Pakistan plans to double tea imports from India.

As part of the Pakistan business delegation to India, a high-level team led by the chairman of the Pakistan Tea Association (PTA), Mohammed Hanif Janoo, visited Kolkata last week, holding a series of parleys with their counterparts in the Indian Tea Association (ITA) and other industry bodies. Janoo said his country was looking to doubling tea imports from India in the next three years.

On his part, ITA chairman C S Bedi said, “We are looking forward to increase tea exports from around 25 million kg at present to 50 million kg by 2015.”

With both India and Pakistan on the same page, the move could bring new cheer to Indian tea growers, more so, with Pakistan being the world’s third largest tea importer. Pakistan's domestic consumption of tea is expected to exceed 235 million kg by 2015. This means the country will have to substantially increase imports to bridge the demand-supply gap.

Nilanjan Dey, director at Wishlist Capital, an equity and commodity research and brokerage firm, points out that dry spells in some of the major tea growing areas like Assam (tea production in Assam, one of India's top tea producing states, dropped 20 per cent recently) has impacted the availability Indian tea, resulting in a shortage of around 100 million kg and is likely to push up prices up further. Average quality tea is already selling at around Rs 65 to Rs 70 a kg at present, while high quality teas are selling at Rs 100 a kg and above at the auctions.

According to Tea Board of India statistics, India's tea output fell 11 per cent to 18.7 million kg in January against the 20.9 million kg in January last year.

“India's tea prices are likely to rise further as the demand for Indian tea in Pakistan remains high. PTA has confirmed that South India would continue to be the major source of supply from India,” Dey told FC Invest.

Janoo, during his Kolkata visit said, “Consumption of tea in Pakistan is growing at 2 per cent per year and we need to import more to cater to the demand. It seems that import of South Indian tea will increase to meet this higher demand. But we are also looking for newer varieties from the north.”

Janoo also said South Indian tea was facing competition from Vietnamese crop, especially in the medium-grade category. While North Indian variety sells at an average of $3 or more per kg, South Indian tea sells at an average of $1.35. Vietnamese tea is priced marginally lower at $1.20 per kg.

“We are trying to push small tea growers from Assam and Dooars to get the right exposure in the Pakistani market. We are confident that they will find a good market,” AN Singh, managing director of Goodricke, said during ITA’s meeting with PTA.

Azam Monem, director of McLeod Russell, said. “The price differential will make tea from small gardens attractive to buyers in Pakistan. We can see growth for North Indian tea and it has the potential to go up to 10-12 million kg from the present level of 3 million kg,” Monem said. Tea from small gardens sold cheaper at Rs 25-30 per kg last season.

Source : mydigitalfc.com