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US attacks may impact Indian tea trade

P.S. Sundar

COONOOR, Sept. 19

CONTRARY to common beliefs, the tea industry in the country cannot remain insulated against the aftermath of the terrorists' attacks on the US. Things would drift to worse if the US wages a war on Afghanistan.

The US is the world's fourth largest importer of tea, accounting for some 90 million kg annually. So, although tea is not the most favoured drink in the US, unlike soft drinks, beer, coffee, milk, bottled water and fruit juices, the US is a major force in the global tea trade. And, of late, there has been an increased tilt towards tea, following the proven scientific studies on the positive health effects. Also, American youth is seen preferring iced tea.

The US admittedly is not a major market for Indian tea right now. Only 7 mkg of the Indian teas are exported to the US annually. But, they fetch in foreign exchange worth Rs 86 crore. This shows an average price of Rs 125 a kilo against Rs 70 paid by Russians, who, in any case, pay far low a price for the teas from the south.

In fact, India is now required to look for alternate markets for Russia, because although this has been the country's principal market, it has been increasingly proved that over-dependence on it would not help any more. The recent visit of the Russian delegation disappointed the producers from the South as the visitors told them firmly that they would not be able to pay more than Rs 35 a kilo for their teas. At this price, after deducting Rs 15 as factory expenses, the small growers who supply the gre en leaves to the factories would get only Rs 5 a kilo for the leaves.

Besides, Russia had not been honouring its commitment to facilitate the lifting of 100 mkg of teas annually from India. Last year, they took only 86 mkg and the Russian delegation said this year's import would not exceed 70 mkg.

India's hold in the next largest importing market, the UK, has also waned over the years following its shift towards Russia. And, in Pakistan, the world's third largest importer, India has no say worth the name at all. Although this has been listed as a priority market, trade prospects continue to remain evasive.

So, India's attention should shift to the US, the fourth largest importer. With some prospects of health aspects gaining ground and an impression veering round there of good quality teas being available in India, there had been increasing chances of Ind ia selling more teas to the US. But, with the general slow-down in the US economy, the spending power of the Americans on tea came under question. To make things worse, the present bombing of the US centres has strained the country's economy further. Sh ould a war break out, more resources would be spent on the battlefield and the question of promoting India's teas would have to be shelved.

In fact, just a day before the Black Tuesday of last week, an American tea analyst, Mr. James Norwood Pratt, told the planters in Coonoor, "I have come a long way to assure you that no body can produce such a quality tea like the Nilgiri tea. You shoul d target the elite in the US.'' He also asked the planters and traders to embark on a promotional campaign.

The other aspect of the US bombing is that if American purchases come down, the countries now offering teas to this market will look for newer pastures. Some of them could be the ones where India is already a major seller. Surely, these displaced sellers will give a stiff competition to India in the global market. Thus, Argentina, China, Indonesia and Kenya may be seen to be scouting for new buyers at the cost of India.

If the US wages a war against Afghanistan, this trend will be visible there as well. Afghanistan is the world's seventh largest importer, accounting for an intake of about 36 mkg annually. With a warfront, the purchasing power of the people goes down f orcing a reduction in the consumption of tea. Also, war causes disruption in the movement of goods.

So, the countries supplying teas to Afghanistan will also be forced to look for newer markets and, in the bargain, the competition for India in the global scenario would increase. Directly, India exports only 2.6 lakh kg of teas to Afghanistan and earns Rs 2.5 crore.

Thus, there would be a mentionable impact on the Indian tea industry because of the developments on the US front.