The tea industry is prepping itself for a likely decline in exports to the tune of 30-40 million kg this year as compared to 2020. As per industry sources, the availability of low-cost varieties in the global market and trade restrictions in countries that have traditionally been strong importers are considered as the main reasons for the same.
Citing another reason they say, that the pandemic-induced economic downturn in much of the world is also a factor for falling shipments.
As per Tea Board India data, exports fell by 13.23% for the period between January to March this year, as against the corresponding period a year ago, and by 29.03% compared to 2019,
Altogether, 45.86 million kg of tea was exported from India between January to March in 2021. The figure was 52.85 million kg in 2020 and 64.62 million kg in 2019.
The figures also reveal that the share of shipment from North India has witnessed more dip than that from South India since the last three years.
While the tea export share of South India fell by 5.41% in 2021 between January and March compared to the same period in 2020, the decline was 25.85% compared to 2019.
In the case of exports from North India, the figure for the three-month period was lower by 17.83% as against 2020 and 31.04% compared to 2019.
The Low prices of the Kenyan and Sri Lankan exports have taken a toll on the Indian exports in the last two to three years.
“Kenyan tea auction price average is below 2 US dollars per kg, which is much lesser than our auction average,” Dinesh Bihani, secretary, Guwahati Tea Auction Buyers Association (GTABA), told PTI adding that the Kenyan tea is available for 1.8 US dollars per kg ( ₹130-135 per kg) on an average, while for Indian tea, the average auction price is nearly ₹200-210 per kg.
India had exported 208 million kg of tea out of the total production of 1,255.60 million kg in 2020, while shipments accounted for 252 million kg out of 1,389.70 million kg produced in 2019.
As per another tea industry source, there is very limited domestic consumption demand of the beverage in Kenya and Sri Lanka, which means that more tea is available and targeted for export.
About 80 percent of it produced in India is sold for domestic consumption, as per a 2018 ‘Executive Summary of Study on Domestic Consumption of Tea’ published by the Tea Board.
Furthermore, the exports to Pakistan, which is a major market for Indian tea, have also stopped since the last three years due to the escalating tension between the two countries, pointed out the industry source.
Another cause of concern for Indian Exporters is the US sanctions against Iran.
Iran imported 9.98 million kg of tea between January and March 2020 at an average cost of ₹263.14 per kg, which decreased to 4.57 million kg for the corresponding period this year, sold at an average price of ₹246.81 per kg, as per Tea Board India data.
The global economic crisis caused due to the outbreak of the pandemic has led to a further global decline in demand for tea. Even the domestic consumption of tea has gone down since the onset of the pandemic last year in the out-of-home sector (tea sold in railway stations, bus depots, and cafeterias).