Tea exports from India are set to feel the jitters of the coronavirus outbreak as shipments in crucial export zones are likely to shrink substantially. The Tea Board has raised an alarm, calling for an exporters’ meet this week to find a solution to the crisis.
“Looking at the trends arising out of the coronavirus outbreak and other factors, we feel that the tea sector is headed for a huge crisis this year. Already, there is financial stress in the sector and it may worsen this year,” A K Ray, deputy chairman of the Tea Board, told Business Standard.
The alarm follows the deadly virus’s effect on India’s key export market – Iran and other countries including Japan, which cancelled a tea exhibition. Last year, Iran overtook Russia to become India’s top tea export destination at 53.45 million kg (mkg), which led to revival in the costlier whole leaf tea exports. Unlike Russia, which is primarily a low-priced crush, tear, curl (CTC) market, the entire export to Iran is whole leaf, which is priced 80-150 per cent higher than the usual CTC tea.
Exports to China – epicentre of the coronavirus outbreak – have also been hit. Primarily a green tea market, China was also emerging a new destination for CTC tea from India. Last year, exports to China had risen by over 30 per cent at more than 13 million kg (mkg).
Japan, which is a major market for the costly Darjeeling tea (at 5 mkg), has also been affected by the virus and shipments to this country is expected to fall.
Usually February-April is a significant period for tea companies as forward contracts are signed during this time. Industry officials noted that owing to the epidemic, contracts are not getting signed. This left the Tea Board worried.
Also, exports to West Asia, excluding Iran, registered a 41 per cent fall at around 23 mkg due to the prevalent geo-political tensions. Exports to the UK also saw a 25 per cent decline at around 12 mkg, primarily due to Brexit. To make matters worse, exports to Pakistan, formerly the fourth largest export market for India, has also hit rock bottom.
Ray said that while the export situation is expected to be gloomy this year, India is also burdened with over production and this may take a toll on prices this year. In 2019, domestic production increased by around four per cent at a record 1,390 mkg while domestic consumption stagnated and export volume fell by around three per cent.