Continuing political turmoil in the Middle East has badly hit Sri Lanka’s tea exports.
A whopping 78 per cent of Sri Lanka’s annual tea exports of 300 million kilos are sent to Iran, Iraq, Syria and Libya both in bulk and value-added form, but only 55 million kilos (or 30 per cent of the total exports) has been sent for the first six months of this year, tea export officials said.
Malik Fernando, Director of a leading tea firm in Colombo, said yesterday that shipments had no access to ports in Libya and Syria – countries which were in turmoil.
He said economic sanctions on Iran had also added to the crisis. “Exporters receive their payments from Iran through a different channel arranged by a local commercial bank,” he pointed out.
Sri Lanka Tea Board Tea Promotion Division Director Hasitha de Alwis admitted that there was a decline in exports to the Middle East. “It has gone from bad to worse in the past six months,” he said pointing out that crisis-hit Syria was the fourth largest buyer of Sri Lanka’s tea. He said a ten million kilogramme market in Libya had also been hit.
Until 1990 Sri Lanka was the major supplier of tea to Iraq, providing 65 per cent of that country’s demand.
At present, more than 90 per cent of Sri Lanka’s exports to Iraq consist of tea but the Sri Lanka-Iraq tea trade is beset by allegations that some tea export companies are adulterating and mislabelling the product at trans-shipment points while on the way to Iraq.
The tea industry was experiencing the effects of US sanctions on Iran with banks being cautious in accepting Letters of Credit (LCs).This matter is being settled to some extent with the intervention of the Central Bank and the Bank of Ceylon, Mr Alwis said.
Iran is one of Sri Lanka’s biggest tea markets with the last two years’ shipments amounting to more than 28 million kilos worth around Rs. 15.6 billion. Purchases by Iran in the first quarter of this year ranked the second highest with 8.15 million kilos, up by 36% over the corresponding period last year.
BoC Chairman Gamini Wickremasinghe said there was a difficulty for Sri Lankan exporters in getting their money through the banks in the Middle East due to sanctions and the turmoil in some countries in the region. This issue had been brought under control to some extent with the involvement of the BoC.
He said the BoC was the only bank which stepped in to find redress for Sri Lankan tea exporters.
However, he said that exporters should find other markets in the face of turmoil in the Middle East rather than depending on traditional markets for tea.