By: Staff Writer

April 08, Colombo (LNW): Sri Lanka’s tea industry recorded a slight rebound in March 2025, with the National Sales Average (NSA) reaching Rs. 1,183.76 ($4.02), reflecting an increase of Rs. 14.83 and $0.06 compared to February. While this offers a glimmer of hope for the sector, year-on-year comparisons still show a downward trend, as the March 2024 NSA stood significantly higher at Rs. 1,296.48 ($4.27).

Despite the seasonal challenges, industry analysts see the March figures as a sign of stability in an otherwise volatile market.

Tight Global Supply Supports Price Trends

A combination of factors is shaping the global tea market this year. The consistent decline in Sri Lankan tea output over recent years, along with India’s production shortfall in 2024, has created a tighter supply of orthodox large leaf teas.

Additionally, the first quarter is traditionally a low cropping period across most tea-producing nations. However, Sri Lanka benefits from its Western quality season during this time, which helps support stronger prices. Market watchers anticipate that prices may remain firm through the first quarter and possibly into the early part of the second quarter, depending on how global supply levels unfold.

Exchange Rate and Policy Changes to Influence Pricing

The strength of the Sri Lankan Rupee (LKR) against the US Dollar (USD) remains a critical factor influencing domestic tea prices. With the government planning to gradually lift restrictions on imports—particularly vehicles—currency fluctuations could have a noticeable impact on the industry’s profitability.

Cautious Optimism for 2025 Output

Despite facing ongoing challenges such as climate variability, higher input costs, labour wage pressures, and government regulations on fertiliser, the Sri Lankan tea sector is cautiously optimistic. Industry estimates project a total annual output of around 280 million kilograms in 2025.

Key Markets and Sustainability in Focus

Modest growth is expected in the global tea trade this year, with India and China continuing to present strong demand opportunities. However, weather unpredictability and economic pressures are likely to influence performance. Quality assurance and sustainability practices will remain vital for Sri Lanka to maintain a competitive edge.

Monthly and Regional Price Movements

In March, High Grown teas posted a month-on-month increase of Rs. 39.28 ($0.14), though still fell short of 2024’s levels by Rs. 96.94 ($0.20). Medium Grown teas rose by Rs. 28.02 ($0.10) from February but recorded a drop of Rs. 117.07 ($0.28) year-on-year. Low Grown teas gained Rs. 10.82 ($0.05) compared to the previous month, yet experienced a significant annual decline of Rs. 121.00 ($0.27).

 Overall, all regions reported lower prices for the January–March period compared to the same period in 2024, with High Grown teas being the only elevation to show slight strength in USD terms.