Current issues in the farm sector of the tea industry in Sri Lanka

Sri Lanka is a leading tea producer and exporter. The contribution of the tea industry to the country’s GDP, foreign exchange earnings and employment is sizable. However, its’ international competitiveness and domestic growth are threatened presently because of strong competition from emerging tea producers and exporters, and performance-related factors in the value chain and in the farm sector. Pressing issues in the farm sector are related to labour availability, high production costs, restrictive government policies, climate change and a lack of entrepreneurial tendencies. They relate to both private and estate growers and they have led to serious adverse consequences for production in the sector. Farm-level decision-making in the green leaf production sector as a response to the emerging issues shows a reluctance by both smallholders and estate managers/company management to reinvest in their tea cultivations. This is more common in the estate sector, where reinvestment in essential field activities that are capital and labour-intensive, such as in-filling, replanting and new planting, are not done or are delayed. The same fate happens to other investment projects such as soil conservation, rehabilitation, and infrastructure development that directly and indirectly affect productivity. Accordingly, areas under cultivation are decreasing, and production is declining