Tea exports rise 18% in Jan-July

Latest trends in tea export indicate that the quantity shipped from India has increased by 18 per cent to 105.6 million kg in January-July 2008 from 88.9 million kg during the corresponding period.

Moreover, the value realisation and unit price were also higher by Rs 1,86.1 crore and Rs 1.42 per kg respectively, according to an overview on Tea by the United Planters Association of South India (UPASI).

One of the major threats that the Indian tea industry is exposed to since the removal of quantitative restriction in 2001 is the surge in import of low-priced tea, it said.

A cursory look at the quantum exported since 2001 suggests that quantum of imports has fluctuated, with the highest import volume registered being 30.8 million kg in 2004. In 2006, the quantum of import was estimated at 23.8 million kg and in 2007 it declined to 16 million kg.

The pattern of import since 2001 suggested that there existed a counter cyclical movement as far as import volume and unit value of imports was concerned.

Quantum of import was lower when the unit price of imports was higher, which clearly suggested that imports were resorted to take advantage of low-value low-priced teas and subsequently, re-export the same at a higher margin. Similarly a pro-cyclical movement was observed with a quantum of imports and quantum of exports, it said.

In conformity with earlier observation, the trend suggested that imports during Jan-May 2008 was higher by 34.7 per cent and the unit value realisation was lower by 5.1 per cent compared to corresponding period last year, UPASI said.

Contrary to the increase in world tea production in 2007, world tea exports declined from 1585.8 million kg in 2006 to 1,565.2 million kg.

The decline was largely contributed by India (61.9 mn kg) Sri Lanka (20.6 mn Kg) and Indonesia (12.3 mn kg), it said.

Incidentally, the first two countries also reported lower production and the analysis by UPASI into the trends in export from producing countries suggested the pre-eminence of Vietnam in the export market within a short span of time.

Vietnam exports increased from 27 million kg in 1997 to 114.5 million kg in 2007, at an annual growth of 18.08 per cent. If Vietnam exports continued to grow at this pace, it would surpass India as the fourth largest tea exporter in the near future.

India’s export performance in 2007 was dismal, with the quantity being lower by 61.9 million kg and placed at 156.8 million kg. Value realisation was lower by Rs 478.4 crore at Rs 1,528.1 crore.