Divided tea industry brews export rebound in March

The industry may be currently involved in infighting, but tea exports have made a welcome rebound in March after suffering sharp declines in the previous two months of the New Year.

Overall exports grew by Rs. 1.1 billion or 7.4% to Rs. 16 billion in March aided by better performance by tea shipments in bulk and in packets though tea in bags continue to struggle.

The rebound in March comes after tea exports in January dipped by 19% to $ 104 million and further by 11.6% to $ 105 million in February, over their performance in the respective months in 2011. The dips in the first two months of 2012 have also resulted in first quarter performance marginally negative over the corresponding period of last year.

In March, quantity of tea exports in bulk rose to 12.1 million kilos worth Rs. 5.77 billion, from 11.4 million kilos and Rs. 5.3 billion. Tea in packets rose to 14 million kilos valued at Rs. 7.1 billion from 13.1 million kilos worth Rs. 6.6 billion. FOB price per kilo of tea in bulk in March this year was Rs. 476.84 up by Rs. 10.47 per kilo whilst tea in packets’ figure was lower at Rs. 506.80 per kilo from Rs. 507.87 per kilo in 2011 March.

Exports of tea in bags dipped from 2.7 million kilos (Rs. 2.4 billion) to 2.3 million (Rs. 2.35 billion) in March this year. The dip in value was despite the average unit FOB value in March was higher at Rs. 1,026, as opposed to Rs. 889.50 a year earlier.

Sri Lanka’s export of green tea declined in volume from 0.48 million kilos to 0.45 million kilos but the value was higher at Rs. 549.6 million as against Rs. 474 million in March last year. Its FOB value too rose from Rs. 984.63 per kilo to Rs. 1,205.86 per kilo. Instant tea exports saw a usually higher volume in 2012 March of 0.13 million kilos from 13 kilos a year earlier with value increasing to Rs. 117 million from Rs. 14.5 million. 

Tea exports in the first quarter were worth Rs. 40 billion, marginally down from Rs. 41 billion achieved in the corresponding period of last year. Volume wise, it was down to 75.89 million kilos from 77.4 million kilos in the first quarter of 2011. The FOB price was down by Rs. 1.12 to Rs. 536.32 per kilo.

In the first two months of 2012, the dip in the cumulative export value was 7.4% and the March rebound had reduced it to 2%. Volume wise it was down near 6% by end February but was reduced to 2% at the end of the first quarter.

Tea in bulk saw marginal rise in volume whilst the dip was equal as well in the first quarter of 2012 (31.3 million kilos worth Rs. 14.3 billion vs. 30.9 million kilos worth Rs. 14.4 billion in 2011) whilst tea in packets was down to 36.7 million kilos from 38 million kilos and their values down from Rs. 18.7 billion to Rs. 17.8 billion. Tea in bags had declined to 6.1 million kilos worth Rs. 6.1 billion from 7.1 million kilos worth Rs. 6.5 billion in first quarter of 2011.

According to John Keells the CIS continues to be the leading market for tea exports with 12.1 million kilos worth Rs. 6.4 billion followed by Iran with 10.6 million kilos worth Rs. 6 billion.

Syria and Iraq followed suit with Rs. 3.2 billion and Rs. 2.1 billion respectively. Turkey was ranked fifth largest with Rs. 1.87 billion worth of exports and Libya followed with Rs. 1.37 billion.

Tea trading hub UAE had imported 2.48 million kilos worth Rs. 1.25 billion and was placed at number 10. As per Forbes and Walker Tea Brokers, UAE imports have drastically reduced so far this year, with last year’s figure being 6.7 million kilos.

Analysts said the March rebound would boost depressed sentiments within the tea industry, which is currently embroiled in infighting with regard to whether orthodox tea import must be liberalised or not.

Tea exporters on Tuesday went public with their proposal for the move along with a hub concept as the best way forward for the tea industry and the next day, the Planters Association countered, saying imports spell doom.