New markets will be boon to tea industry

New markets will be boon to tea industry

Kochi: Indian tea exports are set to see new destinations and earn better prices despite the closure of the Iraq market that accounted for about 20% or 42 million kg worth of exports—the highest by a single country.

India’s total tea exports stood at 203.86 million kg in 2006. With payments not coming from Iraq for the exported tea, traders are unwilling to send additional shipments to Iraq.

Egypt is emerging as a big market ever since the government started buying tea for public distribution from outside the Common Markets of Eastern and Southern Africa (Comesa)—a trade organization of countries in the region—from March this year.

It has signed contracts for importing around 2.3 million kg of tea from a string of Indian firms including The State Trading Corp. of India Ltd, Jay Shree Tea & Industries Ltd, Siewert and Dholakia Pvt. Ltd and Harrisons Malayalam Ltd. The industry expects exports to nearly double to 5 million kg from 2.72 million kg last year. Russia and neighbouring countries such as Kazakhastan, Ukraine, Uzbekistan and Iran are expected to be the next big markets for high-quality orthodox variety tea.

Russia, Ukraine, Kazakhastan, Uzbekistan and Iran are expected to be the next big markets for high-quality orthodox variety teaBasudev Banerjee, chairman of the government trade promotion body Tea Board, said that with the Egyptian government deciding early in March to source at least 6 million kg tea from outside Comesa, the future of tea exports from India was bright.

Earlier, Egypt used to source most of its 80 million kg tea from Kenya. India lost the market, where there was a 50% duty levied on tea imported from outside of Comesa countries, in the late 1990s. However, with the duty reduced to 5% early this year, India stands a good chance of regaining a foothold in the market, Banerjee added.

He said he was not aware of any quality issues in the Iraq market and the embargo on additional tea shipments was because of non-payment of bills. The Tea Board had recently taken up the matter with Iraqi embassy officials and a few payments had started trickling in after the follow-up action.

S. Sriram, leading tea auctioneer and director of Contemporary Tea at Coimbatore, Tamil Nadu, said Iraq was earlier sourcing cheap tea from Vietnam but non-payment of bills by Iraqi trade agencies had dissuaded the country from doing business with them. Sriram said it was always better to export high- quality tea to other destinations such as Egypt, Russia and Iran because the product got better prices in those nations.

According to Rajeev Dholokia, director of Seiwert and Dholakia, a new tender expected to be floated by Egypt in October should see more Indian teas, especially the CTC (cut, tear, curl) variety, from South India making their way to Egypt.

However, D.P. Maheswari, vice-president of United Planters Association of South India (Upasi), said there will be a drop in exports this year since Kenya may not import tea this year because the country was witnessing a good crop after last year’s drought.

India exported 8.5 million kg of tea to Kenya last year.

Besides, Pakistan may depend on Kenya and Bangladesh for tea and Indian tea export to Pakistan may drop to less than 10 million kg this year—down from 16 million kg last year.

The Egyptian market can compensate for the decline in exports to Pakistan and Kenya to a large extent.

Banerjee said Russian firms are showing interest for Indian tea. Officials of St. Petersburg-based Orimi Trade Ltd, which imports around 14 million kg—highest among Russian firms, had evinced keen interest in Indian orthodox tea.