Tea is the country’s biggest export commodity, bringing in about US$1.3 billion annually before the current economic downturn, the worst since independence in 1948.
However, a ban on fertilizer imports last year — introduced in a doomed effort to save foreign currency and avoid a debt default — hit growers hard, with production falling 18 percent year-on-year for the period from November last year to February.
Customs data showed that first-quarter exports this year correspondingly plunged to 63.7 million kilograms, down from 69.8 million kilograms in the first quarter of last year.
The tally was the lowest since the first quarter of 1999, when the country shipped out 60.3 million kilograms of tea.
Export earnings for the first quarter also declined, to US$287 million from US$338 million.
Tea brokering firm Asia Siyaka Commodities PLC blamed the drop on the agrochemical ban, which was portrayed by the government as a push to turn Sri Lankan farming 100 percent organic.
The ban was lifted by October last year following a backlash from the industry, but farmers were left unable to access imported fertilizer as the country simultaneously ran out of US dollars.
Industry officials added that about 10 percent of Sri Lanka’s tea exports had also been affected by Russia’s invasion of Ukraine. Both countries are top buyers of the country’s aromatic black tea.
The country of 22 million lacks enough foreign currency to finance even the most essential imports such as food, fuel and medicines. Dire shortages and galloping inflation have led to widespread protests calling for Sri Lankan President Gotabaya Rajapaksa to step down.
Sri Lanka plans to replace its “unrealistic” budget and is in talks with the World Bank to extend its support by US$300 million, Sri Lankan Minister of Finance Ali Sabry said yesterday.
The country, hit hard by COVID-19 and short of revenue after steep tax cuts by Rajapaksa’s government, has sought an emergency bailout from the IMF.
“The existing budget is unrealistic, given our challenges,” Sabry told parliament. “We will bring in a new budget that will seek to address core issues of low public revenue.”
Sabry said he wanted to increase tax revenue from 8.7 percent of GDP to 14 percent within the next two years.
Sri Lanka is within the next two weeks to appoint financial and legal advisers for a proposed restructure of its sovereign debt, Sabry said, adding that the government is eager to work with the IMF on structural reforms.
“This is the only way to put the economy on a sustainable footing,” Sabry added.