Pakistan has emerged as a major tea buyer this year with imports up following a return to India as a primary supplier. The country is one of the top tea consuming nations and the third largest tea importer globally.
Per capita consumption rose 35.8 percent to about 1 kilogram per person during the years 2007-2016. Total volume is estimated at 172,000 metric tons, a number expected to rise to 250,000 metric tons by 2027, according to the Food and Agricultural Organization of the United Nations (FAO).
India reported a 48 percent increase in export volume to Pakistan this year, sending 8.50 million kilograms during the first six months of 2018, up from 5.73 million kilograms exported in the corresponding months of 2017. India exports about 200 million kilograms annually. The Pakistan Bureau of Statistics said imports overall were up 4.8 percent to reach $100 million during the first months of the year. The country annually spends about $500 million on tea imports.
Pakistan is a black tea drinking nation with a growing interest in green tea and a long history of use of medicinal and functional beverages.
While citizens of both India and Pakistan drink chai, local tea culture differs somewhat from India. Green tea is popular, Afghani Kahwah and Kashmiri tea are sold in stalls and Gulabi chai (pink salt tea) is a regional favorite. Like India, Pakistan is a tea producing land, but with fewer natural resources. Gardens thrive in south Kashmir.
Pakistan is running large deficits from past borrowing, leading to a devaluation of the rupee last week, which saw the largest single-day decline in a decade. Since most of the tea consumed is imported (and priced in U.S. dollars) this will result in a PKRs30-50 per kilogram increase, according to Pakistan Tea Association chairman Shoaib Paracha. Economists explain that a 1 percent depreciation in currency leads to a 0.1 percent increase in the Consumer Price Index nationally, a measure of inflation. One thousand Pakistani rupees now trade for about $7.50 U.S.
To complicate matters, Pakistan is at odds with China over continued funding of the China-Pakistan Economic corridor, a segment of the One Belt, One Road initiative to improve trans-Asian shipments.
Tea yields this year increased across East Africa’s 10 tea producing nations, but quality is lower and prices at the Mombasa auction declined 13 percent in the past month. Pakistan buys about 40 percent of the tea sold in Mombasa.
Tea arrives from 19 countries with greens arriving from China, Sri Lanka, Japan and Indonesia and 60 percent of black tea from Kenya. In 2017 Pakistan dramatically cut imports from Kenya following a positive test for aflatoxin, a potentially fatal by-product of fungal growth. Requirements that exporters submit all tea for laboratory analysis led to a decline in shipments from 24 million kilograms to 12 million kilograms with sales falling by half in a single month.
A reversal of mandatory inspections at the insistence of the Pakistan Tea Association restored confidence but also afforded Indian suppliers an opportunity to regain market share.
Pakistan may never be tea self-sufficient but developing its tea lands could greatly reduce costly imports, according to researchers at the National Tea and High Value Crops Research Institute (NTHRI) in Mansehra. The institute operates a 50-acre experimental farm in Shinkiari and began processing tea in 2001, producing about one metric ton of black tea per day. Green tea processing equipment produces an additional 100 kilograms per day, according to a news report in the publication Dawn.
In 2017 the Turkish state-owned tea company Caykur donated a black tea processing plant capable of producing 500 kilograms per day.
NTHRI Director Dr. Farrrukh Siyak Hamid said the institute has identified 64,000 hectares of land suitable for tea cultivation in the districts of Mansehra and Swat. Tea cultivation is possible in Battagram and Abbottabad as well as Khyber Pakhtunkhwa, and Azad Kashmir.