Indian tea exporters face payment delays due to political unrest in Iran

The political unrest in Iran has put tea exporters concentrating in Kochi auctions in a dock in view of delays in payment faced by them.  

A tea exporter in Kochi told businessline that the payments for August-September shipments from Iran are yet to be received despite having a thriving demand from the Islamic Republic for good quality orthodox leaves. The stoppage of the internet to contain the agitation is hindering communication with buyers there.

Iran used to procure 50-60 million kg (mkg) of tea from India and of this, around 20 mkg were from Kochi auctions. Production disruptions in Sri Lanka have forced not only Iranian buyers but customers in Iraq, Tunisia, Libya and Turkey to turn to India, which is currently having some teas to cater to these markets. The recent escalation of the Russia-Ukraine war has started delaying payments from Russian buyers also.

The crop shortage in Kolkata has put South Indian teas at an advantage in the overseas markets with quality teas continuing to rule strong. Tea bag shipments to Europe are also on the rise from Kochi.

According to Dipak Shah, Chairman, South India Tea Exporters Association, shippers are little skeptical over the payment delays and it would be difficult to manage, once it goes beyond control. The Iranian market witnessed a massive growth in the first few months and things have started slowing down with declining off take. However, Russian buyers are purchasing in strength and their current offtake is encouraging, thanks to approaching winter.  

Cecil Jose of Encil Global Beverages said the dropping production in Sri Lanka has hit global supply of orthodox teas. This, coupled with higher prices of African brew with a drop in Kenyan tea production, has facilitated buyers to scout for tea in Indian markets. Iran, Iraq, Libya, Turkey, and even European countries are all potential buyers for good quality teas. Given the situation, Indian orthodox leaf grades are expected to get a boost to cater to emerging export opportunities.

Meanwhile, in sale 41 in Kochi auctions, the sales percentage for good quality teas was good with a firm market for select best Nilgiri whole leaf and brokens. The quantity offered in orthodox leaves was 3,71,566 kg and 80 per cent was sold, the auctioneers Forbes, Ewart & Figgis said. CTC leaf market was also firm with 87 per cent of the offered quantity of 48,500 kg was sold.  

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