Asia Siyaka Commodities blamed the decline on the ban on agrochemicals, a government effort to turn the country’s farms into 100% organic farms.
Sri Lanka’s tea exports have fallen to their lowest level in 23 years, official figures showed yesterday, hit by a fertilizer ban and Russia’s war on Ukraine.
Tea is the country’s main export, bringing in around $1.3 billion a year before the current economic downturn, the worst since independence in 1948.
However, a ban on fertilizer imports last year – introduced in a futile effort to save foreign currency and avoid a default – has hit growers hard, with production falling 18% year-on-year. another for the period from November last year to February.
Customs data showed exports in the first quarter of this year fell to 63.7 million kilograms from 69.8 million kilograms in the first quarter of last year.
The tally was the lowest since the first quarter of 1999, when the country shipped 60.3 million kilograms of tea.
Export earnings for the first quarter also fell from US$338 million to US$287 million.
Tea brokerage Asia Siyaka Commodities PLC blamed the decline on the agrochemical ban, which has been described by the government as an incentive to make Sri Lankan agriculture 100% organic.
The ban was lifted in October last year following a backlash from industry, but farmers were unable to access imported fertilizers as the country simultaneously ran out of US dollars.
Industry officials added that around 10% of Sri Lanka’s tea exports were also affected by Russia’s invasion of Ukraine. Both countries are the main buyers of aromatic black tea in the country.
The country of 22 million people lacks foreign currency to finance even the most essential imports such as food, fuel and medicine. Severe shortages and runaway inflation have led to widespread protests calling for the resignation of Sri Lankan President Gotabaya Rajapaksa.
Sri Lanka plans to replace its “unrealistic” budget and is in talks with the World Bank to extend its $300 million support, Sri Lankan Finance Minister Ali Sabry said yesterday.
The country, hard hit by COVID-19 and short of revenue after deep tax cuts by Rajapaksa’s government, has requested an emergency bailout from the IMF.
“The existing budget is unrealistic, given our challenges,” Sabry told parliament. “We will present a new budget that will seek to address the fundamental problems of weak government revenue.”
Sabry said he wanted to increase tax revenue from 8.7% of GDP to 14% over the next two years.
Sri Lanka is due to appoint financial and legal advisers for a sovereign debt restructuring project within the next two weeks, Sabry said, adding that the government was eager to work with the IMF on structural reforms.
“It’s the only way to put the economy on a sustainable footing,” Sabry added.
Additional Reuters reports
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