Depleted soil, aging plants, and five decades of dependence on chemical fertilizers make Sri Lanka a good test as to whether organic production can be the norm nationwide. But a weakening economy also weakens government’s resolve to enforce a ban on chemical fertilizers, herbicides, weedicides, and pesticides. Photo of Kandy tea gardens in the morning light by Luboslav Ivanko | Dreamstime.com
Sri Lanka began September under a government-declared state of economic emergency, rationing goods amid a foreign exchange crisis that will likely require a bailout from the International Monetary Fund. President Gotabaya Rajapaksa relies on the tea industry to help generate funds essential to meet almost $4 billion in bond payments due in 2022.
Tea growers are making a valiant effort to meet those expectations. Exports in August totaled 25.5 million kilos, a 3.5 million increase over August 2020. Cumulative production through August is 212 million kilos, up 32 million kilos compared to last year, according to the Tea Exporters Association of Sri Lanka.
At export prices approaching $5 per kilo during the past several years, Sri Lanka earned $1.2 billion annually. In August, the average FOB value was SLRs 927 ($4.64) per kilo. Still, the January-August average is SLRs 858 per kilo, down from the January-December 2019 average of SLRs 822 (a record average at that time).
Sri Lanka retains its rank as third among the tea exporting nations by value, but International Trade Center statistics reported on the World Top Exports website show an 18.3% decline in value in 2020 to $712.3 million in vital foreign currency. The Sri Lankan rupee depreciated 9% against the US dollar to soften the impact of the decline to 10% of total tea exports but offers no solace to foreign debtors.
In contrast, Kenya earned $1.1 billion in 2020, down only 0.4% compared to pre-pandemic 2018-19, and China exported $2 billion worth of tea, accounting for 28.7% of total tea exports. Kenya exports are virtually all black tea, so it gained market share at Sri Lanka's expense and now accounts for 15.6% of the total global value. Indian tea exports, which rank fourth globally by value at $624.6 million, declined 17.7% in 2020.
Local Demand Down
Tea tourism is popular in Sri Lanka, and sales at tourist destinations like Kandy are significant. In addition, restaurants and cafes serving tourists in every part of the island invariably offer tea to reflect the nation's pride in the industry. In 2020 Covid-19 closures virtually eliminated tourism as in-bound flights ceased following a year-long decline dating to the Easter Sunday bombings in April 2019.
The Delta spike reached a seven-day peak of 6,000 new cases in August, but Sri Lanka fared much better than India, where the spring toll in lives was horrific. The vaccination rate approached 60% in September, and several international flights arrive daily as winter nears. Still, a recent report by Bloomberg asks: “Will it be enough, though, to make up for a 99.6% drop in tourism earnings from the pre-pandemic level? Clearly not.”
Sri Lanka briefly reversed its ban in August over concerns expressed by food growers who will have depleted the nation's supply of synthetic fertilizers by October. The entire agriculture segment is racing to harvest cover crops for compost and importing certified organic cow dung, but it takes far more organic material by volume to replenish nitrogen. There simply has not been sufficient time to replace synthetic applications since May, when the ban was imposed. Vegetable growers experiencing lower yields cannot replenish stocks, leading to shortages. Rice growers are organizing protests due to a lack of urea fertilizers.
The Straits Times reports that “Urea fertilizer, which will remain banned, is widely used in the $1.25 billion (SLRs $1.69 billion) tea industry - the country's biggest export - as well as in the farming of rice, the staple food.”
Herman Gunaratne, a tea grower and member of the presidential committee guiding the transition to organic cultivation, predicts the sudden shift will have “catastrophic” consequences. Gunaratne, who was dismissed from the committee after voicing his concerns publicly, told AFP, "We risk losing our international markets for tea."