The Hindu Business Line : Kenya buying Indian tea to honour export deals

This is precisely what the Kenyan trade is doing – buying Indian tea to fulfill its export commitments. The Kenyan tea industry is currently suffering from lower production.

According to statistics available, its tea production during January-May is down by 36.8 million kg (mkg) at 134.6 mkg. The production has been affected by drought and political tension witnessed during the beginning of the year.

Kenya is one of the top two tea exporting nations along with Sri Lanka. “It cannot be seen faltering on its commitments since unlike India, it totally depends on exports. It also has export targets to meet,” says Mr Ullhas Menon, Secretary-General of the United Planters’ Association of Southern India.

To meet the obligation, Kenya is buying tea from India. “The purchase for Kenya by merchant-exporters does not figure in the export data currently. But it will soon start reflecting in the data,” say industry sources.

Not the first time

This is not the first time that Kenya is buying Indian tea. During 2006, when its production was affected by the vagaries of weather, it bought 8.74 mkg of tea at an average Rs 55.84 a kg. Tea Board statistics show last year, Kenya bought 3.01 mkg at an average Rs 47.71.

Industry watchers say last year’s exports to Kenya could have been the quantity that had been carried over from 2006. Interestingly, according to the figures, Kenyan woes and subsequent purchases in the Indian tea market have also led to an increase in the auction prices.

According to industry sources, Kenyan buyers could be using Indian tea for blending with their tea. Even Indian tea is sold, blended with teas from Sri Lanka, Indonesia and Vietnam. On the other hand, Kenyan tea doesn’t claim any uniqueness like Indian tea.

Buying tea from India also makes good business proposition for Kenyan traders. Indian tea prices averaged Rs 78.42 a kg in May and Rs 69.81 a kg during January-May. In comparison, the Kenyan tea average price was Rs 89.92 a kg in May and Rs 87.66 during January-May.

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