Sri Lanka’s tea industry has been severely affected by the ongoing military conflict in the Middle East, which has disrupted export shipments to the region.
Tea exporters estimate that the industry is currently losing between $10 million and $15 million in revenue per week due to the suspension of exports.
The Tea Exporters Association said exporters have confirmed orders from buyers across the Middle East but are unable to ship them due to supply chain disruptions, suspended shipping operations, and the rising risk of conflict along key maritime routes.
About 52% of Sri Lanka’s tea exports are destined for Middle Eastern markets. A significant portion of the tea supplied to these markets comes from the country’s low-grown tea-producing regions, where most of the crop is cultivated by smallholder farmers.
According to 2025 export data, Sri Lanka exported around 125 million kilograms of Ceylon tea to the Middle East, generating approximately $750 million in revenue.
Major markets in the region include Iraq, Iran, Libya, Turkey, Saudi Arabia, Syria, and the United Arab Emirates.
Tea exporters noted that shipping routes to these markets usually pass through the Strait of Hormuz and the Red Sea via the Suez Canal. Although there is no official blockade of the canal, many major global shipping lines have suspended operations along these routes due to the heightened risk of war linked to the conflict.
As a result, tea exports to the region have largely come to a standstill.
While some shipping lines resumed limited operations from March 4, freight charges have risen sharply. Freight rates have reportedly increased by about $1,800 for a 20-foot container and $3,000 for a 40-foot container.
At the same time, insurance coverage previously obtained by exporters has been cancelled due to the elevated risk associated with the shipping routes.
Exporters have also pointed to the lack of regular and scheduled vessels departing from Colombo to Middle Eastern destinations, further complicating supply arrangements.
The disruption has begun to affect the local tea market as well. Exporters are facing significant cash flow difficulties because payments for shipments already sent to the region have been delayed amid the uncertain situation.
This has limited exporters’ ability to purchase tea at auctions.
At this week’s Colombo Tea Auction, overall tea prices fell by about Rs. 50 per kilogram, while prices for low-quality tea dropped by around Rs. 75 per kilogram.
Industry stakeholders warn that if the situation continues for several more weeks, buyers may reduce their purchases due to ongoing shipping difficulties.
Such a development could directly impact the income of thousands of small tea estate owners who rely on the tea industry for their livelihoods.
Despite the current challenges, Sri Lanka’s tea export earnings showed growth earlier this year. In January 2026, the country earned $121.8 million from tea exports, reflecting a 5% increase compared to $112.7 million recorded in January 2025.
February export figures are yet to be released but are expected to be similar to or slightly higher than last year’s performance.
However, the disruption to shipments in March is expected to affect both export volumes and earnings, although the exact impact remains uncertain.
The ongoing conflict could also complicate Sri Lanka’s long-term tea trade with Iran. Data indicates that Sri Lanka has already settled about 95% of its outstanding debt to Iran through tea supplies under the ‘oil for tea’ barter agreement.
Even if the conflict eases, exporters say continuing shipments to Iran may prove difficult unless a new mechanism is established, given United States sanctions that restrict direct trade outside the barter framework.
Iran imports about 11 million kilograms of Sri Lankan tea annually under the agreement.
The crisis and its implications for the tea industry were discussed with the Minister of Plantations and Community Infrastructure during a meeting held on March 4.
Industry stakeholders have called on the government to provide support to ease the financial pressure on exporters, including measures to address cash flow difficulties and to consider absorbing part of the sharply increased freight and insurance costs.
They have also urged authorities to intervene to secure payment of approximately $50 million in outstanding dues for tea shipments already supplied to Iran under the barter arrangement.
