Cheap Vietnam teas displace Indian leaf in export deals

Import of tea from Vietnam has shot up in the first half of calendar 2004 by nearly 300 per cent to over 26 lakh kg., according to Tea Board estimates.

Most of the tea was imported at a price of Rs 28 per kg.. In 2003, imports from Vietnam stood at 11 lakh kg with the average unit price at Rs 33.

Imports from Vietnam shot up in the second quarter. Imports in the first quarter was about 5 lakh kg. Tea Board sources said most of the imported tea was for re-export. "The orthodox Vietnam tea imported is promptly marked as 'Indian origin tea' and shipped out, harming the image of Indian tea," they said.

According to Tea Board estimates, Vietnam accounted for 80 per cent of the 35 lakh kg increase in imports during the period. The price of tea from Vietnam was also very low. The import price average was Rs 54 per kg. Imports from Vietnam accounted for 39 per cent of total imports but represented just 20 per cent in value terms. Traders blamed Iraqi buyers for the trend.

"Iraqi requirement is purely price sensitive with little regard for quality. Indian traders spotting the opportunity have resorted to shipping in cheap teas from Vietnam," they complained.

In 2003, a year in which India struggled to match the previous year's exports, imports fell 60 per cent to 68 lakh kg. This year, traders predicted imports could be as much as 1.5 crore kg.

Sources said export demand from Iraq was driving imports from Vietnam for low cost tea. This was a big worry for Indian growers as Vietnam has slashed prices this year.

Tea Board statistics indicate in the last four years, Vietnam tea was priced close to prices of Indian low grade tea at Rs 35-45 a kg. Tea Board sources said the body was monitoring the situation.

Traders said if imports continued to rise, Indian tea prices would slump like that of Indian coffee and pepper. Vietnamese Robusta coffee and pepper had caused prices to crash. While Vietnamese imports were hurting demand for poor Indian teas used so long for exports, the domestic tea market has started looking up.

Good rains in pockets, better quality and lower production led to prices recovering after declining for three successive years. Tea prices rose 30 per cent in the last few months, with quality Orthodox tea fetching over Rs 85/kg. The CTC (cut-tear-curl) price was over Rs 55/kg.

However, gardens in southern India were suffering as production cost for CTC was above Rs 60/kg, sources said.