Omicron Covid variant threat may hit India’s winter tea exports

The threat of various stages of lockdown and closure of entry for foreigners and foreign goods in many countries due to the now-spreading Omicron variant of coronavirus is causing a new challenge and concern to India’s tea exports.

“Although it is too early to gauge the impact of Omicron on India’s tea shipments, we are concerned that Christmas markets are being closed in some European countries for fear of the spread of coronavirus in any variant form. Over a dozen countries have taken precautionary measures to close borders at least for a few days now,” L Vairavan, an exporter told BusinessLine .

“Some parts of Germany have announced that the rising Covid-19 cases is causing so much concern that protecting people is their priority for which lockdown is imposed. We fear that this will have a cascading impact in other parts of Europe as well. Transport restrictions mean lesser possibility to export tea,” he said.

Generally, when winter builds up in Europe and more so in the CIS with waterways freezing, transportation becomes difficult and tea exports suffer. Last year also, Covid lockdown along with harsh winter in such countries affected smooth trade for Indian tea.

Christmas season

“Many countries used to import our tea ahead of Christmas to build stocks during harsh winter but this year, exporters had a testing time with shortage of sea containers and prohibitive transportation cost. In some cases, importers pointed out that transportation cost was more than the tea in the container,” Vairavan said.

Till August, the latest period for which Tea Board’s official data are available, the price of exported Indian tea rose to an average of ₹272.92 a kg from ₹230.84 in January-August 2020, marking an increase of 18.23 per cent.

But, the higher price pulled down the volume shipped to 118.84 million kg (mkg) from 134.47 mkg in Jan-Aug 2020 – a decline of 11.62 per cent. However, because of the higher price, the overall earnings from exports rose to ₹3,243.37 crore from ₹3,140.04 crore in January-August 2020 – a gain of 4.49 per cent.

Germany matters a lot to Indian tea exports price-wise, earnings-wise and is among the few countries which bought a higher volume of tea from India this year paying a higher price than last year. This year, Germany imported 5.78 mkg (January-August: 5.16 mkg) at ₹343.84 a kg (₹250.47 a kg) spending ₹198.74 crore (₹129.24 crore).

The CIS continued to top India’s tea export table but with a lower volume, price and value than last calendar. CIS imported 28.18 mkg (34.51 mkg) at ₹188.44 a kg (₹164.97) spending ₹531.02 crore (₹569.32). Volume-wise, Iran followed at 15.47 mkg (23.87 mkg) paying ₹254.74 a kg (₹ 267.23) and spending ₹394.08 crore (₹637.87 crore). Price-wise, Ireland paid the highest price of ₹748.65 a kg (₹742.59). Value-wise, next to the CIS, the US topped at ₹408.23 crore (₹254.40 crore).

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