Setback for agriculture as tea, rubber coconut crops dip in 1Q

• Tea and rubber sectors see continuity of contraction in production from 2022
• 1Q 2023 setback for coconut sector after achieving highest ever crop in 2022

The country’s key agriculture crops tea, rubber and coconut have suffered contraction in the first quarter of this year in comparison to the corresponding period of 2022 reaffirming the continuous damage caused by the unprecedented policy of banning chemical fertiliser by the former ousted president Gotabaya Rajapaksa.

As per provisional data released by the Central Bank last week, in the first quarter of 2023 tea crop was down by 6.5% to 59.2 million kilos. Rubber production was down by 2.5% to 18.7 million kilos. Coconut production was down by 5.6% to 790.3 million nuts.

CBSL said the contraction “can be largely attributable to the lag effect of shortages of required fertiliser.”

It said coconut production drop reflects the lag effects of dry weather conditions that prevailed during the corresponding quarter of 2022.

The negative start overall and continuity of decline in output for tea and rubber (coconut crop hit a record last year) have caused concern within the agriculture industry. Analysts warned that the outcome makes economic recovery more challenging this year. The broader agriculture activities in 2022 contracted by 4.6% in 2022 in value-added terms, compared to the growth of 0.9% in 2021.

In terms of exports, the value of tea shipments in the 1Q of 2023 were up 9.6% to $ 314.3 million on account of favourable prices. Rubber exports however were down by 26% to $ 10.8 million and coconut exports were down by 28% to $ 75.8 million. Sri Lanka’s overall exports were down by 8% to $ 3 billion in 1Q of 2023.

Last year tea production dipped by 16% largely due to the lagged effect of acute shortages of fertilisers and agrochemicals domestically.

According to the Central Bank, the preliminary diagnosis carried out by the Tea Research Institute (TRI) on the large decline of crop yields in several regions of the country pointed out that inaccessibility to chemical fertilisers and agrochemicals, particularly urea based fertilisers and weedicides, significantly impacting the reported yield losses during 2022.

Production of high, medium, and low grown tea, which contributed to around 22%, 16%, and 62% of the total production, respectively, declined by 13.8%, 21.2%, and 15.4%, respectively, in 2022.

The average yield in the smallholder sector decreased to 1,193 kilograms per hectare, compared to 1,414 kilograms per hectare reported in 2021, registering a year-on-year decline of 15.6% in average yield.

Rubber production too suffered its second consecutive decline in 2022 by 7.8% to 70.9 million kilograms, largely driven by the combined effect of adverse weather conditions that prevailed in rubber growing areas, fertiliser shortages, and the spread of the Pestalotiopsis disease.

According to the Central Bank, the impact of fertiliser shortages on immature rubber plantations during 2022 was significant, causing stunted tree growth that causes delays in the tapping stage of plantations and reduces land productivity in the period ahead. Furthermore, the scarcity of agrochemicals resulted in severe propagation of the Pestalotiopsis disease in rubber plantations during the year, affecting around 40,000 hectares of rubber plantations, resulting in a decline in yield ranging from 0-10% in affected rubber plantations.

The coconut sector registered its highest ever annual production in 2022, due to the favourable weather conditions that prevailed during 2021 and 2022. Total nut production increased to 3,391 million nuts in 2022, recording a year-on-year increase of 8.7%, over the notable increase of 11.7% recorded in 2021. The increase in production was largely supported by the well-distributed rainfall from 2021 coupled with the ideal air temperature in the main coconut growing areas. These favourable effects outweighed the immediate negative impact of limited application of chemical fertilisers on coconut cultivation during 2022. Along with the increased nut production, coconut-based products also witnessed an improvement during the year.