India’s black tea exports to dip by 2010: FAO

Ashok B Sharma

New Delhi, Oct 14: The United Nations Food and Agriculture Organisation (FAO) in its medium-term outlook for tea has stated that exports of black tea by India is likely to fall to 1.51 lakh tonne (lk tn) by 2010 from 1.98 lakh tonne in the year 2000, indicating a decline of 2.4 per cent in 2000-10. This is despite the estimated over one per cent increase in annual global export growth rate in the period.

For boosting India’s exports, FAO has suggested reduction in unit cost of production through productivity gains, capacity building of small growers, streamlining marketing channels, improving infrastructure, tailoring marketing activities to individual country’s demand, propagating health benefits of tea and promotion of organic tea using the Tea Mark.

In 2000-10 likely net imports of black tea by Russia would increase at an annual average growth rate of 3 per cent, by Pakistan would increase by 2.9 per cent, by USA would increase by 1.4 per cent and by Japan would increase by 1.8 per cent. But net imports by UK will decrease by 0.6 per cent annually. These major importers together would account for about 60 per cent of the global net imports of black tea.

The FAO while conducting this study has not taken into consideration the likely aberrations in the global market due to the recent US military action in Afghanistan. It has estimated this future projection on basis of the current declining trend in Indian tea export, increase in output in major producing countries leading to a likely fall in global prices and the estimated increase in demand in the consuming countries. The FAO has also estimated that India’s tea export in 2000 and 2001 is likely to fall by 9.5 per cent. But the domestic industry and the Tea Board of India fear that fall in exports may occur due to the recent US military action in Afghanistan and liberalisation in Russian tea market.

The Tea Board chairman, Naba Kumar Das has stated that India’s tea export in the current year is likely to fall to 195 million kg from 206 million kg in 2000-01. He said that this war will have an impact on the movement of cargo.

Already traders in Pakistan have advised their counterparts eleswhere to withhold shipments fearing that they might be blown up. He said that India had planned to double its exports to Pakistan to 7 million kg, but the situation in Afghanistan is likely to disrupt the plan.

Mr Das said that India used to export about 85 million kg of packaged tea to Russia. But now with the entry of multinationals like Unilever, Russia is processing tea and their imports of packaged tea has fallen. In UK after the split of Williamson Magor, the situation has changed. UK is now not sourcing tea from India. Mr Das also alleged that high tariff barriers and unnecessary sanitary and phytosanitary measures imposed in many countries are hindering Indian exports.

FAO report stated that in 2001, India’s tea output is to increase by 4 per cent over the previous year’s level 8,23,000 tonne. The global output of tea is also slated to increase by 2 per cent and this would weaken tea prices. Import demand from Middle East countries where economies continue to strengthen with higher oil prices can moderate the global price fall to an extent. It is also expected that auction prices in India and Sri Lanka can strengthen if demand for high quality teas picks up again in Russia as it did in the later part of 1999.

Other factors that may influence global prices include the implementation of the bilateral free trade agreement between India and Sri Lanka which was reached in March 2000. Under this agreement Sri Lanka would qualify for a 50 per cent fixed tariff concession for tea exports to India on a preferential basis subject to an annual maximum quota. Import data indicate a more than doubling of exports to India since 1998. China may lift price controls on tea sales as part of its bid to join the WTO. Little impact is expected in the short-term if China grants this concession. However in the longer term the impact can be significant.