Advantage Indian Tea, As Dry Weather Hurts Kenya Output

Kenya’s loss is Indi­a’s gain, at least wh­en it comes to tea. The Indian tea industry had been losing out to Kenyan tea in the international market, thanks to unprecedented high production for two consecutive years.

The international market had been flush with Kenyan tea; that too at a much cheaper price compared with Indian tea. As a result, India’s tea exports were affected severely.

Subsequently, Kenya experienced dry weather, affecting its tea production, but it came as a boon for the Indian tea industry. Tea exports from India dropped by a substantial 10.43 per cent to 126.28 million kg in the first eight months of financial year 2014-15 between April and November. Price realisation had fallen to Rs 199.24 per kg from Rs 207.38 in FY15.

Now with Kenya experiencing dry weather, there is huge uncertainty in the market over the availability of Kenyan tea. This has pushed up prices of Kenyan tea in the international market by at least 60 per cent, much to the relief of the Indian tea industry, exporters in particular.

There are indications that Indian tea exports may be less by 15-20 million kg this year, but even then it should be better than last year. India exported 226 million kg last year. Industry officials said India’s tea exports suffered mostly in markets like the US, the UAE, Iran, Bangladesh and Pakistan. Higher price of Indian tea due to a sharp rise in the cost of production was one of the reasons India’s tea exports to these markets suffered all these years.

With the possibility of the crop size coming down in Kenya, Indian tea producers are expecting demand to pick up in global markets once again, which may help them regain their markets in Pakistan, the UK, Egypt and north America.

The other good news is that Indian Tea Association (ITA) is taking a delegation to Iran in February as India tries to sort out the issue of maximum residue limit, which has been hurting Indian exports to that country.

A four-member Iranian delegation visited Kolkata late last year to meet senior Tea Board officials and other stakeholders, including members from industry associations, traders associations and tea research institutes to discuss various food safety and quality issues of Indian tea and its smooth export to Iran.

Members from industry and tea research institutes also participated in the discussion and interacted with the members from Iran on different regulatory issues, including the pesticide residue problem, fixation and harmonisation of maximum residue levels (MRLs), presence of heavy metals and other contaminants. The ITA delegation’s visit to Iran is expected to take these discussions to the next level and possibly to a logical culmination.

Besides, both the government and other stakeholders from the tea industry need to do a lot more to enhance the brand equity of Indian tea in the international arena and to increase exports. The Centre, jointly with various stakeholders, is trying to sort out various issues such as increasing productivity of Indian tea, value addition, product diversification, boosting exports, improving soil health and steps for the welfare of small tea growers.

Analysts pointed out that normally demand for tea is always higher than the output in India. Therefore, prices are likely to remain firm in the new season that begins in April. India’s tea crop, which was down by 14.7 million kg last year, is expected to recover fast this year.

Source:mydigitalfc.com