Tea exporters say “doing OK” amid virus storm compared to apparel, construction

• But say prolonged slowdown in supporting industries could impact
• Fear shortage of packaging materials, logistics side disruptions

By Shabiya Ali Ahlam 
Sri Lanka’s tea industry is currently coping relatively better with the ongoing coronavirus (COVID-19) storm compared to other industries, but the prolonged disruption to its support industries could negatively impact the sector, industry stakeholder said yesterday.

According to Tea Exporters Association (TEA) Chairman Sanjaya Herath, the tea industry is currently “managing well” despite a slowdown in its operational environment. However, he fears COVID-19 disruptions could hit packaging processes and shipments.

“Unlike tourism, apparel and construction sectors, which took a direct hit due to the outbreak, the tea industry is doing OK.

“As of now there are no major issues, but if the situation continues there will be a problem. The immediate impact will be on packaging as we currently get our supplies such as canisters, pins, even tape from China. The stocks are depleting fast,” Herath said.

On the logistics side, the reduction of frequencies in shipments by vessel operators has created a bottleneck. 

“The vessel operators have cut down frequencies and are consolidating cargo. Most of the containers are full due to which there is a spillover to next week,” shared the TEA chief.

Herath said companies must look at making firm bookings hereon, for every fortnight at least to ensure shipments continue to reach 
designated markets.

Issues in Sri Lanka’s key tea exports markets such as Iran and Iraq have moved up a notch due to problems in shipment clearance. 

Iraq last week announced the closing of five land borders with Iran due to the pandemic. Iran’s Customs officials were negotiating with Iraq on the need for quick customs clearance and oversight of Customs.  

Sri Lanka saw reduced demand for its tea from Russia, Iran, Iraq and Turkey last year as the countries were unable to pay up due to weaker currencies.

In the present context, Ceylon Tea is witnessing lower demand from many of its buying markets due to the current currency devaluation stemming from the virus outbreak. 

With demand for Ceylon Tea from Middle East increasing during Ramadan, TEA chief Herath said bulk of the shipments have already been dispatched whereas the remaining will leave in the coming weeks.  Ramadan this year is set to begin on April 25.    “We will have to wait and see. If the halting of operations continue, then we are likely to face some consequences,” Herath stressed. 

Sri Lanka exported 292 MnKgs of tea in 2019, which was 10 MnKgs higher compared to the exports achieved in the previous year. However, due to poor harvest, the country continued to export below 300 MnKg for the fourth consecutive year. 

Turkey, Iraq, and Russia were the top three markets for Ceylon Tea in 2019.