The Hindu Business Line : Kenya finds flavour in S. Indian tea

WHILE the new year seems to have brought relief to the tea industry in the form of improved exports to Iraq and Pakistan, a step-up in Kenyan offtake has further strengthened the optimistic undertone in the market.

Kenya, one of the producer-nations and a key competitor in the global tea market, has been an active buyer at the Coimbatore and Coonoor auctions this year.

As per the data provided by the Cochin Chamber of Commerce, shipments to Mombasa from South India for February stood at 1.18 milliong kg (mkg). An almost 93 per cent jump in the quantum from around 0.61 mkg in January 2004.

Merchant-exporters told Business Line that while Kenya was no stranger at the auctions, suppliers for the Kenyan market had been quite active at both the auction centres this year. The teas purchased are believed to be primarily for re-export.

"They are purchasing certain grades for blending. Some players have started buying on Kenyan account at 83-84 cents and with prices firming up, have been buying at $1-$1.1 a kg,'' trade sources said.

Sources maintain that given the fact South Indian teas are similar in terms of appearance etc, Kenya prefers to source teas from South India for blending.

While there is no apparent demand-supply mismatch in Kenya, traders speculate that an inability to meet growing export demand has led Kenya to step up imports from India.

"Kenya has quality but quantity is not there,'' said a leading exporter to Kenya who is confident that the offtake will improve further.

Kenyan production in 2003 stood at 293.4 mkg as against 287 mkg in 2002. Kenyan production in January stood at 31.1 mkg as against 32.7 mkg in January 2003, a 5 per cent drop.

Kenya exports mainly to Egypt, Yemen, Afghanistan, Pakistan and other West Asian countries. Other importers include Sudan, Russia and Eastern Europe.

As per the Mombasa Tea Auction report of sale No. 14, all the main export centres (Egypt, Yemen etc) had lent strong support.

Merchant-exporters said one of the reasons for the recent surge in Kenyan imports was said to be a huge order from Egypt. Kenya reportedly shares a trade preferential status with Egypt, with the latter exporting rice to Kenya and importing teas from them.

While exact figures on the Egypt contract were not immediately available, trade sources maintain that post-blending teas were exported not only to Egypt but it has also found its way to Pakistan, Sudan etc.

Yet with the onset of pre-monsoon showers, an anticipated improvement in the crop situation could soften prices, feel traders.

"One can expect prices to become on par with that of the overall market. For Kenya is bound to revise its prices accordingly,'' sources said.

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