Tea Exporters Count Gains

Calcutta, July 9: Tea exporters are expecting to earn more on account of the rupee slump and be in a position to hedge risks such as a rise in freight costs.



If the situation continues till August, Kenyan tea is likely to face stiff competition from India in the export market. The African country, known for its crush, tear, curl (CTC) variety, had a bumper crop in May when India lost a lot of trade enquiries to it. However, a dry weather has now pushed up prices there leaving India with an opportunity to regain the lost ground.



“We are sensing a lot of demand. At this time, during the second flush period, the demand is primarily from the Continent and the UK. We are being able to sell at a good value. A lot of trade negotiations with importers are on.



“The effect of rupee devaluation is not on in full force yet. The real test will come in August when we compete with Kenya. India is becoming attractive to importers because of the currency devaluation,” said Azam Monem, whole-time director at McLeod Russel and additional vice-chairman of the Indian Tea Association.



So far, the second flush crop has seen a volume growth of about 10 per cent, while its value is up 8-10 per cent in rupee terms. However, there are concerns over whether India will be able to meet the demand for the CTC variety because a good demand for orthodox tea in the export market is likely to encourage planters to switch to orthodox production. India exports close to 200 million kg.



“Enquiries are trickling in for July and August. We believe from July-September, there will be a renewed spurt in buying. Key buyers are relocating their interest to India. In the next 2-3 weeks, we hope to get business from even non-traditional countries in West Asia and Pakistan. The currency issue will only mitigate export risks such as freight costs, which have gone up in select destinations,” he said.



Shishir Agarwal, director (finance), Agarmet Corporation, said though the fall in rupee was a positive sign for exporters, there was a need to be cautious.



“Other currencies such as the euro and yen are also suffering against the dollar. Japan and Europe are good buyers of Indian tea. As the currency is hitting them, they are likely to refrain from placing large orders,” he said.



We have seen freight costs move up 5-10 per cent for the past three months on an average,” he said.



Darjeeling Tea Association chairman, S.S. Bagaria adds that with the rupee depreciating about 10 per cent, it would mean a 10 per cent gain for exporters.



“India is becoming attractive to importers because of the currency devaluation. In May, there was more tea in Kenya. We were sceptical as many trade enquiries went to them. But now because of a dry weather there, Kenyan prices are up a little. So again an equation equilibrium is coming through,”

Source:-www.telegraphindia.com