The Sri Lankan government retained its monopoly on tea production and export for sixteen years. The most significant development during that period was the growth of a vast new market for Ceylon Tea in the newly affluent markets of the Middle East. From Iraq to Oman, Iran to Turkey, the demand for Sri Lanka’s most famous product expanded prodigiously. This was answered by a parallel expansion in tea production, especially in the low-grown regions of Ruhuna and Sabaragamuwa, which produce a strong, full-bodied, dark-liquoured tea that appeals to Middle Eastern tastes.
Also during this period, the industry produced its first tea bags, and by 1983, a limited degree of mechanization had been introduced in the form of CTC (‘cut, twist, curl’) machines at some factories. Export duties and ad valorem taxes on tea sales, introduced during the 1960s when the plantations were still privately owned, were abolished. However, growing administrative difficulties, labour problems and financial losses finally resulted in large-scale privatization (under a different government) in 1992-93. Although the State retained title to the plantation lands, management contracts under long leases were offered to the private sector. Another change occurring during this period was the rise of the tea smallholder. Cultivators living in tea-growing areas began to cultivate small ‘plantations’ on their own land, plucking the tea themselves and carrying it to nearby factories for sale and processing. This smallholder sector has received considerable encouragement and support from the state, and is today responsible for a very large proportion of the island’s produce.