Nine-month tea exports value top $ 1 b mark; September volume dips to 26-year low

• Steady strengthening of the Rupee against USD has had a dual negative impact on the tea industry, says Asia Siyaka Commodities

 Sri Lanka’s tea exports in value during the first nine months of this year has crossed the $ 1 billion mark, whilst quantity-wise, September has seen a 15% slump year-on-year to a 26-year low of 19.7 million kilograms.

The September figure is also lower by 10% from August exports, Asia Siyaka Commodities PLC said quoting provisional Customs data.

“The low September figure is largely due to low tea production in Q2 this year. With Q3 tea production showing signs of recovery particularly in September, we would expect exports in October and November to improve YoY 2023,” Asia Siyaka Commodities said.

Despite the poor performance, tea exports for the period from January-September reached 182.3 million kilograms and is nominally higher than last year’s nine-month figure of 181.4 million kilograms.

For the first time in five years, Sri Lanka crossed the $ 1 billion earnings mark in the first nine months with an approximate value of $ 1.059 billion, which is 6% more than last year’s nine-month earnings of $ 991.88 million.

“Considering that a quantity of 182.3 million kilograms was exported during the period, this converts to a highest-ever FOB value of $ 5.81 per kilogram,” Asia Siyaka added.

Despite this strong USD performance, Asia Siyaka said Rupee earnings, which ultimately trickle down to tea producers, have remained flat at Rs. 323.3 billion, compared to Rs. 323.8 billion the year before.

“The steady strengthening of the Rupee against the USD has had a dual negative impact on the tea industry. Buyers’ ability to pay Rupees at the Auction has been restricted, as they have been focused to factor in a low Rupee conversion by the time exports proceeds are received,” Asia Siyaka said. “From a tea production perspective, the lower Auction prices, together with the rising cost of production, has taken off much of the gloss from the higher USD income figure,” it added.

Iraq continues to lead as the prime destination for exports of Ceylon tea, but volumes have slipped to 24.1 million kilograms from 25.8 million kilograms in 2023. Russia has grown 4% to 18.4 million kilograms and is followed by the UAE, whose volumes have increased sharply by 33% to 17.4 million kilograms. Turkey follows at 13.4 million kilograms, with China at 8.8 million kilograms and Iran at 8.1 million kilograms. Direct shipments to Azerbaijan have increased from 6.9 million kilograms to 7.7 million kilograms and is followed by Saudi Arabia – the high value market – whose absorption shows a 34% YoY growth from 5 million kilograms to 6.7 million kilograms. Chile and Libya follow with quantities of 6.2 million kilograms each.