Sri Lanka’s iconic Ceylon tea sector, a lifeline for hundreds of thousands of rural families, is under severe strain as skyrocketing costs and plummeting leaf prices push smallholders to the brink of abandonment.
More than 400,000 smallholder farmers who produce the bulk of Sri Lanka’s famous brew are grappling with unsustainable economics. In districts like Badulla, over 30,000 tea smallholders report operating at heavy losses, with many contemplating abandoning their plantations altogether.
The story is one of squeezed margins: raw leaf prices have tumbled while labour, fertilizer, and other input costs have surged. Successive governments’ failure to deliver consistent support, particularly fertilizer subsidies, has left families who rely on tea as their primary livelihood in despair. Broader industry challenges – including climate vulnerabilities, labour shortages, global market competition, and recent geopolitical disruptions from Middle East conflicts – exacerbate the plight.
The Ground Reality: Voices from Badulla
Anura Jayawardene, a smallholder from Pugahakumbura with two acres of tea, paints a grim picture. “The cost of labour has shot up to Rs. 1,600 per day with meals for a tea plucker. A bag of fertilizer now costs Rs. 15,000. We get paid about Rs. 150 per kilo of raw leaves, which doesn’t even cover costs. I spend around Rs. 150,000 on fertilizer alone for my small plot. It’s unbearable.”
Similar sentiments echo across the region. M.D. Karunawathie from Ambagamuwa in Ella blames authorities for neglect. “We are sick of this trade due to the losses. The price of raw leaves has declined while maintenance costs have skyrocketed. Unlike coconut growers, we get no fertilizer subsidy. We are compelled to abandon tea cultivation.”
D.M. Karunapala in Badulla notes the sharp drop in leaf prices from Rs. 210 to as low as Rs. 140 per kilo. He recalls a time when subsidies existed under previous governments, now suspended, leaving farmers exposed to alarming fertilizer price hikes. Many fear their lands will revert to jungle if no relief comes.
Systemic Issues and Alleged Malpractices
Beyond input costs, smallholders highlight other grievances. Singaram Nadarajah from Ballaketuwa points to manipulated weighing scales at factories that underreport leaf weight, further eroding earnings. Prices he once received at Rs. 250 per kilo have fallen sharply, compounding losses from inconsistent fertilizer application and poor yields.
Dulith Asoka, Assistant Director of the Weights and Measures Standardising Service in Badulla, acknowledges the problem. Several cases of fraudulent scales have led to court fines, and he urges farmers to report irregularities. However, trust in the supply chain remains eroded.
These local issues sit within larger structural problems. Sri Lanka’s tea smallholders, who manage much of the low-grown and medium-grown areas, face aging bushes, low replanting rates (often below 1 per cent annually versus a 2 per cent target), and limited access to high-yielding varieties. Replanting is costly and involves a multi-year income gap, deterring many, especially poorer farmers.
Labour shortages are acute as youth migrate to better opportunities, driving up wages. Climate change brings erratic rainfall, rising temperatures, and increased pest pressures, reducing productivity. Global competition from lower-cost producers like Kenya and India adds price pressure.
Broader Industry Headwinds
Recent geopolitical events have intensified the pain. Conflicts in the Middle East, a key market absorbing nearly half of Sri Lanka’s tea exports, have disrupted shipping, raised fuel and energy costs, and slashed export earnings. In early 2026, tea export revenues dropped significantly, with factories facing closures due to financial strain and quality enforcement.
Despite projections for 290–300 million kg production in 2026, supported by some replanting and mechanization efforts, smallholders feel the benefits are uneven. Government initiatives like QR-code fertilizer subsidies have been introduced or expanded in some areas, but many in regions like Badulla report they remain inaccessible or insufficient.
Economic and Social Stakes
Tea remains vital to Sri Lanka’s economy, contributing to export earnings, rural employment, and foreign exchange. The smallholder sector is particularly crucial, supporting millions directly and indirectly. Yet, persistent losses risk widespread abandonment, land conversion to other crops, and rural depopulation.
Women, who form a large part of the plucking workforce, face heightened vulnerability. Families report shifting to firewood for cooking amid rising energy costs, signalling deeper household stress.
Environmental concerns loom large too. Neglected or abandoned plantations could lead to soil degradation, biodiversity loss, and reduced carbon sequestration in tea-growing regions.
Path Forward: Calls for Action
Smallholders and industry voices call for immediate interventions: restored and expanded fertilizer subsidies, fair weighing practices with better oversight, affordable credit for replanting, and mechanization support to address labour shortages. Training in sustainable practices, climate-resilient varieties, and better market linkages could help.
Experts emphasise a holistic approach addressing the “4Cs” – Climate, Cost, Compliance, and Capacity. Certification for premium markets, value addition, and diversification (e.g., tourism or intercropping) offer potential lifelines, but require investment and policy consistency.
The Tea Small Holdings Development Authority (TSHDA) and Sri Lanka Tea Board have roles to play in extension services, input support, and promotion. Recent celebrations of smallholder resilience on International Tea Day highlight pockets of progress, but ground-level despair suggests more urgent action is needed.
A Critical Juncture for Ceylon Tea
As global demand for quality, sustainable tea grows, Sri Lanka’s smallholders – guardians of the Ceylon legacy – stand at a crossroads. Without targeted support, the human and economic cost could be immense: lost livelihoods, declining production quality, and erosion of a cultural and economic icon.
Tea growers call on policymakers, industry stakeholders, and international partners to act decisively. As one small tea grower said, “The future of Ceylon tea depends not just on its renowned flavour, but on ensuring those who cultivate it can sustain their lives and lands.”
