The Hindu Business Line : Iraq losing taste for Indian tea

Buyers are visibly against speculative purchases for their Iraq principals. "There is no such thing called firm order in a riot-torn situation. No one gives us guarantees that the teas we ship would reach the destination safe and in time. No one assures us of bill settlement. So we deem it unwise to plunge money on tea right now," an exporter told Business Line.

In recent weeks, purchases for the Iraq market tapered off, with the deals being struck only for selective teas. The frequent bomb blasts, the repeated kidnappings and murders to force foreign business enterprises out of the country have weakened foreign exchange dealings with Iraq.

However, there were some positive developments. During the first four months of this year, the exporters sacrificed price realisation by as much as Rs 16 a kg to augment volumes and build a long-term relationship. Thus, despite the price earned falling to Rs 57 a kg from Rs 73, India exported 1.92 million kg to Iraq between January and April as against 0.82 million kg in the same months of last year. Arising from the volume rise, overall earnings increased to Rs 11 crore from Rs 6 crore last year.

With India offering its teas at lower prices than Sri Lanka, Iraq chose to source nearly half of its recent requirements from India. In May, a five-member Iraqi delegation that visited India went on record that around nine million kg had been ordered from Indian companies out of the country's fresh requirement of 17 million kg. The delegation cheered Indian exporters by announcing that about nine million kg would continue to be bought from India every month. This translated into a whopping 108 million kg a year from Iraq alone for an industry whose total shipments in 2003 to all countries amounted to only 173 million kg.

However, with an estimated domestic consumption of 710 million kg, exporting 108 million kg to Iraq alone would mean a demand of 818 million kg for these two segments alone. To export to the remaining two dozen countries, India would have to import.

Nevertheless, the industry placed a lot of significance on cultivating Iraq as an alternate market to Russia. Whatever be the reasons that tilted Iraq towards India, the reality is that in 2002, the country imported as much as 44 million kg from India even as Russia, the permanent largest importer of Indian teas, bought only 48 million kg. And, the next year, Iraq's imports fell to a mere 13 million kg — lower than its intake of 17 million kg in 2001.

More Stories on : Tea | Plantation Panorama

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`Inefficiency of co-ops hits farmers the hardest'

Rice procurement to touch 225 lakh t

Mills seek total ban on wheat exports

Revised DEPB rates on marine products in abeyance

Rubber prices rule steady

Iraq losing taste for Indian tea

Plea for more Cauvery water

Gundlakamma project gets green signal

2-day convention on gold from tomorrow

FCI bond market foray on hold

TNAU to market `coconut tonic'

Corn may rule firm on rising demand — User industries face difficulty in finding alternatives