Dwindling exports dampen tea markets

Kolkata: Indian tea exporters see little chance of a rise in the export of the brew in 2012 compared to last year, with the continuing Iran payment crisis and deficient rainfall in India’s North East likely to hit production.

As a result, the surplus available for trading in foreign markets could be low.

Some leading exporters of India, the world’s second largest tea producer, even fear that the total tea export might fall as a lot of producers of the brew from southern India have recently shifted to (crush-tear-and-curl process) CTC tea from orthodox (another manufacturing process that gives good flavour and aroma).[caption id=“attachment_258394” align=“alignleft” width=“380” caption=“A tea garden in Assam. Simantik Dowerah/Firstpost”]  [/caption]

This has followed a sharp fall in the export of the Orthodox variety due to the payment crisis in Iran and the political turmoil in Middle Eastern and North African countries like Libya, Syria and Egypt.

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Iran is a major consumer of high quality orthodox tea from India and imports nearly 15 million kg every year, but India’s tea exports to the country declined to about 11 million kg in 201l as sanctions imposed by the US made settling of trade payments tougher.

“As the Iran payment crisis still persists, there is less scope for export this year. I think the total tea export from the country would be hovering between 185 million kg to 190 million kg in 2012,” said Kamal Baheti, director of the world’s largest tea producer McLeod Russel.

According to Tea Board of India data, the country’s total export of the brew stood at 186.73 million kg (estimated) during 2011 as against 222.02 million kg during 2010. The sharp fall in exports to the tune of 35.3 million kg last year was despite a rise in the total output to 988.33 million kg (estimated) in 2011 from 966.40 million kg in 2010.

Exporters say despite the government’s attempt to implement a full-fledged rupee payment mechanism with Iran, the problem persists.

According to the arrangement, Iranian oil companies would deposit their rupee earnings in India’s UCO Bank, which will be used to pay Indian exporters to Iran after their papers are vetted by Bank Parisan of that country.

“But it is not happening currently. The payment crisis is yet to get resolved and political turmoil in Gulf countries, especially Syria and Libya, is still lingering,” said Sangeeta Kichlu, vice president of Jay Shree Tea and Industries, a BK Birla Group company.

Kichlu said it was a ‘very critical’ period for the Indian tea industry.

“The present time is very critical for the Indian tea industry. Due to deficient rainfall, the productions are very down in Assam and Darjeeling. So, north India’s orthodox tea production is likely to be down,” she said.

Assam, where around 800 tea gardens exist, accounts for 51 percent of India’s annual output of the brew.

Kichlu, also Calcutta Tea Traders Association chairperson, said a lot of tea makers of southern India, who were earlier producing orthodox tea, have now shifted to CTC tea production following a shrink in the export market last year.

“Thus there would be lesser quantity of exportable orthodox tea,” Kichlu said, adding it might result in a decline in the total tea export this year.

Indian Tea Association (ITA) chairman CS Bedi said, “Iran still remains an uncertain market and nobody likes to export to an uncertain market. It will be a challenge to the Indian tea exporters to export the brew to Iran.”

Bedi seconded Kichlu and said an ‘unsettling scenario’ was prevailing in the country’s tea industry in 2012 due to poor rainfall.

“There has been a drought in the northeast. So tea production will be affected in north India,” Bedi said.

He said the quantity of exportable tea was declining over the years as total production in India has almost been stagnant for the last three years, while domestic consumption is rising in the country, the world’s largest consumer of the brew.

“In this context, as a responsible tea producer, we cannot sell more tea abroad, leaving less tea for the domestic market, as it would lead to a hike in tea prices in the country,” he explained.