Despite its historic reputation for premium tea, spices, and coconuts, Sri Lanka’s agricultural exports sector faces mounting challenges as it struggles to keep pace with global advancements.
While the nation earned $ 16 billion in export revenue in 2024, experts warn that reliance on traditional practices and delayed adoption of modern technologies could hinder long-term competitiveness. Labour shortages, ageing crops, climate change, and rising production costs compound the problem, leaving Sri Lanka at risk of falling behind leading producers like Kenya, India, and China.
According to the latest Government statistics, Sri Lanka’s export crop sector recorded tea revenues exceeding $ 1.3 billion, with expectations to reach $ 1.5 billion, contributing to the overall export revenue of $ 16 billion last year.
Spices, including cinnamon, pepper, and cardamom, generated $ 414 million, while rubber exports accounted for $ 850 million by last November. Vegetables earned $ 26 million and fruits and nuts recorded earnings of $ 37.9 million.
Against this backdrop, Export Development Board (EDB) Chairman and CEO Mangala Wijesinghe told The Sunday Morning that Sri Lanka was targeting an overall export revenue growth of 8-10%, driven by increasing global demand for its tea and spices.
He also stressed that the country’s reputation for premium-quality agricultural products continued to be its most significant strength.
Scientific basis
Meanwhile, elaborating further on the country’s agricultural exports, University of Peradeniya (UOP) Senior Professor in Crop Science Buddhi Marambe said: “Even in export agriculture, varietal development has taken place over the years to meet both quantity and quality standards required by importing countries. This development has altered the genetic makeup of plant materials, increasing their reliance on external inputs like fertilisers and pesticides.
“However, the use of external inputs does not inherently lower product quality. The timing of input applications and adherence to guidelines, such as waiting periods after pesticide use, ensure quality.”
“There is also significant demand for traditionally cultivated products. Low-input systems tend to yield smaller quantities, but these products fetch higher prices in niche markets. Consumers value traditional practices for their environmental benefits and cultural significance. Therefore, the focus in export agriculture can either be on improving yield using modern methods or marketing traditionally cultivated products, depending on the target market and strategy,” he stated.
When asked if modern technology was more harmful than traditional methods, he disagreed. “Modern technologies are built on long-term research and scientific recommendations. Problems arise when technologies are misused. Traditional and modern practices serve different purposes, and when modern technologies are used as recommended, they ensure both product quality and quantity,” he responded.
Tea industry
The tea industry has been a hallmark of Sri Lanka’s global identity for over a century. However, according to Deputy Minister of Food Security R.M. Jayawardana, the sector is at a crossroads.
“We have initiated discussions and called for suggestions regarding tea exports, but no final decision has been made yet. The ministry will consult the Sri Lanka Tea Board (SLTB) and take necessary action accordingly,” Jayawardana stated.
Key strategies under consideration include transitioning from traditional hand-plucking methods to mechanical tea harvesting and replanting ageing or dying tea bushes. Jayawardana emphasised that these efforts aimed to enhance productivity while maintaining the quality of Ceylon Tea, a brand synonymous with excellence worldwide.
SLTB Chairman Raaj Obeyesekere said: “In 2024, we performed better than 2023 by approximately six million kilos in production. This includes 55.2 million kg of high grown tea, 47.6 million kg of medium grown tea, and 158.8 million kg of low grown tea, forming a total of approximately 262 million kg. This year we aim to target a production of 275-280 million kg,” he said.
He further claimed that Sri Lanka was capable of sustaining higher production levels. “Domestic consumption is steady, so any additional production is available for export. However, increased production must align with market demand and pricing to prevent any oversupply issues,” Obeyesekere said.
When questioned about the issues faced by tea plantations, he claimed that the most pressing challenge was labour shortage. “To address this, we are gradually transitioning to mechanisation. Mechanised plucking is being encouraged, although it is not a straightforward process as we have traditionally relied on manual labour. Currently, the lack of labour has reduced the number of plucking rounds from four to two in some areas,” he said.
Obeyesekere also emphasised the reality of Sri Lanka’s ageing tea bushes. “Many bushes are past their prime, reducing yield. Replanting is crucial but costly and time-consuming, which may discourage many in the industry, especially smallholders who comprise about 75% of tea producers and who rely on their tea crop for monthly income. Still, we need to start from somewhere and we have already started,” he said.
Explaining the financial constraints, he said: “Replanting requires substantial investment, estimated at around Rs. 30 billion annually for effective implementation. The issue is lack of funds and this is not a problem confined to us alone, but impacts all of Sri Lanka. We plan to obtain funds even from outside and do what is necessary.”
When asked if Sri Lanka would compete with other top global producers, such as Kenya, India and China, Obeyesekere claimed otherwise.
“Sri Lankan tea is priced higher than tea from Kenya, India, and China, with a Free on Board (FOB) price roughly $ 2 higher per kilo. While Kenya produces 550-600 million kg annually, their prices are lower. This is because our cost of production is high. Sri Lanka focuses on quality, although quantity is also important in bringing in revenue,” he explained.
Spice industry
Sri Lanka’s spice industry, particularly cinnamon and pepper, has historically been a lucrative export sector. However, the market dynamics for spices differ significantly from tea, as Deputy Minister Jayawardana noted.
