Plantation industry seeks urgent attention to tackle current problems
View(s):The Planters’ Association of Ceylon (PA), the apex body of Sri Lanka’s Plantation industry, has called for an urgent review and streamlining of the industry’s cost structures in light of the unprecedented crisis in West Asia and the Strait of Hormuz.
Currently, approximately 45 per cent of Sri Lanka’s total annual tea exports – equivalent to approximately US$680 million of Sri Lanka’s total $1.5 billion tea export revenue – is generated from West Asian markets across Iran, Iraq, UAE, and Saudi Arabia, the PA said in a media release.
Given the critical nature of these market for Pure Ceylon Tea, the PA noted with concern that the combination of supply and demand side constraints emerging since the start of the year are creating unprecedented and existential challenges for the entire plantation industry – spanning Regional Plantation Companies (RPCs) and smallholders across tea and rubber.
Currently, wages account for nearly 70 per cent of the total Cost of Production (COP) in tea and rubber. Input material costs such as Fuel, Fertiliser, Chemicals, Firewood, Packing Materials and other physical goods account for the rest of the COP.
Until the most recent wage hike which came into effect from January 2026, plantation sector wages had been a perennially contentious challenge for the industry.
While RPCs had always agreed in principle with the need to increase worker wages, the industry had consistently called for financially sustainable mechanisms for implementing wage hikes, in light of the significantly higher costs of production, and lower rates of productivity prevalent across Sri Lanka’s plantation industry.
Over the past decade, the Sri Lankan plantation industry has endured various crisis situations. These were caused by ad hoc decisions of previous governments on fertilizer, agri-chemicals and crop diversification. They were followed by disruptions arising out of the COVID lockdowns, 2022 economic crisis, and most recently, Cyclone Ditwah. Each of these events has already taken a significant toll on Sri Lankan plantations.
Combined with continuous increases to the cost of production, and within it the cost of wages, the entire plantation sector is experiencing unprecedented strain.
In light of these converging pressures, the PA calls for coordinated action across several priority areas including but not limited to emergency measures to secure fertiliser stocks, establishment of working capital support – particularly for smallholders, strategic management and storage of unsold stocks and an accelerated effort to diversify markets where Ceylon Tea’s premium positioning can command higher margins.
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