Mideast Upheaval Disrupts Tea Exports

July exports from India and Sri Lanka declined despite production increases due to upheaval in the Middle East.

India’s Tea Board reported production rose 8 percent to 133.3 million kg in July. Exports fell to 15.3 million kgs, an 8 percent decline compared to July 2010.

Sri Lanka exporters, which last year sold 10 million kgs to Libya, about 3.5 percent of total exports, are finding banks cautious about accepting letters of credit. Shipping delays in Tripoli and Syria are another obstacle and United Nations sanctions on Iran complicate payments.

The Middle East is a primary market for bulk and value-added Ceylon teas. Syria purchased 26 million kgs last year, Jordan 16 million kgs, Iraq 13 million kgs and Iran bought 27 million kgs. Almost 90 percent of Ceylon tea is exported, accounting for 17 percent of the global market.

India has seen an overall production increase of 6 percent during the period January through July and domestic demand is strong. In contrast to Sri Lanka, India’s domestic market consumes most of the 23.8 percent of the world’s tea it produces. India tea exports comprise 11 percent of the world’s tea. Exports declined 16 percent during the first six months of the year to 89.8 million kgs, compared to 107.3 million during the same period in 2010.

Production gains are evident in both the North and South. Production in Northern India was 111.9 million kg in July, up 9 percent compared to the previous year. In southern India production was 21.32 million kg up 5 percent compared to July 2010.

Assam's tea production rose to 76.31 million kg in July, 2011, from 66.82 million kg in the year-ago period, while output in West Bengal declined to 33.93 million kg from 34.43 million kg in the same period a year ago.

Tea exports from North India rose by 18 per cent to 8.69 million kg from 7.35 million kg in the six months ending July.

Source: Tea Board of India, NDTV, Sunday Observer