As Kenya Sets The Minimum Reserve Price For Tea, Indian Tea Exports Are Set To Recover
Due to Kenyan tea is available at cheaper rates in global markets, India’s tea exports have suffered greatly. However, the Kenyan government has set a minimum reserve price for tea to protect the interests of the country’s tea growers.
Kenya Tea Development Agency has set a minimum reserve price of $2.43 (about Rs.183) per kg for processed tea at the Mombasa auction.
Therefore, the price disparity between Kenyan and Indian teas has reduced, and Indian producers have begun receiving inquiries about black tea exports from West Asia, Russia, Kazakhstan, and the United States. Indian tea faces strong competition this year from Kenyan tea, whose prices ranged between Rs.250-300 per kg, while Kenyan tea cost less than Rs.150 per kg.
Exporters want to surpass the 200 million kg export milestone in 2021, riding on renewed worldwide demand in the next three months before the winter season brings an end to tea production.
Azam Monem, director of McLeod Russel India NSE 2.36 per cent, said that while exports to Iran have declined, producers have manufactured more CTC teas this year. Iran imports indigenous teas, so the supply of CTC teas has increased. We are in a better position to increase our exports now that our prices are about Rs.250 per kg and Kenyan tea is about Rs.200 per kg. We faced intense competition in the worldwide market due to Kenyan tea.”
India exported 100.78 million kg of tea from January to July for an average price of Rs.271.38 per kg, up from 117.56 million kg the previous year. Last year, the average price per kilogram was Rs.224.21.
Sujit Patra, the Indian Tea Association secretary, says Kenya has taken advantage of the zero tariff with Egypt to establish a favourable quid-pro-quo trade deal (tea against rice) with Pakistan, the second largest tea importer. The two nations import more than 175 million kg of Kenyan tea.
Another tea-producing country, Sri Lanka, has formed barter arrangements with Turkey, a country with high import duties on tea, and is now negotiating preferential trade deals with China and Bangladesh. India does not enjoy such benefits.
Accordingly, India has granted Sri Lanka access to its market at a duty rate of only 7.5 per cent, instead of the primary duty of 100 percent, with no quid pro quo.
The ASEAN block has also agreed to let tea into India with a basic tariff of 45 percent, which will be further reduced in the future,” Patra said.