Israel at war: Impact on Ceylon Tea trade
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With Israel's announcement of going to war against Palestine the impact of it on Sri Lanka's trade with West Asia particularly for tea is being keenly watched should it hurt an industry that was just struggling to revive.
Despite outbreaks of internal skirmishes in the last few years, it had no impact on Colombo; but the outbreak of a war situation in Israel is now left to be seen in terms of the scale to which it will develop into, Sri Lanka Tea Board (SLTB) Chairman Niraj De Mel told the Business Times.
He noted that with all shipping routes in that direction the war scenario is likely to cause shipping lines to impose surcharges resulting in higher freight rates adding to the woes of high costs.
"This is a critical period for Sri Lanka as this is when the winter buying is happening," Mr. De Mel explained, so everybody is watching the situation.
In fact Sri Lanka just commenced this year the Iran - Sri Lanka tea for oil deal whereby exports of tea are expected to pay off the long overdue oil bills. Iran is one of the biggest buyers of
Ceylon Tea in the region.
Ceylon Tea has continued to thrive in its exports even during the Gulf war years when they had to ply on different routes and it is at times like this that smuggled routes emerge.
Meanwhile, with Palestine being a leading buyer of Ceylon Tea it is likely to be affected as their ports within Gaza will be inaccessible as a result of which they will have to channel the exports through Jordan via the West Bank over land, it was noted.
At the moment shipping lines have not notified of any surcharges but it is likely that when a war breaks out the freight cost will increase on the insurance.
Planters Association Spokesman Dr. Roshan Rajadurai said that while it is far too early to assess the impact of the outbreak of war in Israel on Ceylon Tea exports, they expect some impact.
"It's obvious it will have an impact on the oil price and it is expected that the buying pattern will slow down since Iran is one of the major buyers," he said.
Sri Lanka in the meantime, has been struggling to overcome its own issues back home since the over growth of weeds and a glyphosate ban imposed in the country a few years back that have impacted on the plant, Mr. De Mel said.
He pointed out that despite the availability of fertiliser smallholders were finding it hard to purchase these as prices have increased considerably. Smallholders' production contributes to about 70 per cent of tea exports.
And although production was expected to pick up there is a 2.5 million kg deficit in the September tea production numbers of this year compared to 2022.