What is hurting India’s tea exports?
The shortage of product varieties, the high price of CTC beer, and the inability to take advantage of the geographical indication (GI) label in the overseas market are among the many reasons that have led to the slowdown in tea exports. Indian, traders and planters said Sunday.
In contrast, they believed, Sri Lanka, a major competitor to India in the global tea market, has managed to outperform its larger neighbor through “concerted marketing efforts”.
“We used Darjeeling GI as a tool to legislate and threaten buyers when the need at the moment was to promote it with substantial funding on the Colombian coffee lines and to bring international buyers with us.
“By not promoting our logos and our IG brand, we have alienated buyers to our detriment,” said President of the Indian Tea Exporters Association Anshuman Kanoria.
He also explained that the prices of the CTC variety of Indian tea are higher compared to those of African countries, due to which “we risk losing 60 million kg of export”.
Sujit Patra, secretary of the Indian Tea Association (ITA), said enforcement of GI label regulations in destination countries was key, but added that registering the logo and popularizing the names of tea varieties in importing countries were equally important.
“For example, around 8.5 million kg of Darjeeling tea, which is the ‘Champagne of teas’, is produced in one year, but around 50 million kg is advertised as Darjeeling tea in the world. This is in violation GI label regulations, standards and a mechanism to verify whether genuine Darjeeling tea is sold overseas is needed, ”he said.
Darjeeling Tea Association senior advisor Sandip Mukherjee pointed out that tea exports from the hills of North Bengal are mostly private.
“There is a disparity between the well-thought-out marketing activities of the Sri Lankan authorities and the unbalanced and unorganized efforts of individual exporters,” Mukherjee said.
Nepalese tea is sold under the name Darjeeling tea in national and international markets, which constitutes “a violation of the GI label,” he said.
“These cases should be brought to court with the support of the government. We have raised our voices against this illegal trade but do not have the power to enforce our position,” Mukherjee said.
Read also | Want to discover tea? Here is a guide
Over the past decade (2011-2020), India’s tea exports have declined at a CAGR (compound annual growth rate) of 1%, and the industry was stagnant even before the covid pandemic. -19 does hit the industry, according to a study by Drip Capital, a global trade finance firm.
“… one of the reasons for the slowdown in Indian tea exports is the lack of variety in the product line,” he said. Indian tea exports generally suffer from a “complete lack of vision,” Kanoria said.
“We are happy to be too dependent on two or three markets. A stable domestic market has been the cause of the lackluster treatment of tea exports, although shipping to overseas countries is key to maintaining the sustainability of the estate and its stakeholders, ”he said. declared.
In 2004, Darjeeling tea became the very first IG-labeled product in India, and in 2007, Assam Orthodox tea also received the same recognition, according to the report.
“It was observed from FAO trade data that after Sri Lankan Ceylon tea obtained the GI label, the average price of its exports jumped to over US $ 4,000 per tonne, from 2 000 to 3000 USD per tonne previously.
“However, the IG label has had no impact on Indian tea prices, which have rarely exceeded the average range of USD 2,000 to 3,000 per tonne. This could be the result of how these two countries are scoring. their products in the global market, ”the study says.
He also pointed out that although India exported 50% more tea than Sri Lanka in 2019, the dollar export value for the two countries was essentially the same, indicating the marked price difference of products in the countries. two countries.
However, Patra contradicted the report’s findings that the export value of the two countries is almost the same, despite India exporting more tea than Sri Lanka in 2019.
In the recent past, the quality of Indian tea has improved dramatically, resulting in the generation of a higher unit price, he said.
“What we need are more value-added and specialty tea exports. Looking at the ranking of tea exports over the past decade, Kenya tops the list with over 500 million kg, China second with around 370 million kg, Sri Lanka third with 280 million kg. . kg, while India takes fourth place with 250 million kg, ”Patra said.
Read also | The history of the desi kettle
According to Mukherjee, tea and tourism are the mainstays of Sri Lanka and there has been “a concerted effort by the industry and the government of the neighboring country to promote the product to international markets.”
“Sri Lanka’s tea industry enjoys full support from its government, while Indian tea exporters do not receive similar support from Delhi,” he said.
A greater lean towards green tea could help growers and exporters get a better price, according to the report.
Interestingly, even though China’s total export quantity only increased by just 2% between 2010 and 2019, the value of its exports grew at an annual rate of 10%, the study notes.
“China’s growth can be attributed to the ability of its tea industry to adapt its product line to meet the growing global demand for green tea,” he said.
Overall, green tea dictates a higher market price than black tea.
According to the report, 91 percent of India’s tea exports consist of black tea, only 2 percent of green tea and the rest being other beverage preparations.
“Given the tariff advantage enjoyed by green tea, the Indian tea export market could potentially benefit from a move towards a higher than 2% proportion of green tea in the blend,” he said. .
The president of the Indian Association of Tea Exporters, however, disagreed with the idea that a move towards green tea would boost the country’s exports.
“I do not agree with the view that India has a major opportunity to boost tea exports with green tea, given the world production and price of this variety and our own cost of production.” , did he declare.
Another reason for revamping Indian offerings is the need to provide American consumers who demand more ready-to-drink (RTD) tea, according to the report.
RTD tea is a value added product that requires manufacturing facilities to process it.
India, at present, does not have enough manufacturing plants to meet the growing demand for this new product, the report adds.
The ITA secretary said the country has ample opportunity to increase its share in the global Orthodox tea market.
In recent years, India has increased its production of Orthodox tea from 80-90 million kg to 130-140 million kg.
“This has helped increase exports from 200 million kg to over 250 million kg. Now our target is 300 million kg in the next 2-3 years,” Patra said.
Usually, CTC and Orthodox tea varieties each account for 40 percent of the world export market, and green tea 20 percent.
“In the Orthodox segment, India’s export share is around 10-12%. Although the cost of producing Orthodox tea is much higher than that of CTC, the country is able to produce more than the current Orthodox production of around 130-140 million kilograms, ”he said.
Orthodox production involves more expertise, higher cost, less productivity.
“You have to make the right quality and the right quality of Orthodox tea for a specific market. India’s large domestic market consumes CTC teas. It is a risky business to produce expensive Orthodox tea if it is not exported to the world market. It is a dilemma. for producers.
“With concerted promotional efforts in the world market, these varieties will help boost exports,” Patra added.
By Bappaditya Chatterjee