An Analysis of trade dynamics of Sri Lankan tea exports

Abstract

Tea exports significantly contribute to the Sri Lankan economy since it is one of the major agricultural export crops in this island nation. Even though Sri Lanka is one of the leading tea exporting nations in the world, the percentage share of Ceylon tea in the global tea market has been gradually decreased over the years. With this background, this study aims to comprehensively investigate the growth patterns, instability, influential factors, and future predictions of tea exports to propose recommendations to improve the tea export industry in Sri Lanka. Secondary data were mainly used in this study. The Compound Annual Growth Rate Analysis was employed to measure growth rates in production and exports of Sri Lankan tea while instability in production and export indicators of tea in Sri Lanka were calculated by using Cuddy Della Valle Index. The Sri Lankan tea export quantity was modelled and predicted by applying forecasting techniques as Seasonal Autoregressive Integrated Moving Average, Gaussian Hidden Markov Model, and Multilayer Perceptron. Sri Lankan tea exports has shown negative growth while tea export value has depicted positive growth during the period from 2011 to 2022. In the same time Iraq was the most stable market for Sri Lankan tea exports. The comparison of the prediction accuracy of various forecasting techniques in tea export quantity prediction was revealed that the Multilayer Perceptron was performed better than other techniques employed in this study. Tea export types as bulk tea, tea packets, and tea bags as well as year majorly affect on the future predictions of Sri Lankan tea export quantity in order to the data series which was applied for this study. The study findings will be useful for researchers, policy makers, exporters, and other relevant authorities. Further research efforts are recommended to do for tea export prices and earnings.