Friday Jan 24, 2025
Friday Jan 24, 2025
Friday, 24 January 2025 00:08 - - {{hitsCtrl.values.hits}}
Sri Lanka has exported 245.7 Mn kg in 2024 worth $ 1.4 billion narrowly ahead of last year’s low figure of 241.9 Mn kg.
One significant positive aspect is that the value of exports reached an all-time high of Rs. 437 billion which converts to an approximate USD value of $ 1.435 billion.
Asia Siyaka Commodities PLC said this USD value results in a highest ever FOB per kg of $ 5.83. But earnings in the hands of the farmer and estates had declined in Rupees because of appreciation of the LKR against USD and other currencies. In 2023 the country earned $ 1.3 billion on a quantity of 241.9 Mn kg, which converts to an FOB of $ 5.35 per kg. The highest ever earnings from exports were $ 1.6 billion achieved 10 years before on a volume of 327 Mn kg.
“For a country that commands a global share of over 300 Mn kg’s the 2024 numbers are an underachievement resulting from low tea production of 262 Mn kg. The difference is consumed in the country,” said Asia Siyaka Commodities.
It said exports in Packets declined to 41% of the total to a quantity of 101 Mn kg down from 108 the year before. Tea bags shipments however are an important positive aspect, with quantity rising 10% to 25.5 Mn kg from 23.2 in 2023. Instant Tea shipments were nominally lower but Green Tea exports increased 4% YoY to 4.6 Mn kg.
Iraq continued as the No. 1 country for Sri Lanka tea exports with a quantity of 34.2 Mn kg, up 5% on the previous year. This is a relatively low value market with a FOB value of USD 4.41 per kg for the year. Russia follows with a welcome increase of 10% to 24.9 Mn kg from 22.6 Mn kg. Increased transhipment to UAE had quantities rise 14% YoY to 21.1 Mn kg. Exports to and through Turkey declined sharply from 30.4 Mn kg in 2023 to 17.7 Mn kg last year. China records a marginal loss of 6% to 11.5 Mn kg and is followed by Azerbaijan 10.4 Mn kg. Iran absorbed much more tea thanks to its trade deal with Sri Lanka and has increased direct imports sharply by 60% from 6.5 Mn kg to 10.4 Mn kg. Exports to Libya have slipped to 10.2 Mn kg.
Saudi Arabia, a critical high value market whose approximate FOB per kg is $ 7.83, increased its imports sharply by 30% from 7 Mn kg to 9 Mn kg in 2024. Chile makes up the top 10 with an increased quantity of 8.3 Mn kg from 7.3 in the year 2023.
Asia Siyaka said prospects are bright for 2025 with ley markets at peace. It said the Middle East and North Africa absorbs 50% of all Sri Lanka’s tea exports and many of these countries have had difficult political and economic conditions that have reduced their capacity to purchase volumes required and pay a premium for quality that they were used to over the years. Similarly, Russia/CIS absorbed 11% of all exports in 2024.
Syria which was under sanctions for many years is on its way to integration with the world following regime change. This country is a long-standing supporter of Ceylon Tea and imported 7.4 Mn kg in 2024. In better days Syria imported up to 30 Mn kg of Ceylon Tea with Sri Lanka totally dominating the market.
While Libya has the potential for economic growth in 2025, achieving this depends on resolving political disputes, ensuring stable oil production, and successfully implementing economic reforms. Economically, Libya remains heavily dependent on its oil and gas sector, which constitutes a significant portion of its GDP and government revenue. The International Monetary Fund projects a real GDP growth of 13.7% in 2025.
Libya purchased 10 Mn kg in 2024 at a low FOB of $ 3.96. Sri Lanka will look to a higher value per kilo whilst increasing quantity.
“We are optimistic that the recent ceasefire holds. Whilst this is not a major market for tea, peace will go a long way to reduce the costs of doing business in many countries, that have ultimately been passed on to consumers and reduced prices to tea producers,” Asia Siyaka Commodities said.
Sri Lanka’s tea-for-oil debt agreement with Iran continues to operate despite some logistical issues. In 2024 direct imports by Iran was 10.4 Mn kg up from 6.5 Mn kg the year before. This agreement is likely to continue throughout 2025 unless undermined by unexpected sources. Iran has a strong appetite for Ceylon Tea and has absorbed more than 25 Mn kg in the past.
Russia’s political and economic prospects for 2025 are marked by significant challenges. Politically, the nation is navigating a shifting global landscape, seeking to bolster alliances to counteract Western pressures. Economically, internal factors like labour shortages and inflation, compounded by external pressures from sanctions.
“Sri Lanka exported 24.9 Mn kg to Russia in 2024, 10% more than 22.6 in 2023, but at a relatively low FOB of $ 5.81 per kg. Should the war with Ukraine end, there will be potential for a value and quantity increases not just to Russia but Ukraine as well,” Asia Siyaka added.
