A statement from the Planters' Association, which represents listed plantation companies, said some factories had been forced to close owing to low leaf intake, depriving workers of work.
The Planters’ Association of Ceylon said the drought is the worst the country has faced since 1992, with large parts of the island's tea plantations being "devastated".
Regional Plantation Companies were facing a "drastic drop" in crop intake due to the severe drought, with output of high grown teas falling by 11.6 percent during January to August this year from a year ago, it said.
According to the Sri Lanka Tea Board, tea production in the high grown elevation during the eight month period dropped to 48.3 million kilos from 54.7 million recorded during the same period last year.
Total tea production from all three growing elevations during the period fell 3.1 percent to 214.4 million kilos from 221.1 million kilos in the same period in 2011.
"We had the last rainfall on 14th of May 2012, and subsequently a few showers in August but up to September it has been dry," said Drupatha Rodrigo, a deputy general manager in the listed Hapugastenne Plantations, one of the largest estate groups in the Uva region.
"We had to curtail work and as a result production came down by 30-40 percent during the last three months compared to the same period last year."
Rodrigo said one of their factories in the Uva region, Oodoowerre, had to be temporarily closed due to low leaf intake, resulting in factory workers being deprived of work.
Rohan Kobbekaduwa, general manager of Madulsima Plantations, which has eight estates in the Madulsima area of the Uva region, said the drought had adversely affected the company's cash flow
"The loss of crop compared to the budgeted intake is around 810,940 kilos of made tea and the approximate revenue loss is around 272 million rupees for the period January to August 2012."