Coronavirus trouble for Indian tea, exports likely to be hit
Tea planters and exporters are keeping their fingers crossed ahead of the new season in the wake of the coronavirus outbreak as they apprehend that the demand from overseas markets will decline and price realisation could be impacted. Exporters are more concerned about Iran and China, the two countries badly hit by the coronavirus pandemic.
"Iran is a critical market for us. There is a concern about demand for new season tea from the Persian Gulf nation due to coronavirus outbreak. There might be a decline in demand in the short term. "China-the epicentre of COVID-19-is a major importer of Indian black tea. Imports of the beverage from the neighbouring country are also expected to be impacted," Indian Tea Exporters' Association Chairman Anshuman Kanoria told PTI.
China imported over 13 million kg of tea from India in 2019 and is seen as a prospective market for even 20 million kg in the next two years, he said, adding that a decrease in imports from the neighbouring country will adversely hit the Assam tea industry as it mostly buys the commodity from there.
"With the coronavirus spreading at an alarming rate in China, we do not think that tea export will touch 13 million kg shipment this year," Kanoria said. "We have come to know from exporters that things are moving slowly in terms of bagging new orders, though there were no cancellations as such. Iran, which is a key market for orthodox variety of Assam tea, is a concern for us," he said.
Iran had imported around 53 million kg of tea in 2019. "Tea producers are in tension as they do not know what will happen in the overseas markets," North Eastern Tea Association's adviser Bidyananda Barkakoty told PTI.
In the recent months, shipment of pending orders have been continuing but the volume has been low as tea gardens remained closed during winter which is a lean season for the industry, Kanoria said. He said over the last few months there have fewer fresh orders. The outbreak of the disease has weakened the economies of countries importing Indian tea, and this can adversely impact the demand, Kanoria said.
"For example, the spread of the virus has caused a fall in crude oil prices, impacting the economies of CIS countries, including Russia and Kazakhstan, which import Indian tea." He said the demand for Darjeeling tea in overseas markets could also fall by 10-20 per cent this year. Darjeeling tea, he said, is mostly an export-oriented product and buyers from Europe and Japan usually visit tea gardens at the beginning of the season in March before placing orders.
"Many of them could not come this year in the wake travel and visa restrictions due to COVID-19. This may lead to either delay in getting new orders, or the demand will be less," Darjeeling Tea Association general secretary Kaushik Basu told PTI.
Germany and Japan are major buyers of the first flush variety of Darjeeling tea, he said. First flush is the very first plucking of a tea plant's harvest season. The new leaves plucked during first flush are the youngest, most tender and of premium quality.
"Any adverse impact on the sales of first flush tea could be severe for an industry which is under stress, particularly after the agitation in the hills in 2017," he said. The first-flush Darjeeling tea contributes 22-25 per cent of about 8 million kg, the average annual production in the hills, but accounts for 35-40 per cent in terms of value, Basu said.
According to provisional Tea Board data, overall tea exports during the calendar year 2019 stood at 248.29 million kg, marginally down from 256.06 million kg the previous year.
"If exports come down by 10 million kg in the whole year due to coronavirus outbreak, it will wreak havoc in terms of price realisation at the farm gate level," he said.