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As domestic tea prices surge, companies consider imports for first time
Kolkata: As tea prices soar in India owing to decrease output this yr, packet tea gamers and tea merchants are contemplating importing teas from Kenya and Vietnam, the place tea prices have crashed because of overproduction.
The Federation of All India Tea Merchants Affiliation (FAITTA) stated importing teas will likely be a one-time affair and that it’ll not push for imports within the coming years.
If the federal government offers the go-ahead, India will import tea for the domestic market for the first time. India has been importing teas solely for re-export and that too at a small quantity of 9-10 million kg yearly.
Nonetheless, the FAITTA’s demand has been strongly opposed by the planters and the Indian Tea Affiliation (ITA). “We are going to transfer the commerce ministry with a request to cease the import of low-cost teas if the merchants strive to take action,” stated Vivek Goenka, chairman, ITA.
FAITTA chairman Viren Shah stated, “Prices of tea in auctions have gone up considerably this yr because of a scarcity of provide. However we’re not with the ability to go on the value to our prospects as a result of the financial state of affairs within the nation will not be conducive for rising prices. The pandemic has created financial uncertainty in every single place.”
Shah stated the federation will write to the commerce ministry this week for importing tea. “This can solely be for this yr and we won’t press for importing tea within the coming years. We wish to import 40-50 million kg of teas this yr solely,” he stated.
At current, imported tea attracts 100% obligation.
India consumes about 1,100 million kg of teas yearly. Manufacturing in Assam and West Bengal fell 30% year-on-year to 370 million kg in January-July because of lockdown and heavy rains in Assam.
“After seven years, we’re witnessing a surge in prices,” stated CK Dhanuka, chairman, Dhunseri Tea. “All these years we’ve been languishing. However tea merchants and packet tea gamers wish to kill the trade and that’s the reason they’re pushing for import of tea for domestic utilization.”
For tea merchants, imports look like cheaper than domestic teas. Prices of CTC teas have elevated practically 48% year-on-year, hovering round Rs 305 per kg within the Kolkata auctions. However, in Kenya, the place tea manufacturing has gone up 28.5% this yr, prices of tea have fallen drastically. The common worth of Kenyan tea in Mombasa auctions final week was $1.84 per kg, equal to about Rs 138 per kg. Even with 100% import obligation, imported Kenyan tea will likely be cheaper. Vietnamese tea is even cheaper, costing about $1.5 per kg.
“After seven lengthy years, prices have proven some northward motion though the price of manufacturing has gone up 50-60% in the identical interval,” stated Goenka. “There are 10 lakh staff engaged in tea estates immediately. Their livelihood will likely be at stake if the import is allowed. Additionally, the market will likely be flooded with low-cost Vietnamese and Kenyan teas which can damage the Indian tea producers.”