With the tea export earnings for this year wrapping up close to its initial target despite pandemic-related disruptions, the Sri Lanka Tea Board (SLTB) has set an increased target for next year, which is similar to that of 2019
SLTB Chairman Jayampathy Molligoda told The Sunday Morning Business that the Board has set a target of Rs. 300 billion (about $ 1.58 billion) of tea export earnings for 2021 which is close to the target of $ 1.5 billion which was set for 2019.
He stated that the Board is optimistic that next year’s target could be easily met.
Speaking on this year’s target and achievement, Molligoda stated that the initial target set for this year was about Rs. 230 billion ($ 1.24 billion) and export earnings achieved so far this year is over Rs. 200 billion.
However, this year’s achievement is a decline compared to the previous year. Sri Lanka’s tea exports were recorded as Rs. 240.6 billion in 2019, a slight increase of Rs. 9 billion compared to a year ago
“Tea export earnings for this year will fall a little short of the initial target mainly because of two reasons. One is that the quantity of tea production was comparatively lower this year, and we had about a six-month long drought season beginning from end last year to mid-April,” Molligoda stated.
As of August 2020, the SLTB recorded revenue of $ 805.57 million in tea exports, an export revenue of just over $ 100 million a month, making the realisation of $ 400 million in the last four months of 2020 likely. For the last five to six years, there has been a decline in the total production of tea in Sri Lanka, with tea production in 2015 being 326 million kg while in 2020 it is estimated to be around 290 million kg.
The industry aims to achieve an export target of $ 3.5 billion by 2030. Tea is the top export agriculture product in the country’s export basket. Export earnings from tea in September 2020, which made up 12% of merchandise exports, increased by 3.3% year-on-year (YoY) to $ 113.99 million, but the export volume was decreased by 2.82% in September 2020 compared to September 2019. In addition, export earnings from tea recorded a 10.7% increase in September 2020 in comparison to August 2020. The expansion was mainly due to higher demand for tea from Turkey, Russia, and Chile.
In October, according to the data from the Central Bank of Sri Lanka, earnings from tea exports declined by 1.4% YoY due to the decline in volume of tea exports, although unit value increased. By October, tea export earnings for the year at the time stood at $ 1.03 billion.
During the initial lockdown period, the Colombo Tea Auction was conducted online for the first time since establishment, which turned out better than anticipated. Despite the impact of Covid-19 that affected almost all the countries in the world, the buyers of Ceylon Tea in Russia, Turkey, Ukraine, the European Union (EU), and Middle East helped to keep the tea auction buoyant and the depreciation of the rupee by about 8% against the US dollar, compared to the rate that prevailed during the manual tea auction held on 18-19 March 2020, also contributed to a significant gain in prices.
Sri Lanka is the world’s third-largest tea exporter with 19% market share. Sri Lanka exports green tea to more than 40 countries. The major buyers are the United Arab Emirates, the Russian Federation, and Jordan.