📈 Tea Exports Hit by Middle East Tensions: March Volumes Drop 16%

• Overall Performance: Sri Lanka's tea exports in March 2024 fell 16% YoY to 19.7 Mnkg due to the closure of the Strait of Hormuz and regional conflict. Total 1Q exports reached 60.3 Mnkg, a 4.5% decline from 63.2 Mnkg in 2023. • Earnings & Currency: Rupee earnings remained steady at Rs. 109 Bn due to currency depreciation. However, US$ earnings hit a three-year low of US$ 351 Mn for 1Q (down 5% YoY). The average FOB value per kg dipped slightly to US$ 5.82. • Sector Breakdown: The industry showed a positive shift toward Value-Added products, rising to 59% of total exports. Tea Packets led at 44%, followed by Tea Bags (11%), Instant Tea (1.6%), and Green Tea (2%). • Top Markets & Regions: • Iraq: Remained the top buyer (8.7 Mnkg) despite a marginal dip. • Turkey: Strong growth, more than doubling to 7 Mnkg. • UAE: Steep 40% decline to 2.7 Mnkg due to Gulf trade disruptions. • Russia: Decreased 16% YoY to 5.3 Mnkg. • China/Japan: Stable trade flows with no significant disruptions reported. • Impact: Escalated freight and insurance costs, coupled with rerouting cargo, have pressured net margins for the tea sector, a vital pillar for national foreign exchange.