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M.R. Subramani

Chennai, Sept. 24 Tea exports from the country have witnessed a decline this year mainly on account of lower purchases by Iraq and Pakistan, according to a data.

Total exports during January-July have declined to 86 million kgs (mkg) from 106.6 mkg during the same period a year ago. An export target of 206 mkg has been set this year against last year’s actual shipments of 203 mkg but the industry is sceptical of achieving the target given the current trend.

As per a Tea Board data, exports to Iraq have witnessed a sharp decline of 20 mkg to 3.35 mkg in the first half of this year. Consequently, realisations have declined by over Rs 100 crore.

Pakistan is another destination that has imported less of Indian tea. Shipments to the neighbouring country have declined to 2.21 mkg from 5.79 mkg. Earnings have dropped by Rs 16.45 crore to Rs 11.39 crore.

“There is nothing surprising in the decline in exports we are witnessing in the case of Iraq and Pakistan. They both are markets where we usually see demand fluctuation and they have never been consistent for us,” an industry official said.

According to industry sources, Pakistan and Iraq are bulk markets where demand from either source can lead to bulge in exports.

“Since these are bulk markets, prices play a key role. They could have found the price from India costlier than other sources,” the official said.

“No doubt, the 12-14 appreciation in the rupee against the dollar is playing a major role. But there is also the Kenyan angle,” he said.

Exports to Iraq have been at Rs 51.40 a kg this year against Rs 51.54 last year. In contrasts, shipments to Pakistan have been at Rs 51.53 a kg against Rs 48.08.

But in Iraq’s case, it is taking advantage of cheaper shipments from Kenya, which is flush with stocks this year. Tea crop in the African nation last year was hit by drought.

At various tea auctions across the globe, prices have been mixed. In India, the average realisation at the auction has increased to Rs 66.23 a kg from Rs 64.51.

Prices for Kenyan tea have declined to Rs 69.10 from Rs 90.96, while in the case of Sri Lanka, another major competitor in the global market, prices are up at Rs 96.89 from Rs 82.89.

This year, the crop in Sri Lanka has been hit by the vagaries of weather.

Again, in markets such as Pakistan, countries such as Sri Lanka and Kenya enjoy an advantage as they have established themselves there. In contrast, India has been trying to gain access to these markets only now.

On the other hand, India has gained in other markets, especially Russia. “We have begun to make headway in some of the key markets such as Russia due to quality initiatives. It is also fetching us better returns,” the official said, adding that the country should be able to find new takers for its quality tea in the days to come.

Last week, a memorandum of understanding was signed between the Tea Board and Russia for export of premium quality tea. “Things are looking better with such initiatives,” he added.

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