CTC tea export to Kenya may exceed last year’s

The country’s export of CTC tea to Kenya, itself a major producer and exporter of CTC tea, may exceed last year’s level if the present trend is any indication.

In 2011, Kenya imported from India a little more than three millon kg (mkg) valued at Rs 20.72 crore. In first six months of the current year (January-June 2012), the Kenyan import was 1.32 mkg valued at Rs 11.38 crore as compared with 1.05 mkg valued at Rs 6. 74 crore in the same period of the last year.

This is not surprising. This year Kenya has been hit by crop loss due to unfavourable weather and the shortfall in production in the first half (January to June) is estimated to be lower by 22 mkg at 127.8 mkg (149.20 mkg). The import from India it is felt might be re-exported to help Kenyan exporters keep their overseas commitments. In the past, Kenya imported from India larger quantities – more than five mkg valued at Rs 32.76 crore in 2010, for example.

Over the years, Kenyan production has been a showing downward trend – from 398 mkg in 2010 to 377 mkg in 2011.The trend so far suggests that the drop this year might be sharper. However, exports exceed domestic production – 441 mkg in 2010 and 421 mkg in 2011. The commitments to overseas buyers were kept presumably with larger imports.

India’s tea export in the first half is estimated at 43.84 mkg as compared with 45.76 mkg in the same period of previous year despite bullish global market largely due to the demand-supply gap with major tea producing countries reporting shortfall in production. The Indian tea exporters would attribute their inability to cash in on booming export market to the drop in production. However, the drop so far has been estimated at 27 mkg, roughly 2.7 per cent of the total production of about 1,000 mkg.

The real reason is the inward looking approach of our tea producers due to the lucrative domestic market. The export market has many challenges — competition, quality and the stiff standards imposed by many European countries about the use of pesticides in tea.

By comparison, the domestic market is free for all, virtually no challenge.