Tea exports for 2007 are likely to be lower than last year as increased production in Kenya and stiff competition from Sri Lanka takes its toll. Strengthening of the Indian rupee has also put pressure on exporters who are losing Rs 2-3 per kg of exports, Paulose Joseph of Forbes Ewart & Figgis told FE. Indian tea exports stood at 203.86 million kg in 2006.

According to figures provided by UPASI, Indian tea exports dropped to 103.09 million kg during January-August this year from 122.50 million kg during the same period last year. Exports from south India have suffered the most with a decline of 26.5 million kg. Exports from south India stood at 51.37 million kg as against 77.87 million kg in the comparing period last year. The unit realisation has gone up to Rs 97.93 per kg from Rs 86.24 per kg.

India had enjoyed the benefits of a drought in 2006, which lowered production in Kenya. For 2007, Kenyan production is higher by 63 million kg for the period of January-August compared to the same period last year, Joseph said. Kenya is a major competitor for India in the CTC (crush, tear, curl) variety and dominates the Pakistan market. Pakistan is the worlds third largest importer and consumes 150 million kg of tea ever year. Kenya is its main supplier with Indian exports to the country standing at 3.7 million kg per annum.

The relative cheapness of Sri Lanka tea also complicates the market for India as the island nation exports 90% of its production, Joseph said. Indian tea also suffered at the hands of traditional market Iraq as payment problems lowered exports in 2007. The only positive aspect has been the small volume of exports to Egypt, which prefers CTC teas with strong liquor.

Interestingly Indias tea production is also seen lower due to erratic weather and stands at 576 million kg (January-August 2007) from 582 million kg a year earlier.