldemichael urged policymakers to stay committed to reforms, maintain macroeconomic stability, and create a stronger enabling environment for private sector investment.
For the tea industry specifically, she stressed the importance of strengthening competitiveness, embracing sustainability, and capturing more value through innovation. As Sri Lanka works to restore fiscal stability and investor confidence, the tea sector remains a cornerstone of its economic growth story.