The easing of sanctions on Iran will deliver a much needed pick-me-up to Sri Lanka’s troubled tea industry by allowing the resumption of direct exports to one of its main markets, the government said Wednesday.
Although tea was not on the list of products banned from being exported to Iran over its nuclear program, restrictions on banking meant exporters had to go through risky and expensive channels to be paid.
But as part of the deal agreed on Tuesday with major powers, the currency restrictions are being lifted, effectively allowing the Islamic Republic to resume free trade with countries such as Sri Lanka.
“Direct exports to Iran will mean a better deal for our producers. This is very welcome,” said Sri Lankan Finance Minister Ravi Karunanayake.
“Our tea industry has been going through a very difficult patch last year. Opening up of the Iran market will be a big boost,” he told reporters. Before the restrictions on banking put the squeeze on exports, Iran was the largest overseas market for Sri Lanka’s trademark Ceylon brew.
And even after those restrictions began being rolled out in 2008, more than 30 million kilos (66 million pounds) of Sri Lankan tea were sold to Iran.
Industry bosses say the number of exports to Iran could now double, which would be a fillip to a sector that has been hit by a global glut of tea and an increase in the domestic costs of production.
“With sanctions gone, there is a potential to double our tea exports to Iran,” said Anil Cooke, chief executive officer of the Sri Lankan tea firm Asia Siyaka Commodities.
He said a majority of tea growers in Sri Lanka will see better demand for their produce while Iranian consumers will also benefit thanks to lower intervention costs in directly importing Ceylon tea.