Kenya glut forces India to export cheaper tea to Pakistan.

KOLKATA: Indian tea exporters are under pressure to lower prices for clients in Pakistan in face of cheaper imports from Kenya, its largest supplier which has seen a 68 per cent increase in production this year.

Pakistan is one of the top three tea importers, with annual consumption of 220 million kg.

In 2015, it had imported 19.45 million kg of tea from India at an average price of $1.47 per kg. A year earlier, it had imported 15.8 million kg but at a higher average price of $1.50 per kg.

Indian tea exporters said Pakistani buyers are not keen to pay a higher price for Indian tea even though it has produced better quality teas this year in comparison with 2015, when a long dry spell had damaged the crop.

According to traders, in the first four months of 2016, Pakistan imported 5.12 million kg of tea, down from the 5.63 million kg it had imported in the year-ago period. Pakistan imports most of its requirement between August and October.

"Kenya has produced 177 million kg of tea this year, which is 72 million kg more than last year. With this huge production, Kenya is in a position to offer much competitive price to Pakistan than India," a senior tea planter told ET.

A merchant exporter said, "Last year, quality of Indian tea had suffered due to erratic weather conditions. That is why Pakistan had offered less price for Indian teas. But this year, quality is much better. Despite that, Pakistan is offering an average price of $1.70 per kg for Indian tea, as availability from Kenya is on the higher side."

However, fall in exports to Pakistan could be offset by demand from another neighbour, Bangladesh, which is showing keen interest. India's tea export to Bangladesh grew by 58.57 per cent in 2015 from a year ago even though the country produces 80-85 million kg annually.

"Bangladesh is ready to buy Indian teas at a price of $1.90 $2.05 per kg. It is a good market for Indian teas and is growing," said another merchant exporter.

A senior official of the Indian Tea Association said that apart from the traditional EU market, Russia, the US, Pakistan, Iran, Egypt and Bangladesh continue to be focus markets for Indian tea exporters. In 2015, Indian exported 232.92 million kg of tea compared with 199.08 million kg in 2014.

Source : economictimes.indiatimes.com