India's tea exports may fall this year due to stiff competition from Africa
India’s tea exports may plunge below 200 million kg this year, down from 207 million kg in the pandemic-hit 2020, owing to stiff competition from Africa which is offering teas at more competitive rates. Freight rates are lower in Africa than in India while production of black teas is higher in the continent.
“In India, freight rates have skyrocketed. The rates have gone up four times over the past few months. But the freight rates have not gone up in such a way in Africa, which has put them in an advantageous position. If this trend continues, exports will be less than 200 million kg,” Anish Bhansali, chairman of Calcutta Tea Traders Association, told ET.
Apart from a hike in freight, what is hurting the trade is lower prices of teas from Africa. Africa is able to sell teas at $1.6-1.7 per kg or Rs 120-126 per kg. Indian black tea price, which is of a similar quality as African tea, is selling at more than Rs 200 per kg.
Higher domestic prices of tea are hurting India’s exports, said Azam Monem, director, McLeod Russel India NSE 4.54 %. “Prices are up by 4-5% compared to 2020. But if we compare with the prices of 2019, which was a normal production year, prices are up by 30-35%. It is difficult to say whether there will be a price correction immediately,” he said.
Prices of teas from Assam, the major tea producing state in the country, have gone up due to shortage of the tea crop. Production was down 35% and 25% respectively in March and April compared to the corresponding months of 2019, a normal production year. In May, the crop loss was about 35%.
Last year, due to the pandemic induced lockdown, the industry had lost 140 million kg of teas. Monem said that due to the dry spell prevailing from the beginning of March, production is down 60 million kg. “But it had rained in June and we are expecting good production of second flush teas,” he said.