India’s Tea Exports could Shrink due to Tough Competition from Kenya

Tea exports from India could shrink this year as a bumper crop in Kenya increases the risk of oversupply.

Azam Monem, director at Mcleod Russel India Ltd said shipment might go down by 8 million to 10 million kilograms in the year through March from a record of 256.57 million in 2017-18 as production in Kenya is likely to go up by as much as 60 million kilograms, which is a huge volume for the world market to absorb.

Monem in an interview said once Kenya produces that quantity and their prices drop, it will become very hard for India to contend. Kenya gives good quality tea at a low cost, while India’s tea in that class is quite costly in relative terms.

Moreover, weak exports from India may harm domestic producers, who have been suffering from oversupply. And local tea prices will probably stay stagnant or rise only marginally this year.

Tea production in India could plunge 5 to 10 % this year due to poor weather in some of the major growing areas, said Monem. According to data by the Tea Board of India, production mounted almost 6 % from a year earlier to a record 1.33 billion kilograms in 2017-18.

He said India can export over 30 million kilograms to Iran in 2019, from around 28 million kilograms a year before, as demand for good quality tea is increasing.  

Mcleod Russel India Ltd that traces its origins back to a partnership created by two Englishmen in the year 1869 and now has about 28,000 hectares of plantations, expects its output in India to fall to 55 million kilograms from 87 million kilograms in 2017-18 because it sold few gardens this year. The company is set to produce an additional 30 million kilograms from overseas estates in places like Rwanda, Vietnam and Uganda.