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Weak crude prices may hurt India’s tea exports.

Date: 18-10-2016
Subject: Weak crude prices may hurt India’s tea exports
KOLKATA: India’s tea exports are expected to fall in 2016, hurt by the impact of weak crude oil prices on the Middle East economy, a devalued pound and lower consumption of black tea in the UK, and rising tensions with Pakistan.

Lower demand from the global markets has already pulled down the price of good-quality tea by 8-10% compared with this time last year. In 2015, India shipped out 233 million kg of tea.

Growers and traders are concerned about the consequences of Britain’s decision to leave the European Union. India ships around 20 million kg of tea to the UK every year and any weakness to the economy of that country could hurt the shipments. In the first eight months of 2016, exports to the UK dropped 12.64% from a year earlier.

“The pound devaluation has hurt the Indian tea industry the most. Moreover, black tea consumption is dwindling in the UK. According to their own estimates, it has fallen by 15% since 2010 as Britons are embracing green tea and coffee,” said Azam Monem, a director at McLeod Russel India, one of the biggest tea growers.

“Our worries also remain about the fallout of Brexit in coming years.” The tea industry is now looking at new destinations like Chile and Canada to expand its global footprint. “Exports this year may be less in comparison to last year by 5-6%. The main concern is that premium teas from India are not moving. We feel that higher Kenyan tea crop this year is the major reason for the lower offtake of Indian tea in global markets,” said Tea Board Chairman Santosh Sarangi.

Source : economictimes.indiatimes.com

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