The Hindu Business Line : Global tea output may decline by 45 m kg

The realities
Kenyan output has dropped by 32.5 mkg during Jan - June.
India production during the period fell by 10.3 mkg.
Exports to Pakistan showing an upward swing but not to the expected levels.

Kochi , Aug. 17

The latest trend indicates that the world tea output is likely to be down by 45 - 50 million kg (mkg) this year, as production in all major tea-growing countries, including India, is on a declining mode.

Kenyan output has dropped by 32.5 mkg during January - June 2006. Though it has improved its production, there might still be a gap of 25 mkg. Unfavourable climatic conditions are pointed out to be the reason for the drop in all the tea-producing countries. Yet, according to international reports, the global production continues to be higher than the demand.

Indian output down

All India production in January - June this year fell by 10.3 mkg to 328.2 mkg as against 338.5 mkg in the corresponding period previous year. South Indian output dropped by 8.7 mkg to 112.8 mkg from 121.5 mkg while that of North India dropped by 1.6 mkg to 215.4 mkg from 217 mkg.

However, the decline in output has not made any significant impact on the Indian tea prices, United Planters' Association of Southern India sources told Business Line. The South Indian average price improved by Rs 4 a kg to Rs 49.32 from that of the same period previous year. The prices of orthodox tea compared to last year witnessed a decline this year, they said.

Meanwhile, the 32.5 mkg fall in Kenyan output has pushed up the CTC price. The average price of Kenyan tea was $2.17 a kg. Thus, for the major African producer the loss in output is compensated by the higher price. "In fact, compared to other producers we are not benefited as the Indian tea prices do not seem to be driven by the demand - supply position", they said.

Exports to Pakistan have shown an upward swing of late, but not to the expected levels as "they were looking for a particular type of tea at a particular (low) price", they said.

Shipments down

Shipments from India, during January-June 06, declined to 79 mkg valued at Rs 665.3 crore at a unit value of Rs 84.15/kg, from 80.5 mkg valued at Rs 755.8 crore at Rs 93.80 a kg in the same period last year.

The 2005 exports stood at 191.8 mkg as against 197.6 mkg the previous year. The declining trend in tea shipments from the country is attributed to the traditional markets, i.e, the CIS countries continuing to shift to teas of other origins. Industry sources, however, claimed that there had been significant improvement in the exports of Indian teas to non-traditional markets in Asia and West Asia.

According to reports from Kenya, Pakistan blenders, Russia, Eastern Europe, Britain and Afghanistan bought more tea last week from there than they did in the previous week. Egyptian packers, Sudan, Yemen and other West Asian countries bought similar quantities when compared to the week before.

Meanwhile, reports from Rwanda said it was getting impressive demand from new markets such as Dubai, Netherlands, Pakistan and UK. During last six months, 37 per cent of total Rwandan sales had been directed to these new markets whereas 67 per cent had been directed to the traditional Mombasa auction in Kenya.

A study released by the Kenya Industrial Research and Development Institute stated that Sri Lanka, the world's biggest exporter of black tea, had 40 per cent of its exports value-added, while India's branded and packed tea accounted for between 33 per cent and 35 per cent of its export market. It also stated that although Kenya produces some of the best quality tea in the world, the produce was rarely branded and instead it was used mainly in blending with other teas.

Vietnam's emergence

Vietnam has also emerged as a major supplier of tea by becoming the world's seventh largest tea exporter with an export volume of around 80,000 tonnes a year, according to Vietnam Tea Association (VTA).

The country is said to have exported around 45,000 tonnes of tea in the first seven months of this year, a year-on-year rise of over 30 per cent. Black tea made up around 58 per cent of the total's tea export.

Vietnam plans to ship more than one lakh tonnes of tea and earn around $110 million in 2006, a report said.

The VTA was quoted as saying that the country was capable of producing around 15 different types of tea products, which have been sold in 57 countries and territories. Pakistan, Taiwan, India and Russia are its major tea importers.

By the end of 2005, the country had around 1.25 lakh hectare under tea, yielding 5.77 lakh tonne in raw tea, which could meet only half of the production capacity of the country's existing tea plants.

The Association plans to expand tea production nationwide to around 1.50 lakh ha by 2015, producing more than one million tonne of materials a year.