“Spices are sold through auctions, so the ministry cannot directly influence market prices or trends. At this point, we are not in a position to make specific decisions regarding this sector,” he said.
Prof. Marambe stated that Sri Lanka had incredible potential in exporting spices. “There is high demand for Sri Lanka’s cinnamon, which is unique to the country. Unfortunately, we have not capitalised on this as we should have.
“The European Union granted Sri Lanka a Geographical Indication (GI) status for Cinnamomum zeylanicum, recognising its distinct characteristics compared to cassia cinnamon, such as its pungency and lower coumarin content.
“Sri Lanka should prioritise spices like cinnamon, which hold significant export potential. Leveraging modern technologies for cultivation, harvesting, and processing can further enhance their marketability and global competitiveness,” he said.
Coconut industry
The coconut industry represents another critical pillar of Sri Lanka’s agricultural exports, but it too is grappling with unique challenges.
According to Prof. Marambe, with an annual requirement of 3,000 million nuts to meet both domestic and export demands, the country fell short in 2024, producing only 2,680 million nuts. This shortfall has raised concerns over the sustainability of the sector, particularly as the shortage affects both local consumption and export markets.
Prof. Marambe highlighted the multifaceted issues plaguing the coconut sector. Chief among them is the Government’s previous fertiliser ban and subsequent price hikes, which have had a crippling effect on growers.
“The price of a 50 kg mixed fertiliser bag skyrocketed from Rs. 1,500 to Rs. 12,000, making it unaffordable for most farmers. As a result, only about 10% of coconut plantations received adequate fertiliser,” Prof. Marambe explained. This lack of proper nutrition has led to diminished yields.
“Adding to the woes is the increasing prevalence of pests such as whiteflies, which have wreaked havoc on coconut plantations. These insects drain nutrients from the trees and transmit diseases, leaving leaves yellow and trees weakened. Wildlife damage such as by toque macaque attacks, particularly in areas like Kegalle and Hambantota, has further reduced the output of coconuts,” he explained.
Climate change has also emerged as a significant threat, according to Prof. Marambe. “Droughts and floods are impacting coconut production, although the effects are often felt a year later due to the perennial nature of the crop,” he said. These erratic weather patterns, combined with long-term environmental shifts, pose a severe challenge to the resilience of coconut farming in Sri Lanka.
Exacerbating the problem is the increase in coconut exports. “Between January and November 2024, export earnings from coconut products surged by 20% compared to the same period in 2023. While this growth has contributed positively to the nation’s export revenue, it has also led to reduced availability for local consumers, driving up prices and creating shortages in the domestic market,” Prof. Marambe explained.
The challenges faced by the coconut industry underscore the need for a comprehensive approach to address both short-term and long-term issues.
Deputy Minister Jayawardana provided a detailed overview of the situation, explaining that while production and exports had increased in recent years, this growth had strained local supply chains. “The shortage in the local market has caused coconut prices to remain high, exceeding Rs. 200 in rural areas,” he explained.
To address these issues, the ministry has adopted a multifaceted approach. The first of these is to provide fertiliser subsidies to encourage farmers to boost production.
The second, according to Jayawardana, is to allocate approximately 8,000 acres of Coconut Development Board-owned land for local consumption rather than auctioning it off, thereby curbing exports that exacerbate local shortages.
Thirdly, the Government intends to expand replanting efforts across 40,000 acres. However, Jayawardana acknowledged: “This strategy requires patience, as it takes up to five years for the new trees to mature and bear fruit.”
In the interim, the ministry is considering importing coconuts for use in factories producing coconut-based products to meet local demand without jeopardising the export market.
State initiatives to boost export crops
Both EDB Chair Wijesinghe and Deputy Minister Jayawardana outlined several Government initiatives aimed at bolstering the export crop sector.
Jayawardana said: “The Government has earmarked significant investments in modern irrigation systems and training programmes for farmers. These efforts are designed to boost productivity and ensure that export crops meet the highest quality standards.”
He emphasised the importance of innovation in the export crops sector, stating: “We are encouraging farmers to adopt integrated pest management systems and organic farming techniques. These measures not only enhance the quality of spices but also align with global trends favouring sustainable and eco-friendly products.”
Financial support has been a key focus, with low-interest loans and grants introduced to help farmers invest in modern equipment and adopt sustainable farming practices. Infrastructure development is also underway, including investments in advanced irrigation systems and post-harvest facilities, aimed at reducing crop losses and boosting productivity.
To empower farmers further, comprehensive training programmes are being conducted, equipping them with the necessary knowledge and skills to adopt modern agricultural techniques. Additionally, the Government is prioritising market diversification by exploring new opportunities in Africa, South America, and Central Asia to reduce dependency on traditional markets.
To facilitate easier access to international markets, the EDB has streamlined export procedures, making the process more accessible to Small and Medium-sized Enterprises (SMEs). These collective efforts underscore the Government’s commitment to strengthening the agricultural export sector.
Despite these positive developments, the sector faces challenges such as climate change, fluctuating global market conditions, and rising production costs. Deputy Minister Jayawardana acknowledged these hurdles but expressed optimism about the future.
“We are addressing these challenges through a multifaceted approach,” he said. “From investing in climate-resilient crop varieties to advancing storage facilities to negotiating favourable trade agreements, we are leaving no stone unturned in our efforts to secure a prosperous future for Sri Lanka’s agricultural exports.”