Tea factories face financial disruption
Sri Lanka’s tea industry is facing a number of factory closures as authorities are clamping down on adulterated teas from reaching the market while some others are closing due to financial constraints.
The Sri Lanka Tea Board did not disclose the number of factories closed or whose operations have been suspended. It is learnt that lately a large number of factories have been sealed by the authorities in a bid to ensure that Sri Lanka continues to retain its tea standards in the global market. In fact teas are being randomly checked prior to being sold at the Colombo tea auctions every week, it is learnt. Sri Lanka Tea Factory Owners Association Chairman Lionel Herath said that in 2025 alone there were about eight factory closures carried out by the authorities due to adulterated teas and their licences temporarily suspended. This was more than closures in the past.
Mr. Herath pointed out that in sticking to the prescribed payment formula for tea, the decline in production lately has led to factory owners being compelled to pay more than the formula and as a result face financial problems leading to factory closures.
Asia Siyaka Managing Director Anil Cooke explained that tea factory owners have been plagued with low production quantities ever since the fertiliser crisis hit the industry compelling them to cultivate without the required fertilisers. As a result the recovery of the tea crop has been slow resulting in a decline in the production quantities with annual volumes at around 250-260 million kgs.
He noted that despite the drop in volumes the same number of factories clamours to obtain the teas and as a result the factories are paying extra to obtain more teas.
In addition, the industry is currently facing low prices due to the appreciation of the rupee and the break out of wars in some of the key markets.
And with the surging costs of production and the increasing wages the industry’s factories are facing financial crisis.
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